<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 23, 2000
REGISTRATION NO. 333-92985
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 13-3261323
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
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)
----------------------------------------------------------------
BRUCE E. STERN, ESQ.
GENERAL COUNSEL AND SECRETARY
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
350 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 826-0100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------------------------
COPIES TO:
JOHN W. WHITE, ESQ.
CRAVATH, SWAINE & MOORE
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019-7475
-----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to time
after the effective date of this registration statement, as determined by market
conditions and other factors. If the only securities being registered on this
Form are being offered pursuant to dividend or interest reinvestment plans,
please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box.|X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.|_| ______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.|_| ______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.|X|
(CONTINUED ON FOLLOWING PAGE)
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------- ----------------------- -------------------- ----------------------- ----------------
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING PRICE(3) REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1)(2)(3) PER UNIT FEE
- -------------------------------------- ----------------------- -------------------- ----------------------- ----------------
<S> <C> <C> <C> <C>
PRIMARY OFFERING
Debt Securities
Common Stock
Stock Purchase Contracts (4)
Stock Purchase Units (5)
Preferred Stock
Subtotal: $92,750,021 100% (6) $92,750,021 (6) $24,486
SECONDARY OFFERING
Common Stock
Subtotal: 500,000 $49.40625 (7) $24,703,125 (7) $ 6,522
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TOTAL.............. $31,008
- -------------------------------------- ----------------------- -------------------- ----------------------- ----------------
</TABLE>
(1) Securities registered by the registrant under Registration Statement
No. 333-74165 and not previously sold in the amount of $157,249,979 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 $$43,715.49 have previously been paid. On
December 17, 1999, upon the initial filing of this Registration
Statement, the Company paid an aggregate registration fee of $30,454,
of which $23,932 related to $90,650,021 of securities of the type
described under "Primary Offering" in the table above. With
Pre-Effective Amendment No. 1, the Company is increasing the "Amount to
be Registered" for primary offering by $2,100,000 to $92,750,021, and
paying an additional $554 registration fee. The total amount registered
under this registration statement with respect to primary offering(s),
as so consolidated, is $250,000,000.
(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.
----------------------------
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 $157,249,979. THIS PRE-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION
STATEMENT NO. 92985 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.
<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 FEBRUARY 23, 2000
[LOGO]
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
$250,000,000
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 $250,000,000. 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 a selling shareholder, as described in the section entitled
"Selling Shareholder". 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.
--------------------------
THE DATE OF THIS PROSPECTUS IS , 2000
<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 a trend
towards private finance initiatives for projects having an
essential public purpose and regulatory changes encouraging
or facilitating off-balance sheet financings.
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.
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<PAGE>
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
(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.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
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
</TABLE>
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.
3
<PAGE>
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:
- the title of the debt securities;
- any limit upon the total principal amount of the debt
securities;
- the date or dates on which the principal of the debt
securities is payable;
- 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;
- the place or places where the principal and any interest on
the debt securities is payable;
- 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;
4
<PAGE>
- 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;
- if other than denominations of $1,000 and any integral
multiple of $1,000, the denominations in which any debt
securities are issuable;
- 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;
- 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;
- the additions, modifications or deletions, if any, in the
events of default or our covenants specified in the indenture;
- 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;
- 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;
- whether defeasance and/or covenant defeasance applies to the
debt securities, as more fully described below under the
heading "--Defeasance or Covenant Defeasance";
- 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;
- the terms of any right to convert or exchange the debt
securities into or for our common stock or preferred stock;
- any other terms of the debt securities not inconsistent with
the provisions of the applicable indenture; and
- 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
5
<PAGE>
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.
