<PAGE>
As filed with the Securities and Exchange Commission on February 9, 1996.
Registration No. [____________]
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PS GROUP HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 7359 33-0692068
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
4370 La Jolla Village Drive, Suite 1050
San Diego, CA 92122
(619) 642-2999
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
JOHANNA UNGER
Vice President, Controller and Secretary
PS Group Holdings, Inc.
4370 La Jolla Village Drive, Suite 1050
San Diego, CA 92122
(619) 642-2999
(Name, address including zip code, and telephone number, including area code, of
agent for service)
COPY TO:
HENRY LESSER, ESQ.
Irell & Manella
Suite 3300, 333 South Hope Street
Los Angeles, California 90071
(213) 620-1555
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
consummation of the reorganization described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================================
Title of Each Class Amount Proposed Maximum Proposed Maximum Amount of
of Securities to be to be Offering Price Aggregate Offering Registration
Registered Registered Per Unit Price Fee
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.00
per value 6,068,313 N/A N/A $20,795/*/
================================================================================================
</TABLE>
/*/ Registration fee was determined pursuant to rule 457(f)(1) under the
Securities Act of 1933 by reference to the market value as of February 7,
1996 (as determined pursuant to Rule 457(c) under the Securities Act of
1933) of the common stock of PS Group, Inc., which is proposed to be
received by the Registrant in exchange for the securities registered on this
Form.
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>
PS GROUP HOLDINGS, INC.
Cross Reference Sheet Pursuant to Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Item of Form S-4 Location in the Prospectus
---------------- --------------------------
<S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................... Forepart of Registration Statement; Outside
Front Cover Page of Prospectus/Proxy Statement
2. Inside Front and Outside Back Cover pages of
Prospectus....................................... Forepart of Prospectus/Proxy Statement;
Available Information; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and other Information.................... Summary; Forepart of Prospectus/Proxy Statement;
Special Considerations
4. Terms of the Transaction......................... Summary; Forepart of Prospectus/Proxy Statement;
Special Considerations; The Annual Meeting; The
Reorganization
5. Pro Forma Financial Information.................. Not applicable
6. Material Contacts with the Company Being
Acquired......................................... Not applicable
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to Be
Underwriters..................................... Not applicable
8. Interests of Named Experts and Counsel........... Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities...................................... Not applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants..... Not applicable
11. Incorporation of Certain Information by
Reference....................................... Not applicable
12. Information with Respect to S-2 or S-3
Registrants..................................... Not applicable
13. Incorporation of Certain Information by
Reference....................................... Not applicable
</TABLE>
<PAGE>
<TABLE>
<S> <C>
14. Information with Respect to Registrants Other
Than S-3 or S-2 Registrants..................... Not applicable
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
15. Information with Respect to S-3 Companies....... Not applicable
16. Information with Respect to S-2 or S-3
Companies....................................... Not applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies....................... Not applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited.............. Forepart of Prospectus/Proxy Statement; Summary;
The Annual Meeting; Election of Directors;
Executive Compensation; Beneficial Ownership of
Directors and Officers; Beneficial Ownership of
Principal Stockholders; The Reorganization
19. Information if Proxies, Consents or
Authorizations are not to be Solicited
or in an Exchange Offer......................... Not applicable
</TABLE>
(ii)
<PAGE>
PRELIMINARY COPY, SUBJECT TO COMPLETION
PS GROUP, INC.
[____________], 1996
Dear Stockholder:
Enclosed is a Notice of Annual Meeting, a Prospectus/Proxy Statement and a
proxy card for the 1996 Annual Meeting of Stockholders of PS Group, Inc. (the
"Company"). At the Annual Meeting you will be asked to elect two directors
nominated by the Board, with terms expiring in 1999, and to consider a
stockholder proposal (if properly presented) which your Board recommends your
vote against. In addition, you will also be asked to consider and vote upon an
Agreement and Plan of Reorganization pursuant to which the Company would become
a wholly-owned subsidiary of PS Group Holdings, Inc. ("Holdings"), a newly-
formed company organized under the laws of the State of Delaware which is
currently a wholly-owned subsidiary of the Company (the "Reorganization"). Upon
consummation of the Reorganization, each outstanding share of the Company's
common stock will be converted into one share of common stock of Holdings and
the Company will be a wholly-owned subsidiary of Holdings.
The sole purpose of the Reorganization is to help preserve the Company's
substantial net operating loss carryforwards, investment tax credit
carryforwards and other tax benefits (the "Tax Benefits") for use in offsetting
future taxable income. As of December 31, 1994, the last year for which the
Company has filed tax returns, the Company believes it had an $83.4 million
federal net operating loss carryforward and a $12.5 million federal investment
tax credit carryforward, in addition to other state and federal tax benefits.
Assuming the Company has sufficient future taxable income to use all of the Tax
Benefits, the Tax Benefits could be of great value to the Company.
As the Company has previously indicated to stockholders, certain transfers of
shares of the Company's common stock could result in the occurrence of an
"ownership change" for income tax purposes, which would limit the ability of the
Company to use the Tax Benefits. The Company estimates that, based on the Tax
Benefits as of December 31, 1994 summarized above, if an "ownership change" had
occurred in February, 1996, the Company's utilization of its Tax Benefits would
be limited to a maximum potential amount of approximately $3.3 million a year
for 15 years, or an aggregate maximum potential amount of approximately $50
million (again, assuming that the Company would otherwise have income against
which the reduced amount of Tax Benefits could be utilized). In addition, if an
"ownership change" were to occur, the resulting limitation on the Company's
ability to use the Tax Benefits would result in a significant increase in the
net deferred tax liability shown on the Company's financial statements, which
would cause a corresponding reduction in the Company's net income and
stockholders' equity on its financial statements in the year of an ownership
change.
The Company currently does not generally have the ability to prevent transfers
of its common stock that could result in an "ownership change." The
Reorganization will help decrease the risk that an "ownership change" will occur
by including certain transfer restrictions in Holdings' Restated Certificate of
Incorporation and certain legends on the certificates representing the common
stock of Holdings, which will be issued to stockholders in exchange for their
common stock in the Company on a share-for-share basis. A number of other
publicly-traded companies, including Navistar International Corp., The Hallwood
Group Incorporated, Foodbrands America, Inc. and ERC Industries, Inc. have
enacted similar transfer restrictions in order to preserve tax benefits.
The proposed transfer restrictions are intended to bind all holders of shares
of the Company's common stock outstanding at the effective time of the
Reorganization (the "Effective Time") and will apply both to shares of Holdings
common stock issued in exchange for those shares of Company common stock
outstanding at such effective time and to shares of Holdings common stock issued
thereafter. Transfers of shares of Company common stock occurring prior
<PAGE>
to the effective time of the Reorganization (the "Effective Time") will not be
restricted and all holders of Company common stock as of the Effective Time will
receive shares of Holdings common stock in exchange for their Company shares.
However, if the Reorganization is consummated, subsequent transfers of those
Holdings shares will be subject to the transfer restrictions. Accordingly,
persons who become "5-percent shareholders" of the Company (for purposes of the
applicable federal income tax regulations relating to "ownership changes") on or
after February __, 1996 and prior to the consummation of the Reorganization will
be prohibited, unless expressly permitted by the Board of Directors of Holdings,
from disposing of their Holdings shares while the transfer restrictions are in
effect.
In contrast this prohibition will not apply to certain transfers by
"Preexisting 5-Percent Shareholders." This term applies to specified persons who
had made Securities and Exchange Commission filings reporting their ownership of
more than 5% of PS Group common stock as of February __, 1996 (the day before we
first publicly announced our proposal for the Reorganization) or who establish
to the satisfaction of the Holdings board that they were the direct or indirect
owners of 5% or more of the Company's common stock (for purposes of the
applicable federal income tax regulations) on February __, 1996. These
"Preexisting 5-Percent Shareholders" will be permitted to transfer those shares
of Holdings that are issued in the Reorganization in exchange for the shares of
the Company they owned on February __, 1996 provided, in general, such transfers
do not result in a new holder of 5% of the stock or increase the ownership
percentage of an existing holder of 5%. Transfers of interests in these
"Preexisting 5-Percent Shareholders" (as distinct from transfers of shares of
Holdings owned by them after the Effective Time) will not be restricted.
Since the sole purpose of the Reorganization is to implement the transfer
restrictions described above, there will be no change in the operations of the
Company as a result of the Reorganization. Immediately following the
Reorganization, the sole activity of Holdings will be to hold 100% of the stock
of the Company. The consolidated assets, liabilities and stockholders' equity
of Holdings following the Reorganization will be the same as the consolidated
assets, liabilities and stockholders' equity of the Company immediately prior to
the Reorganization. The directors and officers of Holdings following the
Reorganization will be identical to the directors and officers of the Company
prior to the Reorganization. Except for the transfer restrictions, the terms of
the Holdings shares will be substantially identical to the terms of the Company
shares for which they are exchanged and will, as Company common stock presently
is, be listed on the New York and Pacific Stock Exchanges.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
REORGANIZATION PROPOSAL AND RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS PROPOSAL.
The accompanying Prospectus/Proxy Statement provides detailed information
about the Reorganization, including a description of the effects of the
Reorganization on the rights of stockholders. Also enclosed is an Annual Report
to Stockholders for the year ended December 31, 1995. Please give these
documents your careful attention.
In view of the importance of the action to be taken and to save your company
the cost of further proxy solicitation, we urge you to complete, sign, and date
your proxy and return it promptly in the enclosed envelope, whether or not you
plan to attend the Annual Meeting. If you attend the Annual Meeting, you may
vote in person even if you have previously mailed your proxy.
Sincerely,
[Signature]
Charles E. Rickershauser, Jr.
Chairman of the Board and Chief Executive Officer
<PAGE>
PS GROUP, INC.