6
<PAGE>
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:
- the investor cannot have debt securities registered in his or
her own name;
- the investor cannot receive physical certificates for his or
her interest in the debt securities;
- 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;
- 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;
- 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
- 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:
- when the depository notifies us that it is unwilling, unable
or no longer qualified to continue as depository, unless a
replacement is named;
- when an event of default on the debt securities has occurred
and has not been cured; or
- 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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<PAGE>
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:
- 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;
- a sale, transfer or other disposition of the entire capital
stock of any Restricted Subsidiary for at least fair value; or
- 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:
- 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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- 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
- 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)
9
<PAGE>
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 than Not less than 25% in principal amount All debt securities of the
all series, and (h), unless of the debt securities of all affected affected series then
otherwise specified in the series then outstanding, voting as a outstanding
applicable supplemental single class
indenture
- ---------------------------------- ---------------------------------------------- -----------------------------------
(d), with respect to all Not less than 25% in principal amount All debt securities then
series, (e), (f) or (g) of all debt securities outstanding under outstanding
the 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 All debt securities of that
principal amount of the debt securities series then outstanding
of the affected series, voting as a
separate class, then outstanding
- ---------------------------------- ---------------------------------------------- -----------------------------------
(d), with respect to less than Holders of a majority in aggregate All debt securities of the
all series, and (h), unless principal amount of all affected debt affected series then
otherwise specified in the securities then outstanding, voting as a outstanding
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
- that holder has previously given to the trustee written notice
of a continuing default,
11
<PAGE>
- 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,
- the trustee fails to institute the requested proceeding within
60 days and
- 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:
- to be discharged from our obligations with respect to the debt
securities of that series, subject to limited exceptions
("defeasance") and/or
- 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:
- no default in the payment of principal of, or premium or
interest, if any, on, any senior debt can have occurred and be
continuing,
12
<PAGE>
- 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:
- extend the final maturity of any debt security,
- reduce the principal amount of any debt security,
- reduce the rate or extend the time of payment of interest on
any debt security,
- reduce any amount payable on redemption of any debt security,
- 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,
- 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,
- impair or affect any right of repayment of any debt security
at the option of the holder or
- 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:
- 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,
- any of our Debt to any of our subsidiaries,
- Debt to any of our employees,
- any liability for taxes,
- 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
- 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
February 15, 2000, 33,517,995 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:
- The stated amount that a holder will be obligated to pay under
the stock purchase contract in order to purchase our common
stock.
- 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.
- The events, if any, that will cause our obligations and the
obligations of the holder under the stock purchase contract to
terminate.
- 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.
- 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.
- 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.
- 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.
- 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:
- 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;
- 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;
- 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;
- 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;
- 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;
- the full or limited voting rights, if any, to be provided for
the shares of that series; and
- 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.
17
<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.
18
<PAGE>
SELLING SHAREHOLDER
We are registering 500,000 shares covered by this prospectus for
secondary offering on behalf of Credit Suisse Financial Products ("CSFP"). On
December 28, 1999, we entered into a forward purchase arrangement with CSFP. To
hedge its commitment under the forward arrangement, CSFP acquired 500,000 shares
of our common stock at an average price of $54.20 per share. Under the forward
arrangement, we will either repurchase those shares or direct their sale within
a five-year period. If we direct a sale, the forward arrangement requires that
we pay or receive the difference between the sale proceeds and the sum of the
original purchase price plus carrying costs but less dividends. We are
registering for secondary offering only those shares that are legally owned by
CSFP which may be sold at our direction under the forward arrangement.
The table below sets forth the name of the selling shareholder, the
number of shares owned by the selling shareholder as of January 27, 2000, the
number of shares that may be offered by the selling shareholder under this
prospectus and the number of shares that the selling shareholder will continue
to hold if all 500,000 shares are sold. The number of shares set forth opposite
"Number of Shares Being Offered" represents all of the shares that we may direct
be sold for the selling shareholder under this prospectus. We may direct that
some, all or none of those shares of the selling shareholder be sold from time
to time under this prospectus.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------- ------------------------------------------------
Name: Credit Suisse Financial Products
- -------------------------------------------------------------------- ------------------------------------------------
<S> <C>
Number of Shares Beneficially Owned Prior to Offering (1):
Number........................................................ 500,000
Percent (2)................................................... 1.49%
- -------------------------------------------------------------------- ------------------------------------------------
Number of Shares Being Offered: 500,000
- -------------------------------------------------------------------- ------------------------------------------------
Number of Shares Beneficially Owned After Offering (1):
Number........................................................ 0
Percent (2).................................................... (3)
- -------------------------------------------------------------------- ------------------------------------------------
</TABLE>
(1) CSFP informed us that it held no other shares for its own account, and
that Credit Suisse First Boston Corporation had a 1,000 share short
position (not reflected in the table).
(2) Based on 33,517,995 shares outstanding, which includes shares owned by
a trust on our behalf and excludes 158,306 shares of treasury stock.
(3) Less than 1%.
CSFP would be deemed to be an underwriter of any of the shares that it
sells under this prospectus. During the past three years, CSFP or one or more of
its affiliates have had the following relationships with us:
- Credit Suisse First Boston Corporation has acted as
underwriter of securities issued by others and insured by our
affiliates in the ordinary course,
- Credit Suisse First Boston, the Swiss bank, participated in a
credit facility of ours, which we terminated effective August 31,
1998, and
- CSFP is a party to the forward arrangement described above.
PLAN OF DISTRIBUTION
We or Credit Suisse Financial Products, as a selling shareholder, 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
19
<PAGE>
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 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.
20
<PAGE>
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 $250,000,000 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.
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:
<TABLE>
<S> <C> <C>
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
</TABLE>
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.