4370 LA JOLLA VILLAGE DRIVE, SUITE 1050
SAN DIEGO, CA 92122
(619) 642-2999
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON [___________], 1996
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of PS Group,
Inc. (the "Company") will be held at [_________________________________],
located at [__________________], Los Angeles, California, on [____________],
1996 at [_________], Pacific Time, for the following purposes:
1. To elect two directors, with terms expiring in 1999;
2. To consider a proposal to adopt an Agreement and Plan of Reorganization
pursuant to which (a) the Company will, subject to necessary approvals,
become a wholly-owned subsidiary of a newly-formed Delaware corporation
known as "PS Group Holdings, Inc." ("Holdings") and (b) each outstanding
share of common stock of the Company will become, by operation of law, one
share of common stock of Holdings (the "Reorganization"). The sole purpose
of the Reorganization is to help preserve the Company's substantial tax net
operating loss carryforwards, investment tax credit carryforwards and other
tax benefits for use in offsetting future taxable income. Certain transfers
of shares of the Company's common stock could result in the occurrence of an
"ownership change" for income tax purposes, which would severely limit the
Company's ability to use these tax benefits. The Company currently does not
generally have the ability to prevent transfers of its common stock that
could result in an "ownership change." The Reorganization will help
decrease the risk that an "ownership change" will occur by including certain
transfer restrictions in Holdings' Restated Certificate of Incorporation and
certain legends on the certificates representing the common stock of
Holdings, which will be issued to stockholders in exchange for their common
stock in the Company on a share-for-share basis. The directors and officers
of Holdings following the Reorganization will be identical to the directors
and officers of the Company prior to the Reorganization. Immediately
following the Reorganization, Holdings' Restated Certificate of
Incorporation will be substantially identical to the Company's Certificate
of Incorporation immediately prior to the Reorganization, except for the
Transfer Restrictions, and Holdings' By-laws will, with one non-substantive
exception, be substantially identical to the Company's By-laws. Immediately
following the Reorganization, Holdings will have the same consolidated
assets, liabilities and stockholders' equity as the Company immediately
prior to the Reorganization. The authorized equity capital of Holdings
following the Reorganization will be the same as the authorized equity
capital of the Company immediately prior to the Reorganization;
3. To consider and act upon a stockholder proposal, if properly presented
at the meeting by the proposing stockholder or his representative; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors of the Company has fixed [__________], 1996 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting. Only those stockholders of record as of the close
of business on that date will be entitled to vote at the Annual Meeting or at
any adjournment or adjournments thereof.
<PAGE>
PLEASE COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING
RETURN ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF YOU LATER DESIRE TO REVOKE OR CHANGE YOUR PROXY FOR ANY REASON, YOU
MAY DO SO AT ANY TIME BEFORE THE VOTING BY DELIVERING TO THE COMPANY A WRITTEN
NOTICE OF REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE OR BY
ATTENDING THE ANNUAL MEETING AND VOTING IN PERSON.
PLEASE DO NOT SEND ANY CERTIFICATES FOR YOUR STOCK AT THIS TIME. IF THE
REORGANIZATION IS CONSUMMATED, YOU WILL RECEIVE INSTRUCTIONS REGARDING THE
SURRENDER OF YOUR STOCK CERTIFICATES.
By Order of the Board of Directors
[Signature]
Johanna Unger
Secretary
[________________], 1996
San Diego, California
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 9, 1996
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any state.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
6,068,313 Shares
PS GROUP HOLDINGS, INC.
Common Stock
PROSPECTUS
_______________
PS GROUP, INC.
PROXY STATEMENT
This Prospectus/Proxy Statement is being furnished by PS Group, Inc. (the
"Company") to the holders of its common stock, $1.00 par value ("Company Common
Stock"), in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Company Board") for use at the Annual Meeting of
Stockholders to be held at [____________________________], located at
[_________________], Los Angeles, California, on [__________], 1996, at
[_________], Pacific Time, and at any adjournment or adjournments thereof (the
"Annual Meeting").
At the Annual Meeting, the holders of record of Company Common Stock, as of
the close of business on [__________], 1996 (the "Record Date"), will be asked
to elect two directors, with terms expiring in 1999. In addition, the
stockholders will vote on a proposal to approve an Agreement and Plan of
Reorganization dated as of [__________], 1996 among the Company, PS Group
Holdings, Inc., a newly-formed Delaware corporation which is currently a wholly-
owned subsidiary of the Company ("Holdings"), and PSG Merger Subsidiary, Inc. a
newly-formed Delaware corporation which is currently a wholly-owned subsidiary
of Holdings ("Merger Sub") (the "Reorganization Agreement"), pursuant to which
Merger Sub will merge with and into the Company, with the Company being the
surviving corporation (the "Reorganization"). As a result of the
Reorganization, the Company will become a wholly-owned subsidiary of Holdings.
This Prospectus/Proxy Statement also constitutes the prospectus of Holdings
relating to shares of its common stock, $1.00 par value per share ("Holdings
Common Stock"), to be issued in connection with the Reorganization. Upon
consummation of the Reorganization, each outstanding share of Company Common
Stock will be converted into the right to receive one share of Holdings Common
Stock, and each outstanding option to acquire Company Common Stock will become
an option to acquire an equivalent number of shares of Holdings Common Stock.
The relative powers, designations, preferences, rights and qualifications of
Holdings Common Stock will be substantially identical in all material respects
to the relative powers designations, preferences, rights and qualifications of
the Company Common Stock, except as described in this Prospectus/Proxy
Statement.
The sole purpose of the Reorganization is to help preserve the Company's
substantial tax net operating loss carryforwards, investment tax credit
carryforwards and other tax benefits (collectively, the "Tax Benefits") for use
in offsetting future taxable income. The Reorganization will facilitate the
imposition of certain transfer restrictions in Holdings' Restated Certificate of
Incorporation (the "Holdings Certificate of Incorporation") and certain legends
on the stock certificates representing Holdings Common Stock (collectively, the
"Transfer Restrictions"), which should decrease the risk that an "ownership
change" will occur for income tax purposes. See, generally, "THE
REORGANIZATION."
Immediately following the Reorganization, the directors and executive
officers of Holdings will be the directors and executive officers, respectively,
of the Company immediately prior to the Reorganization. Immediately following
the Reorganization, the Holdings Certificate of Incorporation will be
substantially identical to the Company's
<PAGE>
Certificate of Incorporation (the "Company's Certificate of Incorporation")
immediately prior to the Reorganization, except for the Transfer Restrictions,
and Holdings' By-laws (the "Holdings By-laws") will, with one non-substantive
exception, be substantially identical to the Company's By-laws (the "Company's
By-laws"). Immediately following the Reorganization, Holdings will have the
same consolidated assets, liabilities and stockholders' equity as the Company
immediately prior to the Reorganization. The authorized equity capital of
Holdings following the Reorganization will be the same as the authorized equity
capital of the Company immediately prior to the Reorganization.
Holdings has filed a Registration Statement on Form S-4 under the
Securities Act of 1933, as amended (the "Securities Act"), covering up to
6,068,313 shares of Holdings Common Stock to be issued to the Company's
stockholders in exchange for their Company Common Stock pursuant to the
Reorganization (including the exhibits and any amendments thereto, the
"Registration Statement"). This Prospectus/Proxy Statement constitutes the
Prospectus of Holdings relating to Holdings Common Stock and filed as part of
the Registration Statement. Following the Reorganization, Holdings, as the
successor to the Company, will be a reporting company under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith will file reports and other information with the Securities
and Exchange Commission (the "Commission").
Company Common Stock is listed on the New York Stock Exchange and Pacific
Stock Exchange under the symbol "PSG." Following the Reorganization, Holdings
Common Stock will be listed on the New York Stock Exchange and Pacific Stock
Exchange under the symbol "PSG" and Company Common Stock will be de-listed and
cease to trade. On [______________], 1996, the closing price of a share of
Company Common Stock on the New York Stock Exchange was $[_____].
This Prospectus/Proxy Statement and the accompanying proxy cards are first
being mailed to stockholders of the Company on or about [_________], 1996.
_______________
THE SHARES OF HOLDINGS COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE
REORGANIZATION HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
SEE "CERTAIN SPECIAL CONSIDERATIONS RELATING TO THE REORGANIZATION" FOR A
DISCUSSION OF CERTAIN FACTORS THAT STOCKHOLDERS SHOULD CONSIDER PRIOR TO
EXECUTING A PROXY OR CASTING A VOTE WITH RESPECT TO THE REORGANIZATION PROPOSAL.
THIS PROSPECTUS/PROXY STATEMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS
WITH RESPECT TO THE FINANCIAL CONDITION OF PS GROUP, INC. AND PS GROUP HOLDINGS,
INC. SUCH STATEMENTS INVOLVE RISKS AND UNCERTAINTIES INCLUDING, BUT NOT LIMITED
TO, THE AVAILABILITY OF THE TAX BENEFITS SUMMARIZED HEREIN, THE AMOUNT OF
OTHERWISE-TAXABLE INCOME AGAINST WHICH SUCH BENEFITS MAY BE OFFSET, AND THE
EFFECT OF THE PROPOSED TRANSFER RESTRICTIONS SUMMARIZED HEREIN IN REDUCING THE
RISK OF A LOSS OF SUCH TAX BENEFITS. FURTHER INFORMATION ON POTENTIAL FACTORS
WHICH COULD AFFECT THE FINANCIAL RESULTS OF PS GROUP, INC., AND, FOLLOWING THE
PROPOSED REORGANIZATION, PS GROUP HOLDINGS, INC. ARE INCLUDED IN THE COMMISSION
FILINGS OF PS GROUP, INC. REFERRED TO UNDER "AVAILABLE INFORMATION" HEREIN.
_______________
2
<PAGE>
The date of this Prospectus/Proxy Statement is [________], 1996.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective.