21
<PAGE>
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.
- The description of our common stock in our Form 8-A that was
filed on December 3, 1993
- Our Annual Report on Form 10-K, as amended, for the year ended
December 31, 1998
- Our Proxy Statement on Schedule 14A that was filed on
March 25, 1999
- Our Quarterly Report on Form 10-Q, as amended, for the
quarterly period ended March 31, 1999
- Our Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1999
- Our Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1999
- Our Current Report on Form 8-K dated October 29, 1999
- Our Current Report on Form 8-K dated December 28, 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 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
22
<PAGE>
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 February 15, 2000, Bruce E. Stern
beneficially owned 6,114 shares of our common stock, all of which were held in a
trust for the benefit of his children, and had economic ownership of the
equivalent of approximately 128,167 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.
23
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities being registered, other
than underwriting discounts and commissions:
<TABLE>
<S> <C>
Registration .................................................................. $ 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
</TABLE>
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. +
24
<PAGE>
3.2 Amended and Restated By-Laws, as amended and restated on
February 17, 2000. **
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.
++ Previously filed as an exhibit to this Registration Statement No.
333-92985 upon initial filing and incorporated by reference into this
document.
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
25
<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.
26
<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.
27
<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 February 23, 2000.
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
By: *
----------------------------------
Robert P. Cochran
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, Chief February 23, 2000
- -------------------------- Executive Officer and Director
Robert P. Cochran (principal executive officer)
* President and Director February 23, 2000
- --------------------------
Roger K. Taylor
* Executive Vice President and February 23, 2000
- -------------------------- Director
Sean W. McCarthy
* Chief Financial Officer February 23, 2000
- -------------------------- (principal financial officer)
John A. Harrison
* Controller February 23, 2000
- -------------------------- (principal accounting officer)
Jeffrey S. Joseph
*
- -------------------------- Director February 23, 2000
Terry L. Baxter
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director February 23, 2000
- --------------------------
Robert N. Downey
* Director February 23, 2000
- --------------------------
Anthony M. Frank
* Director February 23, 2000
- --------------------------
Fudeji Hama
* Director February 23, 2000
- --------------------------
K. Thomas Kemp
* Director February 23, 2000
- --------------------------
David O. Maxwell
* Director February 23, 2000
- --------------------------
James M. Osterhoff
* Vice Chairman of the Board February 23, 2000
- -------------------------- and Director
James H. Ozanne
* Director February 23, 2000
- --------------------------
Richard A. Post
* Director February 23, 2000
- --------------------------
Howard M. Zelikow
</TABLE>
* 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
29
<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 17, 2000. **
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.
++ Previously filed as an exhibit to this Registration Statement No.
333-92985 upon initial filing and incorporated by reference into this
document.
30
<PAGE>
Exhibit 3.2
AMENDED AND RESTATED
BYLAWS
of
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
as amended and restated on
February 17, 2000
ARTICLES I
OFFICES
The principal office of the Corporation in the State of New York shall
be located in the City of New York, County of New York. The Corporation may have
such other offices, either within or without the State of New York, as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
SHAREHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of the Shareholders shall
be held on such date as the Board of Directors shall designate in each year for
the purpose of electing Directors and for the transaction of such other business
as may come before the meeting. If no designation is made for any year, the date
of meeting shall be the second Thursday in the month of May in such year. If the
day fixed for the annual meeting shall be a legal holiday in the State of New
York, such meeting shall be held on the next succeeding business day.
Section 2. SPECIAL MEETINGS. Special meetings of the Shareholders may
be called by the Chairman, the President or the Board of Directors, and shall be
called by the Chairman, the President or the Secretary at the request of the
holders of not less than ten percent (10%) of the outstanding shares of the
Corporation entitled to vote at the meeting.
Section 3. PLACE OF MEETING. The Chairman, the President or the Board
of Directors may designate any place, either within or without the State of New
York, as the place of meeting for any annual meeting or for any special meeting
called by the Chairman, the President or the Board of Directors. A notice signed
by the holders of not less than ten percent (10%) of the outstanding shares of
the Corporation entitled to vote at the meeting may designate any place, either
within or without the State of New York, as the place for the holding of such
meeting. If no designation is made, or if a special meeting be otherwise called,
the place of meeting shall be the registered office of the Corporation in the
State of New York.
Section 4. NOTICE OF MEETING. Written notice of every meeting of
Shareholders shall state the place, date and hour of the meeting and, unless it
is the annual meeting, indicate that it is being issued by or at the direction
of the person or persons calling the meeting. Notice of a special meeting shall
also state the purpose or purposes for which the meeting is called. If, at any
meeting, action is proposed to be taken which would, if taken, entitle
Shareholders fulfilling the statutory requirements to receive payment for their
shares, the notice of such meeting shall include a statement of that purpose and
to that effect and shall be accompanied by a copy of the relevant statutory
<PAGE>
provision or an outline of its material terms. A copy of the notice of any
meeting shall be given, personally or by first class mail, not less than 10 nor
more than 60 days before the date of the meeting, provided, however, that a copy
of such notice may be given by third class mail not less than 24 nor more than
60 days before the date of the meeting, to each Shareholder entitled to vote at
such meeting. If mailed, such notice shall be deemed given when deposited in the
United States mail, postage prepaid, directed to the Shareholder at his address
as it appears on the record of Shareholders, or, if he shall have filed with the
Secretary of the Corporation a written request that notices to him be mailed to
some other address, then directed to him at such other address.
Section 5. ADJOURNMENTS. The Shareholders present at a meeting of
Shareholders may adjourn the meeting despite the absence of a quorum. When a
determination of Shareholders entitled to notice of or to vote at any meeting of
Shareholders has been made, such determination shall apply to any adjournment
thereof, unless the Board of Directors fixes a new record date for the adjourned
meeting. When a meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting the Corporation may transact
any business that might have been transacted on the original date of the
meeting. However, if after the adjournment the Board of Directors fixes a new
record date for the adjourned meeting, a notice of the adjourned meeting shall
be given to each Shareholder of record entitled to notice on the new record
date.
Section 6. FIXING OF RECORD DATE. For the purpose of determining
Shareholders entitled to notice of or to vote at any meeting of Shareholders or
any adjournment thereof, or Shareholders entitled to receive payment of any
dividend, or in order to make a determination of Shareholders for any other
proper purpose, the Board of Directors may fix in advance a date as the record
date for any such determination of Shareholders, such date in any case to be not
more than 60 days and, in case of a meeting of Shareholders, not less than 10
days prior to the date on which the particular action requiring such
determination of Shareholders is to be taken. If no record date is fixed for the
determination of Shareholders entitled to notice of or to vote at a meeting of
Shareholders, the record date shall be at the close of business on the day next
preceding the day on which notice of the meeting is given, or if no notice is
given, the day on which the meeting is held. If no record date is fixed for the
determination of Shareholders for any other purpose, the record date shall be at
the close of business on the day on which the resolution of the Board of
Directors relating thereto is adopted. When a determination of Shareholders
entitled to vote at any meeting of Shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof unless
the Board of Directors fixes a new record date.
Section 7. VOTING LISTS. A list of Shareholders as of the record date,
certified by the Secretary or by the transfer agent, shall be produced at any
meeting of Shareholders upon the request thereat or prior thereto of any
Shareholder. If the right to vote at any meeting is challenged, the inspectors
of election, or person presiding thereat, shall require such list of
Shareholders to be produced as evidence of the right of the persons challenged
to vote at such meeting, and all persons who appear from such list to be
Shareholders entitled to vote thereat may vote at such meeting.
2
<PAGE>
Section 8. QUORUM. The holders of a majority of the outstanding shares
of the Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of Shareholders. If the holders of less than a
majority of the outstanding shares entitled to vote are represented at a
meeting, a majority of the shares so represented may adjourn the meeting. At any
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 9. PROXIES. Every Shareholder entitled to vote may authorize
another person or persons to act for him by proxy. Every proxy must be signed by
the Shareholder or his attorney in fact. No proxy shall be valid more than
eleven months after it is executed, unless otherwise provided in the proxy.
Section 10. VOTING OF SHARES BY CORPORATE HOLDERS. Shares standing in
the name of another corporation may be voted by such officer, agent or proxy as
the Bylaws of such corporation may prescribe, or, in the absence of such
provisions, as the board of directors of such corporation may determine.
Section 11. INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at a meeting of the Shareholders, may be taken without a
meeting on written consent, setting forth the action so taken, signed by the
holders of all outstanding shares entitled to vote thereon.
ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The business of the Corporation shall be
managed under the direction of the Board of Directors.
Section 2. NUMBER, TENURE AND QUALIFICATIONS.
(a) NUMBER. the number of Directors constituting the entire
Board of Directors shall not be less than three nor more than 20. The
number of directors shall be determined by a majority vote of the
entire Board of Directors.
(b) TENURE. Except as provided in Sections 4 and 5 of this
Article III, each Director shall hold office until the expiration of
the term for which he is elected and until his successor has been
elected and qualified.
(c) QUALIFICATIONS. At all times a majority of the Directors
shall be citizens and residents of the United States. Each Director
shall be at least eighteen years of age.
Section 3. ELECTION OF DIRECTORS. Directors shall be elected at each
annual meeting of the Shareholders.