3
<PAGE>
TABLE OF CONTENTS
-----------------
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Page
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AVAILABLE INFORMATION...................................................... 4
SUMMARY.................................................................... 7
CERTAIN SPECIAL CONSIDERATIONS RELATING TO THE
REORGANIZATION............................................................ 10
Market Considerations............................................... 10
Continuation of Net Operating Loss Carryforwards.................... 10
Limitations on the Company's Ability to Use Tax Benefits............ 11
THE ANNUAL MEETING......................................................... 12
Matters to be Considered............................................ 12
Shares Outstanding and Entitled To Vote; Record Date................ 12
Votes Required...................................................... 12
Voting, Solicitation and Revocation of Proxies...................... 13
ELECTION OF DIRECTORS...................................................... 13
Nominees for Director............................................... 14
Certain Information Concerning Other Directors...................... 14
Information Regarding the Board of Directors and its Committees..... 15
Compensation of Directors........................................... 15
EXECUTIVE COMPENSATION..................................................... 15
Report On Executive Compensation.................................... 16
Compensation Committee Interlocks and Insider Participation......... 17
Summary Compensation Table.......................................... 17
Stock Options....................................................... 18
Retirement Benefits................................................. 18
Executive Employment Agreements..................................... 20
Stock Performance Graph............................................. 20
BENEFICIAL OWNERSHIP OF DIRECTORS AND OFFICERS............................. 21
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS............................. 22
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934........................................ 23
THE REORGANIZATION......................................................... 23
General............................................................. 23
Recommendation of the Board of Directors............................ 25
Preservation of Tax Benefits........................................ 25
Summary of Transfer Restrictions.................................... 27
Form of the Reorganization.......................................... 30
Effect of Reorganization Under the Rights Plan...................... 31
Conditions to the Reorganization and Abandonment.................... 31
Certificate of Incorporation and By-laws............................ 32
Appraisal Rights.................................................... 32
Board of Directors and Management of Holdings....................... 33
Pro Forma and Comparative Financial Statements; Accounting.......... 33
Conversion of Securities in the Reorganization...................... 34
Exchange of Certificates............................................ 34
Certain Federal Income Tax Consequences............................. 35
STOCKHOLDER PROPOSAL....................................................... 35
LEGAL MATTERS.............................................................. 37
</TABLE>
4
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<TABLE>
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Page
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<S> <C>
OTHER MATTERS............................................................ 37
Independent Auditors.............................................. 37
Stockholder Proposals............................................. 37
APPENDIX A: AGREEMENT AND PLAN OF REORGANIZATION BY AND AMONG PS
GROUP, INC., PS GROUP HOLDINGS, INC. AND PSG MERGER
SUBSIDIARY, INC. A-1
APPENDIX B: RESTATED CERTIFICATE OF INCORPORATION OF PS GROUP
HOLDINGS, INC. TO BE IN EFFECT IMMEDIATELY FOLLOWING
THE REORGANIZATION B-1
APPENDIX C: RESTATED BY-LAWS OF PS GROUP HOLDINGS, INC. TO BE IN
EFFECT IMMEDIATELY FOLLOWING THE REORGANIZATION C-1
</TABLE>
5
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR HOLDINGS. THIS PROSPECTUS/PROXY STATEMENT
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE,
ANY SECURITIES, OR SOLICITATION OF A PROXY, IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY HEREOF NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR HOLDINGS SINCE THE DATE HEREOF OR THAT
THE INFORMATION IN THIS PROSPECTUS/PROXY STATEMENT IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is (and, following the Reorganization, Holdings will be)
subject to the informational requirements of the Exchange Act, and in accordance
therewith the Company files (and, following the Reorganization, Holdings will
file) reports, proxy statements and other information with the Commission.
Reports, proxy statements and other information filed by the Company (and,
following the Reorganization, to be filed by Holdings) may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Regional
Offices of the Commission at 7 World Trade Center, Suite 1300, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such information can be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates.
Company Common Stock is traded (and, following the Reorganization,
Holdings Common Stock will be traded) on the New York Stock Exchange (the
"NYSE") and the Pacific Stock Exchange (the "PSE"). Reports and other
information concerning the Company (and, following the Reorganization,
concerning Holdings) can also be inspected at the NYSE located at 11 Wall
Street, New York, New York 10006 and at the PSE located at 301 Pine Street, San
Francisco, California 94104.
This Prospectus/Proxy Statement does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted from this Prospectus/Proxy Statement as permitted by the rules and
regulations of the Commission. For further information with respect to Holdings
and the securities offered hereby, reference is made to the Registration
Statement. Statements contained in this Prospectus/Proxy Statement as to the
contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed or incorporated by reference as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
6
<PAGE>
SUMMARY
The following is a brief summary of certain information contained elsewhere
in this Prospectus/Proxy Statement. This summary is not intended to be complete
and is qualified in its entirety by reference to the more detailed information
contained elsewhere in this Prospectus/Proxy Statement, the appendices hereto
and the documents referred to and incorporated herein, including, without
limitation, the Reorganization Agreement, and Restated Certificate of
Incorporation and By-laws of Holdings to be in effect immediately following the
Reorganization attached as appendices hereto. Capitalized terms used in this
Summary shall have the meanings given in the body of this Prospectus/Proxy
Statement.
THE ANNUAL MEETING
DATE, TIME AND PLACE OF THE ANNUAL MEETING AND RECORD DATE. The Annual
Meeting will be held at [___________________________________________] located at
[______________________________], Los Angeles, California, on [___________],
1996, at [________], Pacific Time. Company Stockholders at the close of
business on the Record Date are entitled to notice of and to vote at the Annual
Meeting.
PURPOSES OF THE ANNUAL MEETING. At the Annual Meeting, Company Stockholders
will be asked to elect two directors and consider and approve the Reorganization
and such other business as may properly come before the meeting or any
adjournment thereof.
ELECTION OF DIRECTORS
The stockholders will be asked to elect two directors of the Company, with
terms expiring in 1999. The Company Board has nominated to these positions
Charles E. Rickershauser, Jr., currently a director and Chairman of the Company
Board and Chief Executive Officer of the Company, and Donald W. Killian, Jr.,
currently a director of the Company. The affirmative vote of a plurality of
shares of the Company Common Stock represented at the Annual Meeting in person
or by proxy is required to elect any nominee for director.
REORGANIZATION
REASONS FOR THE REORGANIZATION. The sole purpose of the Reorganization is to
help preserve the Company's Tax Benefits for use in offsetting future taxable
income by decreasing the risk that an "ownership change" will occur for income
tax purposes. This would be accomplished in the Reorganization through the
adoption of restrictions on the transfer of the Holdings Common Stock. These
restrictions will be adopted by including certain Transfer Restrictions in the
Holdings Certificate of Incorporation and certain legends on the certificates
representing the Holdings Common Stock, which will be issued to Company
Stockholders in exchange for their Company Common Stock. The Company is
proposing to adopt the Transfer Restrictions by means of the Reorganization
rather than through an amendment to the Company's Certificate of Incorporation,
because under the Delaware Corporate Law, if the stockholders adopted the
Transfer Restrictions through an amendment to the Company's Certificate of
Incorporation, the Transfer Restrictions would not be effective to prevent
transfers of shares of Company Common Stock held by stockholders who do not vote
in favor of the amendment. See "THE REORGANIZATION -- Preservation of Tax
Benefits."
In general, the Transfer Restrictions will prohibit, without prior approval
of the Holdings Board, the direct or indirect sale, transfer, disposition,
purchase or acquisition of any stock of the corporation by or to any holder (a)
who beneficially owns directly or through attribution 5% or more of the stock of
Holdings (as determined under Section 382 with certain modifications), or (b)
who, upon the direct or indirect sale, transfer, disposition, purchase or
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acquisition of any shares of stock of the Holdings, would beneficially own
directly or through attribution 5% or more of the stock of Holdings (as
determined under Section 382, with certain modifications). See "THE
REORGANIZATION -- Summary of Transfer Restrictions."
In order to achieve what the Company Board believes to be a reasonable
balance between the Company's need to prevent transfers that could cause an
"ownership change" for tax purposes and the desire of Company Stockholders to be
able to transfer their shares without undue restrictions, the Transfer
Restrictions will contain exceptions permitting certain transfers by certain
pre-existing holders of 5% or more of the Company Common Stock. See "THE
REORGANIZATION -- Summary of Transfer Restrictions."
The Transfer Restrictions are scheduled to expire on the day after the 15th
anniversary of the Effective Time, unless the Holdings Board extends or
accelerates such expiration date. See "THE REORGANIZATION -- Summary of
Transfer Restrictions."
CERTAIN SPECIAL CONSIDERATIONS RELATING TO THE REORGANIZATION. See "CERTAIN
SPECIAL CONSIDERATIONS RELATING TO THE REORGANIZATION" for certain factors which
Company Stockholders should consider carefully before voting with respect to the
Reorganization.
PARTIES TO THE REORGANIZATION. The parties to the Reorganization are the
Company, Holdings and Merger Sub. The Company operates in three principal
business segments: aircraft leasing; fuel sales and distribution; and oil and
gas production and development. Holdings is a newly-formed Delaware corporation
that was formed as a direct wholly-owned subsidiary of the Company for the
purpose of becoming the parent holding company of the Company. Merger Sub is a
newly-formed Delaware corporation that was formed as a direct wholly-owned
subsidiary of Holdings for the purpose of consummating the Reorganization.
Holdings and Merger Sub have no operating history. The principal executive
offices of the Company, Holdings and Merger Sub are located at 4370 La Jolla
Village Drive, Suite 1050, San Diego, California 92122, and their telephone
number is (619) 642-2999.
STRUCTURE OF THE REORGANIZATION. Pursuant to the Reorganization Agreement
and subject to stockholder approval and to certain other conditions, Merger Sub
will merge with and into the Company, with the Company as the surviving
institution. As a result of the Reorganization, the Company will become a
wholly-owned subsidiary of Holdings. Upon consummation of the Reorganization,
each outstanding share of the Company Common Stock will be converted into the
right to receive one share of Holdings Common Stock, and each option to acquire
Company Common Stock will become an option to acquire, on identical terms, an
equivalent number of shares of Holdings Common Stock. It is presently
contemplated that the Reorganization will occur promptly following approval of
the Reorganization by the Company Stockholders at the Annual Meeting, or as soon
as practicable thereafter as the conditions to the Reorganization may be
satisfied. See "THE REORGANIZATION -- General" and "-- Form of the
Reorganization."
RECOMMENDATION OF THE BOARD OF DIRECTORS. The Company Board has unanimously
approved the Reorganization Agreement, subject to the receipt of stockholder
approval, and unanimously recommends that stockholders of the Company approve
such agreement.
REQUIRED STOCKHOLDER APPROVAL. The affirmative vote of the holders of a
majority of the issued and outstanding Company Common Stock is required to
approve the Reorganization Agreement. See "THE ANNUAL MEETING -- Votes
Required." As of January 31, 1996, directors and executive officers of the
Company as a group (7 persons) beneficially owned 341,598 shares of the Company
Common Stock (exclusive of presently exercisable stock options), which
represented 5.6% of the aggregate number of votes entitled to be cast at the
Annual Meeting. Such persons have indicated that they intend to vote all such
shares in favor of the Reorganization Agreement. No such persons will receive
any benefits pursuant to any current employment agreement or employee benefit or
stock option plan as a result of the Reorganization. See, generally, "THE
REORGANIZATION."
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APPRAISAL RIGHTS. Under the Delaware Corporate Law, stockholders of the
Company do not have any dissenters' rights with respect to the Reorganization.
See "THE REORGANIZATION -- Appraisal Rights."
MANAGEMENT OF HOLDINGS. The directors and executive officers of Holdings
consist of the same persons who currently serve as directors and executive
officers of the Company. There will be no increase in the aggregate
compensation and benefits of the officers and directors of the Company as a
result of the Reorganization. See "THE REORGANIZATION -- Board of Directors and
Management of Holdings."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. In general, the Company believes
that the stockholders of the Company will recognize neither gain nor loss for
federal income tax purposes as a result of the Reorganization. However,
Stockholders should consult their own tax advisor to determine the specific tax
consequences of the Reorganization to them. See "THE REORGANIZATION -- Certain
Federal Income Tax Consequences."
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CERTAIN SPECIAL CONSIDERATIONS RELATING TO THE REORGANIZATION
MARKET CONSIDERATIONS
If the Reorganization occurs, holders of Company Common Stock ("Company
Stockholders") of record, immediately prior to the effective time of the
Reorganization (the "Effective Time"), will receive shares of Holdings Common
Stock in exchange for their shares of Company Common Stock. Following the
Reorganization, Holdings Common Stock will be subject to the Transfer
Restrictions, which do not apply to the Company Common Stock. There can be no
assurance that the market price of Holdings Common Stock will be comparable to
the market price of the Company Common Stock, or that the market price of
Holdings Common Stock will not be adversely affected by the Transfer
Restrictions.
The Transfer Restrictions (i) may have the effect of impeding the attempt of
a person or entity to acquire a significant or controlling interest in Holdings,
(ii) may render it more difficult to effect a merger or similar transaction even
if such transaction is favored by a majority of the independent stockholders and
(iii) may serve to entrench management. See "THE REORGANIZATION -- Summary of
Transfer Restrictions." However, the purpose of the Transfer Restrictions is to
help preserve the Tax Benefits, not to have an anti-takeover effect. The
Company Board and the Board of Directors of Holdings (the "Holdings Board")
believe that the benefits of the Transfer Restrictions outweigh any anti-
takeover effect that they may have. Any anti-takeover effect of the Transfer
Restrictions will end when the Transfer Restrictions terminate, which will occur
on the earlier of: (i) the day after the 15th anniversary of the Effective
Time; (ii) the repeal of Section 382 of the Internal Revenue Code of 1986, if
the Holdings Board determines that the Transfer Restrictions are no longer
necessary; or (iii) the beginning of a taxable year of Holdings to which the
Holdings Board determines that no Tax Benefits otherwise available to Holdings
may be carried forward. In addition, the Holdings Board, under certain
circumstances, may modify certain terms of the Transfer Restrictions including
amendments extending or accelerating the termination date of the Transfer
Restrictions. See "THE REORGANIZATION -- Summary of Transfer Restrictions."
CONTINUATION OF NET OPERATING LOSS CARRYFORWARDS
In order to achieve what the Company Board believes to be a reasonable
balance between the Company's need to prevent transfers that could cause an
"ownership change" for income tax purposes and the desire of Company
Stockholders to be able to transfer their shares without undue restrictions, the
Transfer Restrictions do not purport to restrict every possible transaction that
could cause an "ownership change." Among other things, the Transfer
Restrictions will permit certain transfers by "Preexisting 5-Percent
Shareholders" and transfers of interests in those shareholders, which transfers
could under certain circumstances give rise to an "ownership change" (in
contrast, persons who became "5-percent shareholders" of the Company, for
purposes of the applicable federal income tax regulations, on or after February
__, 1996 will not be "Preexisting 5-Percent Shareholders" and the Transfer
Restrictions will prohibit, unless expressly permitted by the Holdings Board,
dispositions by such persons of the shares of Holdings Common Stock issued in
the Reorganization in exchange for their shares of Company Common Stock). Also,
the Transfer Restrictions give authority to the Holdings Board to waive the
Transfer Restrictions with respect to certain transactions that would otherwise
be prohibited. See "THE REORGANIZATION --Summary of Transfer Restrictions."
In addition, while the Company believes that the Transfer Restrictions will
be enforceable, if the binding nature of the Transfer Restrictions were
challenged there is no assurance that a court would hold that the Transfer
Restrictions are enforceable. Furthermore, while the Company Board believes
that the remedies provided in the Transfer Restrictions are generally
sufficient, it is possible that the relevant tax authorities will take the
position that the Transfer Restrictions do not provide adequate remedies for tax
purposes with respect to every transaction that the Transfer Restrictions
purport to prevent. Therefore, even with the Transfer Restrictions in place, it
10
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is possible that transactions could occur that would severely limit Holdings'
ability to utilize the Tax Benefits. In addition, there can be no assurance that
legislation will not be adopted that would limit Holdings' ability to utilize
the Tax Benefits in future periods. However, the Company is not aware of any
proposed legislation for changes in the tax laws that could materially impact
the ability of Holdings to utilize the Tax Benefits as described below.
LIMITATIONS ON THE COMPANY'S ABILITY TO USE TAX BENEFITS
The extent of the actual future utilization of the Company's Tax Benefits is
subject to inherent uncertainty inasmuch as the utilization depends on the
amount of otherwise-taxable income against which the Company will be able to
utilize the Tax Benefits in future years. Accordingly, even though the
Reorganization will reduce the risk that an "ownership change" will occur that
could limit the Company's ability to use the Tax Benefits, there can be no
assurance that the Company will have sufficient taxable income in future years
to actually use the Tax Benefits before they would otherwise expire.
Nevertheless, if the Reorganization is consummated the Transfer Restrictions
will remain in effect for at least fifteen years unless the Holdings Board
determines that they are no longer necessary to preserve the Tax Benefits. See
"THE REORGANIZATION -- Summary of Transfer Restrictions -- General."
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THE ANNUAL MEETING
This Prospectus/Proxy Statement is being furnished to Company Stockholders in
connection with the solicitation of proxies by the Company Board for use at the
Annual Meeting to be held at [______________________] located at
[______________________], Los Angeles, California, on [__________], 1996, at
[_______], Pacific Time, and at any adjournment or adjournments thereof.
MATTERS TO BE CONSIDERED
At the Annual Meeting, Company Stockholders will be asked to consider and
approve (1) the election of two directors, with terms expiring in 1999; (2) a
proposal to adopt the Reorganization Agreement, the purpose of which is to adopt
the Transfer Restrictions; and (3) such other business as may properly come
before the meeting or any adjournment thereof.
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE
Only the holders of record of the outstanding shares of Company Common Stock
at the close of business on [__________], 1996 (the "Record Date") will be
entitled to notice of and to vote at the Annual Meeting. At such date, there
were [__________] shares of Company Common Stock issued and outstanding.
Holders of record of Company Common Stock at the close of business on the Record
Date will be entitled to one vote per share on any matter that may properly come
before the Annual Meeting.
VOTES REQUIRED
A quorum, consisting of a majority of the outstanding Company Common Stock
must be present in person or by proxy before any action may be taken at the
Annual Meeting. The affirmative vote of a plurality of shares of the Company
Common Stock represented at the meeting in person or by proxy is required to
elect any nominee for director and to approve the stockholder proposal. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock is required to approve the Reorganization.
Under the rules of the NYSE, the proposals to be presented for a vote are
considered "non-discretionary items" whereby brokerage firms may not vote in
their discretion on behalf of their clients if such clients have not furnished
voting instructions. Abstentions and such broker "non-votes" will be considered
in determining the presence of a quorum at the Annual Meeting but will not be
counted as a vote cast for a proposal. Accordingly, abstentions and broker
"non-votes" will not affect the election of candidates for director receiving
the plurality of votes but will have the same effect as a vote against the
Reorganization proposal and the stockholder proposal.
As of January 31, 1996, directors and executive officers of the Company as a
group (7 persons) beneficially owned 341,598 shares of Company Common Stock
(exclusive of presently exercisable stock options), which represented 5.6% of
the aggregate number of votes entitled to be cast at the Annual Meeting. Such
persons have indicated that they intend to vote all such shares for approval of
the matters described herein. No such persons will receive any benefits
pursuant to any current employment agreement or employee benefit or stock option
plan as a result of the Reorganization. See "THE REORGANIZATION."
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VOTING, SOLICITATION AND REVOCATION OF PROXIES
A proxy for use at the Annual Meeting accompanies this Prospectus/Proxy
Statement and is solicited by the Company Board. Any Company Stockholder who
has given a proxy may revoke it at any time prior to its exercise at the Annual
Meeting by (i) giving written notice of revocation to the Corporate Secretary of
the Company, (ii) properly submitting to the Corporate Secretary a duly-executed
proxy bearing a later date or (iii) attending the Annual Meeting and voting in
person. Stockholders who have executed a proxy but intend to vote in person are
requested to so notify the Corporate Secretary prior to the time of the Annual
Meeting. All written notices of revocation and other communications with
respect to revocation of proxies should be addressed as follows: Johanna Unger,
Vice President, Controller and Secretary, PS Group, Inc., 4370 La Jolla Village
Drive, Suite 1050, San Diego, California 92122. Attendance at the Annual
Meeting will not, in and of itself, constitute revocation of a proxy.