3
<PAGE>
Section 4. RESIGNATION. Any Director of the Corporation may resign at
any time by giving written notice to the Chairman, the President or the
Secretary of the Corporation. The resignation of any Director shall take effect
at the time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 5. VACANCIES. Except as otherwise provided in the Certificate
of Incorporation, newly created directorships resulting from an increase in the
number of Directors and vacancies occurring in the Board of Directors for any
reason, including the removal of a Director, may be filled by a majority vote of
the remaining directors then if office. A Director elected to fill a vacancy,
unless elected by the Shareholders, shall be elected to hold office until the
next meeting of Shareholders at which the election of Directors is in the
regular order of business, and until his successor has been elected and
qualified.
Section 6. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without notice immediately after, and at the same place as, the
annual meeting of Shareholders. The Board of Directors may provide, by
resolution, the time and place, either within or without the State of New York,
for the holding of additional regular meetings thereof upon notice specified in
such resolution.
Section 7. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the Chairman, the President or any two
Directors. The persons authorized to call such special meetings may fix any
place, either within or without the State of New York, as the place for holding
any such special meeting.
Section 8. NOTICES FOR SPECIAL MEETINGS. Written notice of any special
meeting of the Board of Directors shall be given at least one day in advance of
the day on which such special meeting shall be held. Any such notice may be
personally delivered, transmitted by telex, telegram or telecopy, or mailed to
each Director at his business address, postage prepaid. Any such notice
personally delivered shall be effective upon delivery. Any such notice
transmitted by telex, telegram or telecopy shall be effective one business day
after mailing. Any such notice shall state the place, date and hour of the
meeting and indicate that it is being issued by or at the direction of the
person calling the meeting. Neither the business to be transacted at, nor the
purpose of, any such special meeting need be specified in such notice.
Section 9. QUORUM. A quorum shall consist of a majority of the
Directors then in office.
Section 10. MANNER OF ACTING. The vote of the majority of the Directors
present at a meeting of the Board of Directors at the time of the vote, if a
quorum is present at such time, shall be the act of the Board of Directors.
Resolutions so adopted shall be filed with the minutes of the proceedings of the
Board or committee.
Section 11. MEETING BY TELEPHONE CONFERENCE. One or more members of the
Board of Directors may participate in a meeting of the Board of Directors by
means of a conference telephone or similar communications equipment that allows
all persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
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Section 12. ACTION BY WRITTEN CONSENT. Any action required or permitted
to be taken by the Board of Directors or any committee thereof may be taken
without a meeting if all members thereof consent in writing to the adoption of a
resolution authorizing the action. Resolutions so adopted shall be filed with
the minutes of the proceedings of the Board of Directors or any such committee.
Section 13. COMPENSATION. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as Director. No such
payment shall preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
ARTICLE IV
COMMITTEES
Section 1. EXECUTIVE COMMITTEE. The Board of Directors may, by
resolution adopted by a majority of the entire Board of Directors, designate an
Executive Committee consisting of three or more Directors, which Committee shall
have and may exercise, when the Board is not in session, the power of the Board
of Directors in the management of the business and affairs of the Corporation,
but the Executive Committee shall not have the power to submit to the
Shareholders any action which requires Shareholders' approval, fill vacancies in
the Board of Directors or any committee thereof, fix compensation of Directors
or committee members, amend or repeal these Bylaws or adopt new bylaws, or amend
or repeal any resolution of the Board which by its terms shall not be so
amendable or repealable.
Section 2. OTHER COMMITTEES. The Board of Directors may establish such
other committees having such duties and powers as the Board of Directors may
deem appropriate, but in no event shall any such committee have any of the
powers which may not be granted to the Executive Committee.
Section 3. MEETING BY TELEPHONE CONFERENCE. One or more members of any
committee may participate in a meeting of such committee by means of a
conference telephone or similar communications equipment that allows all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
Section 4. ADMINISTRATIVE MATTERS. Each committee may make rules for
the conduct of its business and may appoint such committees and assistants as it
shall from time to time deem necessary. A majority of the members of each
committee shall constitute a quorum. Each committee shall keep written minutes
of their transactions and report such minutes to the Board of Directors at the
next regular meeting thereof.
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ARTICLE V
OFFICERS
Section 1. NUMBER. The officers of the Corporation shall be a Chairman,
a Vice Chairman, a President, one or more Managing Directors, one or more Vice
Presidents, a Secretary and a Treasurer, each of whom shall be elected by the
Board of Directors. The offices of the Chairman and Vice Chairman may be vacant.