SHARES OF COMPANY COMMON STOCK REPRESENTED BY PROPERLY EXECUTED PROXIES, IF
SUCH PROXIES ARE RECEIVED IN TIME AND NOT REVOKED, WILL BE VOTED IN ACCORDANCE
WITH THE INSTRUCTIONS INDICATED ON THE PROXIES. IF NO INSTRUCTIONS ARE
INDICATED, THE PROXIES RELATING TO SHARES OF COMPANY COMMON STOCK WILL BE VOTED
FOR EACH OF THE NOMINEES FOR DIRECTOR LISTED BELOW, FOR APPROVAL OF THE
REORGANIZATION, AGAINST THE STOCKHOLDER PROPOSAL AND WILL ALSO BE VOTED IN THE
DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTER WHICH MAY PROPERLY COME
BEFORE THE ANNUAL MEETING.
The Company will bear the costs of printing and mailing this Prospectus/Proxy
Statement as well as all other costs incurred in connection with the
solicitation of proxies from the Company's Stockholders on behalf of the Company
Board. The Company has retained MacKenzie Partners, Inc. to assist in the
solicitation of proxies and in the distribution of proxies and accompanying
materials to brokerage houses and institutions for an estimated fee of $7,500
plus expenses. In addition, proxies may be solicited by mail, personal
interview, telephone or telegraph by directors, officers or employees of the
Company and its subsidiaries without additional compensation therefor.
Arrangements also will be made with brokerage houses, voting trustees, banks,
associations and other custodians, nominees and fiduciaries, who are record
holders of the Company Common Stock not beneficially owned by them, for
forwarding such solicitation materials to and obtaining proxies from the
beneficial owners of such stock entitled to vote at the Annual Meeting; and the
Company will reimburse such persons for their reasonable expenses incurred in
doing so.
ELECTION OF DIRECTORS
The By-laws of the Company provide that the Company Board shall be divided
into three classes, with three-year terms expiring in successive years. There
are currently five directors on the Company Board divided between the three
classes. At the Annual Meeting, two directors are expected to be elected with
terms expiring upon the election and qualification of their successors at the
1999 Annual Meeting of Stockholders. The two nominees, Messrs. Rickershauser
and Killian, are both currently directors of the Company.
It is intended that the proxies received by the Company Board will be voted
for the election of the nominees for directors named below, unless authority to
do so is withheld. It is not contemplated that any of the nominees will be
unable to serve as a director, but if that contingency should occur prior to the
Annual Meeting, the holders of proxies reserve the right to substitute and vote
the shares represented by the proxies in favor of such nominee for another
person of their choice. Information follows with respect to each nominee and
present director of the Company. If the Reorganization is consummated the
directors and officers of Holdings will be the directors and officers of the
Company immediately prior to the Reorganization. See "THE REORGANIZATION --
Board of Directors and Management of Holdings."
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See "OTHER MATTERS -- Stockholder Proposals" for information regarding
certain of the requirements and procedures that apply if stockholders wish to
propose nominees for election to the Company Board or submit other business at
an annual meeting of the Company Stockholders.
NOMINEES FOR DIRECTOR
The following persons are nominees for directors with terms expiring in 1999
(such persons will also serve for corresponding terms on the Holdings Board if
the Reorganization is consummated):
CHARLES E. RICKERSHAUSER, JR.: Mr. Rickershauser, 67, has been Chairman of
the Board of the Company since 1991, a director since 1984 and Chief Executive
Officer since October, 1994. From 1980 until 1986 he was Chairman of the Board
and Chief Executive Officer of the Pacific Stock Exchange Incorporated. From
1986 until his retirement in 1990 he was a partner in the law firm of Fried,
Frank, Harris, Shriver & Jacobson. Mr. Rickershauser also serves as a director
of City National Corp. (and its principal subsidiary, City National Bank). He
is also a director of Lee Enterprises, Incorporated and The Vons Companies, Inc.
DONALD W. KILLIAN, JR.: Mr. Killian, 66, has been in the private practice of
law since 1955. Since 1984 Mr. Killian has been a sole practitioner in Newport
Beach, California. Mr. Killian is also a director of the Daily Journal
Corporation. Mr. Killian was elected a director of the Company in 1993.
CERTAIN INFORMATION CONCERNING OTHER DIRECTORS
The following person serves as a director with a term expiring in 1997 (such
person will also serve for a corresponding term on the Holdings Board if the
Reorganization is consummated):
J.P. GUERIN: Mr. Guerin, 66, is an investor. From 1965 to 1992 Mr. Guerin
was managing partner of Pacific Partners, a limited partnership holding long-
term investments. Mr. Guerin was Chairman of the Board of the Company from 1985
until 1991 and Vice Chairman of the Company from 1991 until 1993. Mr. Guerin is
a director of Lee Enterprises, Incorporated and is a director and Vice Chairman
of the Board of the Daily Journal Corporation. Mr. Guerin has been a director
of the Company since 1978.
The following persons serve as directors with terms expiring in 1998 (such
persons will also serve for corresponding terms on the Holdings Board if the
Reorganization is consummated):
ROBERT M. FOMON: Mr. Fomon, 71, is, and has been since 1987, President of
Robert M. Fomon and Company Inc., a private investment company. Previously Mr.
Fomon served as Chief Executive Officer and a Director (from 1970 to 1987) of
the E.F. Hutton Group Inc., a holding company for the investment banking firm of
E.F. Hutton & Company Inc. Mr. Fomon was associated with E.F. Hutton & Company
Inc. for approximately 35 years. Mr. Fomon has been a Director of the Company
since 1963.
GORDON C. LUCE: Mr. Luce, 70, is an independent investment advisor. From
1979 until his retirement in 1990 Mr. Luce was Chairman of the Board and Chief
Executive Officer of Great American First Savings Bank, where he had been
employed since 1969. Great American First Savings Bank was taken over by the
Resolution Trust Corporation in August 1991. Mr. Luce is also a director of All
American Communications, Inc. and Molecular Biosystems, Inc. Mr. Luce has been
a director of the Company since 1973.
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INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company Board has standing executive and audit committees. The Company
Board sitting as a committee of the whole acts as the Compensation Committee
(see "Executive Compensation"). The Company has no nominating committee.
The Executive Committee is comprised of Messrs. Guerin (Chairman),
Rickershauser and Luce. Subject to certain limitations, the Executive Committee
exercises the powers of the Company Board in the management of the business and
affairs of the Company in the absence of the full Company Board. The Executive
Committee did not meet in 1995 but acted by unanimous written consent once
during 1995.
The Audit Committee is comprised of Messrs. Guerin (Chairman), Killian and
Luce. The Audit Committee recommends to the Company Board for its nomination
independent auditors to audit the consolidated financial statements of the
Company, and reviews and approves the overall scope and adequacy of the
independent and internal audit programs and the proposed form of the Company's
consolidated financial statements. The Audit Committee also reviews the
results, findings and recommendations of audits performed by the independent
auditors and the internal audit department, the system of internal accounting
controls, the significant accounting policies of the Company as they apply to
its consolidated financial statements, the audit fees to be paid to the
independent auditors and the nature of non-audit services performed by the
independent auditors. The Audit Committee met once during 1995.
The Company Board appointed Mr. Killian as the sole member of a special
Litigation Committee to review the 1995 settlement of certain class actions
involving the Company and certain of its directors.
The Company Board met four times, and acted once by unanimous written
consent, in 1995. Each director attended all the meetings of the Company Board
and the committees on which he served.
If the Reorganization is consummated, the composition of the committees of
the Holdings Board will be identical to those of the Company Board immediately
prior to the Reorganization. See "THE REORGANIZATION -- Board of Directors and
Management of Holdings."
COMPENSATION OF DIRECTORS
Directors are paid an annual fee of $10,000 plus a fee of $1,000 for each
meeting of the Company Board attended or $350 for attendance by telephone. For
attendance at each meeting of a committee of the Company Board which is not held
on a day on which the Company Board meets, member directors or those attending
by invitation are also paid $1,000 for attendance in person or $350 for
attendance by telephone. The Chairman of the Board and Chief Executive Officer
is paid an additional annual fee of $115,000 and certain other amounts (please
see "Executive Compensation") and the Chairman of the Executive and Audit
Committees is paid an additional annual fee of $25,000.
In addition to the fees described above, the Company paid to Mr. Killian
hourly fees aggregating $4,200 in 1995 in connection with his services as the
sole member of the Litigation Committee.
EXECUTIVE COMPENSATION
This section summarizes certain issues related to the Company's executive
compensation policies. It is contemplated that Holdings' executive compensation
policies following the Reorganization will be the same as those of the Company.
See, "THE REORGANIZATION -- Board of Directors and Management of Holdings."
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REPORT ON EXECUTIVE COMPENSATION
Under rules established by the Commission the Company is required to provide
certain data and information regarding the compensation and benefits provided to
the Chief Executive Officer and the other executive officers of the Company.
The disclosure mandated by the Commission requires the use of certain tables
along with this report explaining the underlying reasons for certain
compensation decisions affecting those individuals. The Company's executive
compensation program is administered by the Company Board sitting as a committee
of the whole./1/ In compliance with Commission requirements the Compensation
Committee has prepared this report for inclusion in this Prospectus/Proxy
Statement.
Commencing in 1994, the maximum amount for which an employer may claim a
compensation deduction pursuant to Section 162(m) of the Internal Revenue Code
of 1986, as amended, is $1 million per person, unless certain performance-
related compensation exemptions are met. Since it is unlikely that any officers
of the Company will receive in excess of $1 million in aggregate compensation a
year in the near future, the Committee has deferred consideration of this
provision.
COMPENSATION PHILOSOPHY. This report reflects the Company's compensation
philosophy and also reflects the underlying reasoning for the information set
forth in the compensation tables accompanying this report. Mr. Rickershauser,
Chairman of the Board of Directors of the Company, also provides part-time
services as Chief Executive Officer of the Company. Mr. Rickershauser's
compensation is established by the Company Board as reflective of the value of
the part-time services he provides to the Company and is not tied to the
criteria set forth herein for determining the compensation to be paid to full-
time officer employees of the Company.
The Company's executive compensation program is designed to retain its key
executive officers. The package consists of a base salary and an annual
discretionary bonus. The Company's goal is to provide base compensation
commensurate with an individual's level of experience, responsibility and past
performance yet at a conservative level so that a significant portion of an
executive officer's compensation opportunities can be based on individual
performance in a fiscal year. Each officer also has an employment contract with
the Company prohibiting reductions in base pay from that last established.
Discretionary bonuses are awarded annually if the Company Board believes an
individual officer's performance in his or her particular area of responsibility
so merits. Individual officer performance is measured primarily by how
effectively the individual officer performed his or her assigned job.
Compensation for 1995 was not tied to the Company's operating results. It is
anticipated that unless the Company's performance were to deviate substantially
from the Company's internally projected results, the Company's performance will
not be taken into account in determining the compensation of executive officers.
BASE SALARIES. Mr. Rickershauser has been Chief Executive Officer since
October 1994. Mr. Rickershauser performs the duties of Chief Executive Officer
on a part-time basis, in addition to his duties as Chairman of the Company
Board. Mr. Rickershauser's role as Chairman of the Board included his provision
of part-time services to the Company in an executive capacity. In setting his
compensation, the Company Board considered the time which Mr. Rickershauser
expected to devote to the Company's affairs in his role as part-time Chief
Executive Officer and Chairman of the Company Board. The Company Board did not
tie Mr. Rickershauser's 1995 compensation to the Company's performance.
The other two executive officers of the Company are Lawrence A. Guske, Vice
President-Finance and Chief Financial Officer, and Johanna Unger, Vice
President, Controller and Secretary. Mr. Guske and Ms. Unger each
- ----------------
/1/ Mr. Rickershauser, Chairman of the Company Board and Chief Executive
Officer of the Company, was not present during discussions relating to his
compensation and abstained from voting on any matters relating to himself.
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received pay increases of $5,000 annually in March 1995 and January 1996. These
were primarily designed to help their salaries remain competitive and keep pace
with inflation.
ANNUAL DISCRETIONARY BONUSES. The executive officers are eligible to receive
bonuses based upon individual performance. Bonuses are normally awarded in
March of each year to reflect performance for the prior year. The Committee has
specifically elected not to establish defined criteria on which bonus
compensation will be based but has instead elected to maintain a subjective
approach to bonus compensation based on a post hoc review of the prior year's
performance by each officer. In January, 1996, the two full-time executive
officers were awarded discretionary bonuses of $50,000.
LONG-TERM INCENTIVE PROGRAM. There is currently no long-term incentive
program in place for executive officers of the Company.
Members of the Compensation Committee
Robert M. Fomon
J.P. Guerin
Donald W. Killian, Jr.
Gordon C. Luce
Charles E. Rickershauser, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company Board sits as a committee of the whole with respect to executive
compensation matters, except Mr. Rickershauser was not present during
discussions regarding, nor did he vote on, compensation matters concerning
himself. Mr. Rickershauser did participate in discussions regarding
compensation of executive officers other than himself.
SUMMARY COMPENSATION TABLE
The following table shows the compensation as of the end of each of the last
three years ending December 31, 1995 of (i) the Company's chief executive
officer and (ii) the two current executive officers (collectively the "Named
Executive Officers").
Annual Compensation
-------------------
<TABLE>
<CAPTION>
All Other
Name and Principal Position Year Salary (A) Bonus (B) Compensation (C)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles E. Rickershauser, Jr. 1995 $138,600 $ - $19,497
Chairman of the Board and 1994 128,604 - 19,441
Chief Executive Officer 1993 121,800 - 19,292
Lawrence A. Guske 1995 170,445 50,000 4,500
Vice President - Finance and 1994 162,946 35,000 4,500
Chief Financial Officer 1993 161,600 25,000 4,497
</TABLE>
17
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Johanna Unger 1995 142,446 50,000 4,500
Vice President, Controller 1994 134,946 35,000 4,500
and Secretary 1993 133,600 25,000 4,008
</TABLE>
- ---------------
(A) Includes amounts deferred pursuant to Section 401(k) of the Internal
Revenue Code and cash payments designated as automobile allowances. Fees
paid to Mr. Rickershauser as a director are included.
(B) Bonuses earned for calendar years 1993, 1994 and 1995 were actually awarded
and paid in March 1994, March 1995 and January 1996, respectively.
(C) The Company's contribution to each executive officer's 401(k) plan is
included in All Other Compensation. The amount of the 401(k) contribution
by the Company in 1995 was $4,158 for Mr. Rickershauser and $4,500 for each
of the other Named Executive Officers. In addition, for Mr. Rickershauser,
$15,339 is included for life insurance premiums for 1995. The Company has
agreed to pay life insurance premiums on Mr. Rickershauser for a period of
five years beginning in 1992. All premiums so paid will be reimbursed to
the Company out of any death benefits paid under such insurance.
STOCK OPTIONS
The following table sets forth information with respect to the number of
unexercised options held by each of the Named Executive Officers as of the end
of the last fiscal year. The Company's 1984 Stock Incentive Plan terminated in
March, 1994, and no additional stock options have been granted since such
termination.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Name Options/SARs at December
31, 1995 (all exercisable)
- -----------------------------------------------------------------
<S> <C>
Charles E. Rickershauser, Jr. --
Lawrence A. Guske 6,333
Johanna Unger 3,000
</TABLE>
None of the Named Executive Officers exercised any options during 1995. None of
the unexercised options were in-the-money at December 31, 1995.
RETIREMENT BENEFITS
The Company maintains a retirement plan (the "Plan") providing unfunded
retirement benefits for its officers. Normal retirement under the Plan is at
age 60 with lesser benefits payable upon early retirement. The Plan provides
that participating officers (those retiring as an officer or who terminate
employment having completed 10 or more years as an officer) receive a monthly
benefit of 2.5% of compensation for each year of service up to 20 years plus 2%
of compensation for each year of additional service up to five years. The term
"Compensation," for such purposes, means the average monthly compensation
received from the Company for the 60 consecutive calendar
18
<PAGE>
months during the last 120 months in which the officer had the highest
compensation. For illustrative purposes the following table provides examples
of the annual benefits payable under the Plan as a straight life annuity at age
60.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
----------------------------------------------------
"Compensation" 15 20 25 30 35
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000 $ 56,250 $ 75,000 $ 90,000 $ 90,000 $ 90,000
175,000 65,625 87,500 105,000 105,000 105,000
200,000 75,000 100,000 120,000 120,000 120,000
225,000 84,375 112,500 135,000 135,000 135,000
250,000 93,750 125,000 150,000 150,000 150,000
300,000 112,500 150,000 180,000 180,000 180,000
</TABLE>
Mr. Guske and Ms. Unger have approximately 26, and 17 years of service,
respectively. All amounts listed in the Summary Compensation Table are included
in Compensation except that automobile allowances shown under Salary and Company
401(k) contributions shown under All Other Compensation are excluded.
In 1988 the Company terminated its defined benefit plan (the "Terminated
Plan") which covered most employees. Mr. Guske and Ms. Unger each received a
lump sum payment for accrued benefits under the Terminated Plan. The benefits
payable under the Plan will be reduced by the actuarial equivalent of such lump
sum payments. The benefits payable under the Plan are not subject to any
deduction for social security or other offset amounts.
The Plan provides a disability benefit for participating officers with at
least three years of service as an officer. This benefit is equal to 60% of
regular salary, excluding bonuses (less other long-term disability and social
security benefits which may be payable), and is payable for a number of years
equal to the number of years of service as an employee. Thereafter, the monthly
benefit is reduced to an amount which is the greater of (a) 40% of regular
salary, (b) $3,000 or (c) the amount to which he or she would be entitled as a
normal retirement benefit on his or her normal retirement date. The benefit
continues until the earlier of normal retirement date, recovery from permanent
disability or death. In addition, the years of service while disabled are
counted toward a retirement benefit but are limited to the number of years of
service accumulated at the time of disability.
Under the Plan, participants are currently required to obtain the consent of
the Company if they wish to retire before the age of 55. This consent
requirement would no longer apply if the Company were acquired by another party
or if the Company consummated certain merger or consolidation transactions. Mr.
Guske and Ms. Unger have agreed that the Reorganization will not be treated as a
transaction that would terminate this consent requirement and therefore the
consent requirement will continue to apply to Mr. Guske and Ms. Unger following
the Reorganization.
The Company has agreed to accrue for Mr. Rickershauser an unfunded retirement
benefit of $50,000 per year plus accrued interest thereon (based on the one-year
Treasury Bill rate on the first day of each year) for each year he serves as
Chairman of the Board of Directors of the Company. This benefit is in lieu of
any participation by Mr. Rickershauser in the Plan.
19
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENTS
Executive employment agreements have been entered into with Mr. Guske and Ms.
Unger. The agreements are for continually renewing one-year periods.
Compensation to be paid to each of them is to be determined by the Company Board
but is not to be less than the amount last established by the Company Board.
The annual salary for each of them last established in January 1996 was as
follows: Mr. Guske, $170,000 and Ms. Unger, $142,000. Under the employment
agreements, the Company has agreed to continue for a one-year period their then
present compensation if either of them is terminated without cause or resign
because certain provisions of their respective agreements have not been complied
with by the Company. In the event they are terminated as a result of a change
in control of the Company they will be entitled to severance pay equal to two
years at their then current compensation. Retirement benefits continue to
accrue during such periods. Mr. Guske and Ms. Unger have confirmed that the
consummation of the Reorganization will not be a change of control for the
purpose of such employment agreements and will not result in the accrual of any
additional benefits or rights under such employment agreements.
STOCK PERFORMANCE GRAPH
The following performance graph compares the five-year cumulative total
stockholder returns (assuming reinvestment of dividends) realized by the Company
Stockholders with the S&P 500 index and with the peer group described below.
The performance graph assumes $100 is invested in the Company's Common Stock,
the S&P 500 index and a composite index of peer companies on December 31, 1990,
and that dividends paid during the five years ending December 31, 1995 were
reinvested when paid to purchase additional shares. The Company has created a
special peer group index because no published peer group accurately mirrors the
three different lines of business in which the Company has material revenues.