Such other officers and assistant officers as may be deemed necessary may be
elected or appointed by the Board of Directors. Any two or more offices may be
held by the same person except the offices of President and Secretary; provided,
however, that if all of the issued and outstanding stock is held by one person,
that person may hold all or any combination of offices.
Section 2. ELECTION AND TERM OF OFFICE. The officers of the Corporation
to be elected annually by the Board of Directors shall be elected at the first
regular meeting of the Board of Directors held after each annual meeting of the
Shareholders. If the election shall not be held at such meeting, such election
shall be held as soon thereafter as practicable. Each officer shall hold office
until his successor shall have been duly elected and shall have qualified or
until his death or until he shall resign or shall have been removed in the
manner hereinafter provided.
Section 3. RESIGNATIONS. Any officer may resign at any time by giving
written notice of his or her resignation to the Board of Directors, or to
another officer of the Corporation, provided that such other officer is the
Chairman, the President or the Secretary of the Corporation. Subject to the
contractual obligations of the person so resigning, any such resignation shall
take effect at the time of the delivery of such notice.
Section 4. REMOVAL. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors with or without
cause, but any such removal shall be without prejudice to the contract rights,
if any, of the person so removed.
Section 5. VACANCIES. A vacancy in any office, because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 6. CHAIRMAN. The Chairman shall preside at all meetings of the
Board of Directors and shall have and perform such other duties as from time to
time may be assigned by the Board of Directors. The Chairman may execute, with
or without the Secretary, an Assistant Secretary or another proper officer of
the Corporation thereunto authorized by the Board of Directors, certificates for
shares of the Corporation, deeds, mortgages, bonds, contracts or other
instruments which the Board of Directors has authorized to be executed, except
in cases where the execution thereof shall be expressly delegated by the Board
of Directors or by these Bylaws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise executed.
Section 7. VICE CHAIRMAN. The Vice Chairman shall, in the absence of
the Chairman, or in the event of the Chairman's death, disability or refusal to
act, preside at all meetings of the Shareholders and the Board of Directors. The
Vice Chairman shall perform such other duties as from time to time may be
assigned by these Bylaws or by the Board of Directors.
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Section 8. PRESIDENT. The President, unless the Board of Directors
specifically determines otherwise, shall be the Chief Executive Officer of the
Corporation and, subject to the control of the Board of Directors, shall in
general supervise and control all of the business and affairs of the
Corporation. The President shall, in the absence of the Chairman and the Vice
Chairman, or in the event of their death, inability or refusal to act, preside
at all meetings of the Shareholders and the Board of Directors. The President
may execute, with or without the Secretary, an Assistant Secretary or another
proper officer of the Corporation thereunto authorized by the Board of
Directors, certificates for shares of the Corporation, deeds, mortgages, bonds,
contracts or other instruments which the Board of Directors has authorized to be
executed, except in cases where the execution thereof shall be expressly
delegated by the Board of Directors or by these Bylaws to some other officer or
agent of the Corporation, or shall be required by law to be otherwise executed.
The President shall perform such other duties as from time to time may be
assigned by these Bylaws or by the Board of Directors.
Section 9. MANAGING DIRECTORS. The Managing Directors shall perform
such duties as from time to time may be assigned by these Bylaws or by the Board
of Directors, the Chairman or the President of the Corporation. Any Managing
Director may be assigned the title and duties of Chief Operating Officer by the
Board of Directors or the President. The Managing Directors may execute, with or
without the Secretary, an Assistant Secretary or another proper officer of the
Corporation thereunto authorized by the Board of Directors, any contracts or
other instruments which the Board of Directors has authorized to be executed,
except in cases where the execution thereof shall be expressly delegated by the
Board of Directors or by these Bylaws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise executed.
Section 10. VICE PRESIDENTS. The Vice Presidents shall perform such
duties as from time to time may be assigned by these Bylaws or by the Board of
Directors, the Chairman or the President of the Corporation.
Section 11. THE SECRETARY. The Secretary shall:
(a) keep the minutes of the meetings of the Shareholders and
the Board of Directors in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of
the Corporation and see that the seal of the Corporation is affixed to
all documents the execution of which on behalf of the Corporation under
its seal is duly authorized;
(d) keep a registration of the post office address of each
Shareholder which has been furnished to the Secretary by such
Shareholder;
(e) execute with any other duly authorized officer of the
Corporation, certificates for shares of the Corporation, deeds,
mortgages, bonds, contracts or other instruments which
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the Board of Directors has authorized to be executed, except in cases
where the execution thereof shall be expressly delegated by the Board
of Directors or by these Bylaws to some other officer or agent of the
Corporation, or shall be required by law to be otherwise executed;
(f) have general charge of the stock transfer books of the
Corporation; and
(g) in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned by
these Bylaws or by the Board of Directors, the Chairman or the
President of the Corporation.