The performance of the Company's aircraft leasing business is closely related to
the financial condition of the companies to which it leases aircraft. As a
result, the Company believes that the peer group against which the performance
of its aircraft leasing business should be measured is more accurately the
companies to which it leases aircraft, rather than other companies in the
aircraft leasing business and therefore the peer group index includes the three
companies to which it leases aircraft. The Company used companies in the fuel
sales and distribution and oil and gas business to measure performance in those
businesses.
Within each line of business the selected peer companies were weighted
annually by market capitalization at the beginning of each period for which a
return is indicated. Weighing of peer companies within the Company's line of
businesses was done annually by the asset value of each individual line of
business.
The peer group includes the following companies from each segment:
Fuel sales and distribution:
International Recovery Corp.
Mercury Air Group Inc.
Aircraft leasing:
USAir Group, Inc.
Continental Airlines, Inc.
America West Airlines, Inc.
Oil and gas:
Alta Energy Corp.
Hallador Petroleum Corp.
Hallador Energy Corp.
20
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG PS GROUP, INC., S&P 500 INDEX AND PEER GROUP
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period PS S&P
(Fiscal Year Covered) GROUP, INC. 500 INDEX PEER Group
- --------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt- 1990 $100 $100 $100
FYE 1991 $ 81.291 $130.335 $ 76.240
FYE 1992 $ 25.656 $140.251 $ 75.850
FYE 1993 $ 36.121 $154.324 $ 84.950
FYE 1994 $ 29.369 $156.419 $ 44.710
FYE 1995 $ 33.083 $214.99 $107.580
</TABLE>
BENEFICIAL OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth as of the Record Date, the number of shares
beneficially owned by each nominee to or member of the Board of Directors, for
each Named Executive Officer shown in the Summary Compensation Table and for all
executive officers, directors and nominees as a group. All references are to
Company Common Stock.
<TABLE>
<CAPTION>
Common Stock Percent of
Beneficially Common
Name Owned (1) Stock
- -------------------------------------------------------------------------------
<S> <C> <C>
Robert M. Fomon 281 *
J.P. Guerin 319,693(2) 5.3
Lawrence A. Guske 12,871(3) *
Donald W. Killian, Jr. 1,600(4) *
Gordon C. Luce 153(5) *
Charles E. Rickershauser, Jr. 4,000 *
Johanna Unger 3,000(6) *
All current Officers and Directors as a group 341,598(7) 5.6
</TABLE>
* Less than 1 percent.
21
<PAGE>
(1) Unless otherwise disclosed, beneficial ownership is direct and the person
indicated has sole voting and dispositive power over the shares of common
stock listed. In certain instances, as footnoted, ownership figures
include shares that may be acquired pursuant to options exercisable within
60 days of the Record Date. All expressions of percentage of shares held
assume that the options of the particular person or group in question have
been exercised and no others.
(2) Includes (i) 12,358 shares owned by Mr. Guerin's wife, (ii) 50,714 shares
and 100,000 shares in the John Patrick Guerin Trust and Guerin Family
Trust, respectively, each of which Mr. Guerin is a Trustee and beneficiary
and (iii) 156,621 shares in the J. Patrick Guerin III Trust, of which Mr.
Guerin is a Trustee but in which he has no beneficial interest. The shares
held by the John Patrick Guerin Trust and Guerin Family Trust are pledged
as collateral under Mr. Guerin's personal line of credit with a bank, which
bank thereby has or shares dispositive power with respect to such shares.
(3) Includes 6,333 shares which may be acquired upon the exercise of stock
options.
(4) These shares are held by the Killian Family 1987 Trust of which Mr. Killian
is a Trustee and beneficiary.
(5) These shares are held by the Luce Family Trust of which Mr. Luce is a
Trustee and beneficiary.
(6) These shares may be acquired upon the exercise of stock options.
(7) Includes 9,333 shares which officers as a group may acquire upon exercise
of stock options.
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to all persons known
to the Company to be the beneficial owners of more than five percent of the
Company's Common Stock as of January 31, 1996.
<TABLE>
<CAPTION>
Common
Stock
Name and Address Beneficially Percent of
of Beneficial Owner Owned Common Stock
- ----------------------------------------------------------------------
<S> <C> <C>
Berkshire Hathaway Inc. (1) 1,208,032 19.9
1440 Kiewit Plaza
Omaha, Nebraska 68131
ESL Partners, L.P. (2) 1,198,270 19.7
115 East Putnum Avenue
Greenwich, Connecticut 06830
J.P. Guerin 319,693 5.3
355 South Grand Avenue
Los Angeles, CA 90071
</TABLE>
- -----------------
(1) Ownership information obtained from Berkshire Hathaway Inc. ("Berkshire")
Schedule 13D dated December 14, 1990 ("Berkshire 13D"). The Berkshire 13D
was also filed on behalf of Warren E. Buffett, who may be deemed to control
Berkshire Hathaway Inc., and the following subsidiaries of Berkshire (the
amount of the Company's stock owned by each such subsidiary as reported in
the Berkshire 13D is shown in parentheses following the subsidiaries'
names): National Indemnity Company (579,957); National Liability & Fire
Insurance Company (330,475); Columbia Insurance Company (197,600); and
National Fire and Marine Insurance Company (100,000). Berkshire Hathaway
Inc. exercises shared voting and dispositive power over all shares listed.
In connection with a 1990 amendment to the Company's Rights Agreement dated
as of June 30, 1986 (the "Rights
22
<PAGE>
Plan") permitting Warren E. Buffett, Berkshire and their respective
affiliates to acquire up to 45% of the Company Common Stock without
triggering the provisions of the Plan, Berkshire entered into an agreement
with the Company dated December 13, 1990 (the "Berkshire Agreement") that:
(i) it would vote all shares of Company Common Stock owned by it or by its
subsidiaries which are in excess of 22.5% of the outstanding Company Common
Stock in the same proportion as all other shares of Company Common Stock
(including the shares owned by Berkshire not in excess of 22.5%, as to the
voting of which Berkshire and its subsidiaries are not restricted by the
Berkshire Agreement) are voted in connection with all matters on which
shares of Company Common Stock are voted; (ii) it would not sell any shares
of Company Common Stock owned by it in any transaction if it knows,
following reasonable inquiry, that as a result of such transaction any
purchaser would be the "Beneficial Owner" (as defined in the Rights Plan)
of a number of shares of Company Common Stock sufficient to make such
purchaser an "Acquiring Person" as defined in the Rights Plan; (iii) it
would not make any further purchases of shares of Company Common Stock
following receipt of notice from the Company that further purchases of such
shares by it may cause the de-listing of Company Common Stock on the New
York Stock Exchange; (iv) it would not be a "participant," as defined in
Rule 14a-11 under the Exchange Act, in any proxy solicitation in opposition
to a solicitation by the Company involving the election or removal of
Company directors nor solicit, within the meaning of Rule 14a-1(1), any
proxy in connection with any other matter on which a vote of Company
shareholders is taken if such solicitation is in opposition to any proposal
or position approved by the Company Board; (v) it would not be a member of
an Exchange Act Section 13(d) group (other than one composed solely of
itself and its affiliates) with respect to any securities of the Company;
and (vi) it would cause its subsidiaries owning shares of Company Common
Stock to comply with the same obligations as itself. Mr. Buffett agreed
(the "Buffett Commitment") with the Company in his individual capacity to
execute a similar agreement before purchasing any shares of Company Common
Stock for his own account and not to make any such purchases while
Berkshire owns any shares of Company Common Stock. Also see "THE
REORGANIZATION -- Summary of Transfer Restrictions -- Effect of
Reorganization Under the Rights Plan."
(2) Ownership information contained in Form 4 filed March 9, 1995. ESL
Partners, L.P. exercises sole voting and dispositive power over all shares.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and the New York Stock Exchange initial reports of
ownership and reports of changes in ownership of equity securities of the
Company. Directors, executive officers and greater than ten percent
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the Company's fiscal year 1995 all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were met.
THE REORGANIZATION
GENERAL
Stockholders of the Company are being asked to approve the Reorganization
Agreement pursuant to which Merger Sub will merge with and into the Company. As
a result of the Reorganization, Holdings will become the parent
23
<PAGE>
holding company of the Company and all of the outstanding shares of Company
Common Stock will be converted into and exchanged for shares of Holdings Common
Stock on a one-for-one basis. The sole purpose of the Reorganization is to
effect the Transfer Restrictions. THE FULL TEXT OF THE REORGANIZATION AGREEMENT
IS ATTACHED AS APPENDIX A TO THIS PROSPECTUS/PROXY STATEMENT, AND THE DISCUSSION
BELOW, WHICH SUMMARIZES THE MATERIAL TERMS OF THE REORGANIZATION AGREEMENT, IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE THERETO.
Holdings is a newly-formed Delaware corporation that was formed as a direct
wholly-owned subsidiary of the Company for the purpose of becoming the parent
holding company of the Company. Merger Sub is a newly-formed Delaware
corporation that was formed as a direct wholly-owned subsidiary of Holdings for
the purpose of consummating the Reorganization. Holdings and Merger Sub have no
operating history and only nominal assets, liabilities and capitalization. If
the Reorganization is approved by the stockholders of the Company and all the
other conditions set forth in the Reorganization Agreement are satisfied or
waived, Merger Sub will be merged with and into the Company, with the Company as
the surviving corporation.
After the Reorganization, the sole business of Holdings will be to own 100%
of the outstanding Company Common Stock and thus function as a holding company.
The Company will continue its existing business and operations as a wholly-owned
subsidiary of Holdings. The consolidated assets, liabilities, stockholders'
equity and income of Holdings immediately following the Reorganization will be
the same as those of the Company immediately prior to the consummation of the
Reorganization. The Holdings Board is comprised of the current members of the
Company Board, and the executive officers of Holdings are the same as the
executive officers of the Company. The Company will continue to operate under
the name "PS Group, Inc." The corporate existence of the Company will continue
unaffected and unimpaired by the Reorganization, except that all of the
outstanding shares of Company Common Stock will be owned by Holdings. It is
possible that the composition of the Company Board will change to reflect the
status of the Company as a wholly-owned subsidiary of Holdings. The Company
Stockholders will, in turn, own all of the outstanding shares of Holdings Common
Stock, having received that stock in exchange for their shares of Company Common
Stock as part of the Reorganization.