Section 12. THE TREASURER. The Treasurer shall have charge and custody
of and be responsible for all funds and securities of the Corporation, receive
and give receipts of moneys due and payable to the Corporation, and deposit all
such moneys in the name of the Corporation in such banks, trust companies or
other depositories as shall be selected by the Corporation. The Treasurer shall
also perform all other duties incident to the office of the Treasurer and such
other duties as from time to time may be assigned by these Bylaws or by the
Board of Directors, the Chairman or the President of the Corporation. If
required by the Board of Directors, the Treasurer shall give a bond for the
faithful discharge of his or her duties in such sum and with such surety as the
Board of Directors shall determine.
Section 13. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
Assistant Secretaries and Assistant Treasurers may execute, with any duly
authorized officer of the Corporation, certificates for shares of the
Corporation, deeds, mortgages, bonds, contracts or other instruments which the
Board of Directors has authorized to be executed, except in cases where the
execution thereof shall be expressly delegated by the Board of Directors or by
these Bylaws to some other officer or agent of the Corporation, or shall be
required by law to be otherwise executed. The Assistant Secretaries and
Assistant Treasurers shall also perform such other duties as shall be assigned
by the Board of Directors or any duly authorized officer of the Corporation, and
in the absence of the Secretary or Treasurer, respectively, shall have all of
the powers and duties of the Secretary and Treasurer, respectively. The
Assistant Treasurers shall, if required by the Board of Directors, give bonds
for the faithful discharge of their duties in such sums and with such sureties
as the Board of Directors shall determine.
Section 14. SALARIES. Except for any employees of the Corporation whose
salary may be fixed in an employment agreement, the salaries of the officers
shall be fixed from time to time by the Board of Directors or a compensation
committee thereof. No officer shall be prevented from receiving such salary by
reason of the fact that he or she is also a Director of the Corporation.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
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Section 2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such authority
may be general or confined to specific instances.
Section 3. CHECKS, DRAFTS. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation, shall be signed by such officer or officers, agent or agents of
the Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
Section 4. DEPOSITS. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the Chairman or the President or
any Managing Director of the Corporation and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer of the Corporation. When
such a certificate is countersigned by a transfer agent or registered by a
registrar, the signatures of such officers may be facsimile. All certificates
for shares shall be consecutively numbered or otherwise identified. Each
certificate shall state upon the face thereof that the Corporation is formed
under the laws of the State of New York, the name of the person or persons to
whom it is issued and the number of shares it represents. All certificates
surrendered to the Corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued therefor upon such
terms and indemnity to the Corporation as the Board of Directors may prescribe.
Section 2. TRANSFER OF SHARES. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the Corporation,
and on surrender for cancellation of the certificate for such shares. The person
in whose name shares are registered on the books of the Corporation shall be
deemed by the Corporation to be the owner thereof for all purposes.
Section 3. RECORD OWNER. The Corporation shall keep at its principal
office, or at the office of its transfer agent or registrar in the State of New
York, a record containing the names and addresses of all Shareholders, the
number of shares held by each and the dates when they respectively became the
owners of record thereof. The Corporation shall be entitled to treat the holder
of record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any
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other person, whether or not it shall have express or other notice thereof,
unless the laws of the State of New York expressly provide otherwise.
ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its Certificate of Incorporation.
ARTICLE IX
SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation,
the state of incorporation and the words "Corporate Seal."
ARTICLE X
WAIVER OF NOTICE
Whenever any notice is required to be given to any Shareholder or
Director of the Corporation, a waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after the meeting shall be
deemed equivalent to the giving of such notice. The attendance of any
Shareholder at a meeting, in person or by proxy, without protesting, prior to
the conclusion of the meeting, the lack of notice of such meeting, shall
constitute a waiver of notice by him. The attendance of any Director at a
meeting without protesting, prior thereto or at its commencement, the lack of
notice to him shall constitute a waiver of notice.
ARTICLE XI
INDEMNIFICATION AND INSURANCE
Section 1. INDEMNIFICATION.
(a) The Corporation shall indemnify any person made, or
threatened to be made, a party to an action or proceeding (including,
without limitation, one by or in the right of the Corporation to
procure a judgment in its favor), whether civil or criminal, including
an action by or in the right of any other Corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, which any director or
officer of the Corporation served in any capacity at the request of the
Corporation, by reason of the fact that he, his testator or intestate,
was a director or officer of the Corporation, or served such other
corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise at the request of the Corporation in any capacity,
against judgments, fines,
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amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred as a result of such
action or proceeding, or any appeal therein, provided that no
indemnification may be made to or on behalf of such person if (i) his
acts were committed in bad faith or were the result of his active and
deliberate dishonesty and were material to such action or proceedings
or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
(b) The termination of any such civil or criminal action or
proceeding by judgment, settlement, conviction or upon a plea of NOLO
CONTENDERE, or its equivalent, shall not in itself create a presumption
that any such person did not act in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit
plan or other enterprise, not opposed to, the best interests of the
Corporation or that he had reasonable cause to believe that his conduct
was unlawful.
Section 2. OTHER INDEMNIFICATION. The Corporation may, to the fullest
extent permitted by law, indemnify or advance the expenses of any other person
including agents and employees to whom the Corporation is permitted by law to
provide indemnification or advancement of expenses.
Section 3. PAYMENT OF EXPENSES IN ADVANCE. To the fullest extent
permitted by the New York Business Corporation Law, the Corporation will advance
to any person who may be entitled to indemnification under Sections 1 or 2 sums
with which to pay expenses incurred by that person in defending against the
claims, actions or proceedings for which such person may become entitled to
indemnification, upon receipt of an undertaking by or on behalf of such person
to repay the sums which are advanced if it is ultimately determined that such
person is not entitled to indemnification under Sections 1 or 2 or to the extent
the sums which are advanced exceed the indemnification to which such person is
entitled.
Section 4. ENFORCEMENT, DEFENSES. The right to indemnification or
advancement of expenses granted by this Article shall be enforceable by the
person in any court of competent jurisdiction if the Corporation denies such
request, in whole or in part, or if no disposition thereof is made within 60
days. Such person's expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for the
advancement of expenses under Section 3 of this Article where the required
undertaking has been received by the Corporation) that the claimant has
conducted himself in a manner which would preclude the Corporation from
indemnifying him pursuant to Sections 1 or 2 of this Article, but the burden of
proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, its independent legal counsel,
and its Shareholders) to have made a determination that indemnification of the
claimant is proper in the circumstances, nor the fact that there has been an
actual determination by the Corporation (including its Board of Directors, its
independent legal counsel, and its Shareholders) that indemnification of the
claimant is not proper in the circumstances shall be a defense to the action or
create a presumption that the claimant is not entitled to indemnification.
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Section 5. SURVIVAL: SAVINGS CLAUSE; PRESERVATION OF OTHER RIGHTS.
(a) The foregoing indemnification provisions shall be deemed
to be a contract between the Corporation and each person who serves in
such capacity at any time while these provisions are in effect, and any
repeal or modification of the New York Business Corporation Law shall
not affect any right or obligation then existing with respect to any
state of facts then or previously existing or any action or proceeding
previously or thereafter brought or threatened based in whole or in
part upon any such state of facts, except as provided by law. Such a
contract right may not be modified retroactively without the consent of
such person, except as provided by law.
(b) If this Article or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each person entitled to
indemnification hereunder against judgments, fines, amounts paid in
settlement and expenses (including attorneys' fees) incurred in
connection with any actual or threatened action or proceeding, whether
civil or criminal, including any actual or threatened action by or in
the right of the Corporation, or any appeal therein, to the full extent
permitted by any applicable portion of this Article that shall not have
been invalidated and to the full extent permitted by applicable law.
(c) The indemnification provided by this Article shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled under any other bylaw, agreement, vote of shareholders or
directors or otherwise, both as to action in his official capacity and
as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators
of such a person. The Corporation is hereby authorized to provide
further indemnification if it deems advisable by resolution of
Shareholders or directors, by amendment of these Bylaws or by
agreement.
Section 6. NEW YORK BUSINESS CORPORATION LAW. All references to the New
York Business Corporation Law in this Article XI shall mean such Law as it may
from time to time be amended.
Section 7. INSURANCE. The Corporation may purchase and maintain
insurance to indemnify officers, directors and others against costs or
liabilities incurred by them in connection with the performance of their duties
and any activities undertaken by them for, or at the request of, the
Corporation, to the fullest extent permitted by the New York Business
Corporation Law.
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ARTICLE XII
AMENDMENTS
These Bylaws may be amended or repealed only by action of the Board of
Directors or by the affirmative vote of the holders of a majority of the
outstanding shares of the Corporation entitled to vote.
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Exhibit 5.1
February 23, 2000
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) $92,750,021 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 by Credit Suisse Financial
Products.
The securities referred to in the foregoing clause (a), when added to
$157,249,979 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 $250,000,000 of such registered
securities. Pre-Effective Amendment No. 1 to the Registration Statement
constitutes Post-Effective Amendment No. 2 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 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.
<PAGE>
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 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.
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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
<PAGE>
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) $250,000,000 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 by Credit Suisse Financial Products 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
February 23, 2000