The Transfer Restrictions to be implemented by the Reorganization are
intended to help prevent the occurrence of an "ownership change" as defined
under Section 382 of the Internal Revenue Code of 1986, as amended from time to
time (the "Code") and the applicable Treasury Regulations thereunder, as amended
from time to time (collectively, "Section 382") (an "Ownership Change"), which
could severely limit the availability of the Company's Tax Benefits. See "THE
REORGANIZATION -- Preservation of Tax Benefits." For certain potential
limitations on the effectiveness of the Transfer Restrictions, see "CERTAIN
SPECIAL CONSIDERATIONS RELATING TO THE REORGANIZATION -- Continuation of Net
Operating Loss Carryforwards."
Under the General Corporation Law of the State of Delaware (the "Delaware
Corporate Law"), if the stockholders adopted the Transfer Restrictions through
an amendment to the Company's Certificate of Incorporation (rather than through
the Reorganization), the Transfer Restrictions would not be effective to affect
transfers of shares of Company Common Stock held by stockholders who do not vote
in favor of the Transfer Restrictions. The Delaware Corporate Law further
provides that transfer restrictions will not be effective with respect to shares
unless they are noted on the certificates representing such shares or the holder
or transferee of such shares had actual knowledge of such restrictions. In
contrast, by adopting the Transfer Restrictions through the Reorganization, the
Company believes the Transfer Restrictions will apply with respect to all shares
of Holdings Common Stock, including shares held by stockholders who do not vote
in favor of the Reorganization.
Holdings Common Stock to be issued by Holdings in exchange for Company Common
Stock will be deemed to be issued after the adoption of the Transfer
Restrictions, which are set forth in Article Eleventh of the Holdings
Certificate of Incorporation to be in effect upon consummation of the
Reorganization, a copy of which is included as Appendix B to this
Prospectus/Proxy Statement. All Holdings Common Stock certificates will contain
a legend
24
<PAGE>
informing holders and transferees of the Transfer Restrictions, and therefore
the Company believes the Transfer Restrictions will apply to all shares of
Holdings Common Stock.
The Transfer Restrictions are intended to bind all holders of shares of
Company Common Stock outstanding at the Effective Time and will apply both to
shares of Holdings Common Stock issued in exchange for those shares of Company
Common Stock outstanding at the Effective Time and to shares of Holdings Common
Stock issued thereafter. Transfers of shares of Company Common Stock occurring
prior to the Effective Time will not be restricted and all holders of Company
Common Stock as of the Effective Time will receive shares of Holdings Common
Stock in exchange for their shares of Company Common Stock. However, subsequent
transfers of those Holdings shares will be subject to the Transfer Restrictions.
Accordingly, persons who became "5-percent shareholders" of the Company (for
purposes of Section 382) on or after February __, 1996 and prior to the
Effective Time, in contrast to "Preexisting 5-Percent Shareholders," will be
prohibited, unless expressly permitted by the Holdings Board, from transferring
their shares of Holdings Common Stock so long as the Transfer Restrictions are
in effect. See "Summary of Transfer Restrictions -- Prohibited Transfers" and
"--Treatment of Preexisting 5-Percent Shareholders".
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Company Board has unanimously approved the Reorganization Agreement,
subject to the receipt of stockholder approval, and unanimously recommends that
stockholders of the Company approve the Reorganization. Each director has
advised the Company that he plans to vote all of his shares of Company Common
Stock in favor of the Reorganization.
PRESERVATION OF TAX BENEFITS
The Company currently is entitled to substantial Tax Benefits of potentially
significant value. The availability of the Company's Tax Benefits would be
jeopardized (as described below) if an Ownership Change were to occur in the
future. There is a risk that an Ownership Change could result if, among other
possibilities, persons acquire 5% or more of the Company Common Stock, or
shareholders that already own 5% or more of the Company Common Stock buy or sell
shares of Company Common Stock.
The extent of the actual value of the Company's Tax Benefits is subject to
inherent uncertainty inasmuch as the value depends on the amount of otherwise-
taxable income against which the Company will be able to utilize the Tax
Benefits in future years. Assuming the Company does not experience an Ownership
Change, Tax Benefits not fully utilized in the first year they are available may
be carried over and utilized in subsequent years, subject to their expiration
provisions. Based on information currently available to the Company, the
Company had, as of December 31, 1994, Tax Benefits which included (among other
items): (a) a federal tax net operating loss carryforward ("NOL") of $83.4
million, expiring beginning in 2005. NOLs offset federal taxable income in
future years and eliminate income taxes otherwise payable on such taxable income
(except for purposes of calculating alternative minimum tax liability); and (b)
a federal investment tax credit carryforward ("ITC") of $12.5 million, expiring
in the years 2000 to 2003. ITCs are applied as a credit to reduce federal
income tax liability in future years. In general, ITCs may not be used to
reduce income taxes until all NOLs have been used.
Section 382 would impose an annual limit on the use of the Company's NOLs and
other Tax Benefits if the Company underwent an Ownership Change. The annual
limit on the use of NOLs would be equal to the value of the Company Common Stock
immediately before the Ownership Change multiplied by the "long-term tax-exempt
rate" in effect at the time of the Ownership Change. The "long term tax exempt
rate" is published monthly by the Internal Revenue Service, and as of February,
1996, is 5.46%. The Company estimates that, based on the Tax Benefits as of
December 31, 1994 summarized above, as of February, 1996, an Ownership Change
would limit the Company's utilization of its Tax Benefits to a maximum potential
amount of approximately $3.3 million a year for 15 years, or
25
<PAGE>
an aggregate maximum potential amount of approximately $50 million (again,
assuming that the Company would otherwise have income against which the reduced
amount of Tax Benefits could be utilized). Similar rules apply to the Company's
other Tax Benefits. If the Company did not continue its business enterprise for
at least two years after an Ownership Change, the NOLs and most of the other Tax
Benefits would be disallowed completely.
In addition, consistent with generally accepted accounting principles, the
net deferred tax liability shown on the Company's financial statements has
previously been reduced by the estimated value of the Tax Benefits. If an
Ownership Change were to occur, the net deferred tax liability shown on the
Company's financial statements would be increased significantly and the
Company's net income and stockholders' equity on its financial statements would
be correspondingly reduced.
In general, an Ownership Change occurs when the percentage of a corporation's
stock owned by one or more "5-percent shareholders" (within the meaning of
Section 382) is more than 50 percentage points higher than the lowest percentage
that such persons owned (within the meaning of Section 382) at any time during a
specified three-year testing period. In general, persons who own 5% or more of
a company's stock are "5-percent shareholders," and all other persons who own
less than 5% of a company's stock are treated, together, as a single, public
group, "5-percent shareholder" (regardless of whether they own an aggregate of
5% of the Company Common Stock). For purposes of determining percentage
ownership, Section 382 generally defines stock to include all issued and
outstanding stock, except certain preferred stock. In addition, Treasury
Regulations provide that certain stock that may be acquired pursuant to
warrants, options, rights to purchase stock, rights to convert other instruments
into stock, and options or other rights to acquire any such interest may under
certain circumstances be deemed to have been acquired for purposes of
determining the occurrence of an Ownership Change under Section 382 of the Code.
Section 382 employs complicated attribution, aggregation and segregation
rules to identify "5-percent shareholders." The attribution rules require,
among other things, that stock ownership be attributed from entities to their
beneficial owners until the stock ownership has been attributed to individuals.
Any individual who indirectly owns 5% of the Company is treated as a "5-percent
shareholder" of the Company. The aggregation rules cause certain shareholders
to be aggregated into one or more public group "5-percent shareholders." The
segregation rules cause the public group "5-percent shareholders" to be
fragmented into multiple public group "5-percent shareholders" and have the
effect of increasing the probability that an Ownership Change will occur. The
segregation rules generally apply, with certain exceptions, to issuances and
redemptions of stock by the Company, certain reorganizations involving the
Company, dispositions of stock by certain "5-percent shareholders" and the
deemed exercise of options (and similar instruments) to buy Company Common
Stock. For example, under these segregation rules, if the Company purchased
Company Common Stock from its stockholders, the degree to which the ownership of
the Company has changed under Section 382 would increase and the Company would
be closer to undergoing an Ownership Change.
Calculating whether an Ownership Change has occurred is subject to inherent
uncertainty (both because of the complexity and ambiguity of the Section 382
provisions and because of limitations on a publicly-traded corporation's
knowledge as to the ownership of, and transactions in, its securities). The
Company believes that, as of December 31, 1995, no Ownership Change had occurred
with respect to the Company. However, the Company estimates that the aggregate
percentage increase in the ownership of its capital stock by "5-percent
shareholders" (within the meaning of Section 382) over the three year period
ended December 31, 1995 was over 30%. As indicated above, certain transfers of
Company Common Stock by or to "5-percent shareholders" (as defined in Section
382) could result in an Ownership Change. The Company does not currently have
the ability to prevent transactions that could result in an Ownership Change.
26
<PAGE>
SUMMARY OF TRANSFER RESTRICTIONS
GENERAL. The following is a summary of the Transfer Restrictions, which are
set forth in Article Eleventh of the Holdings Certificate of Incorporation to be
in effect immediately following the Reorganization. See Appendix B. The
following summary is subject in its entirety to Appendix B. The Transfer
Restrictions apply to transfers of Holdings Common Stock and any other
instrument that would be treated as "stock," as determined under applicable
Treasury Regulations (collectively, "Holdings Stock"). The Transfer
Restrictions will apply until the earlier of (x) the day after the 15th
anniversary of the effective date of the Reorganization, (y) the repeal of
Section 382 if the Holdings Board determines the Transfer Restrictions are no
longer necessary, and (z) the beginning of a taxable year of Holdings to which
the Holdings Board determines that no Tax Benefits may be carried forward.
However, the Holdings Board will have the power to accelerate or extend the
expiration date of the Transfer Restrictions if it determines in writing that
such action is reasonably necessary or desirable to preserve the Tax Benefits or
that the continuation of the Transfer Restrictions is no longer reasonably
necessary for the preservation of the Tax Benefits.
PROHIBITED TRANSFERS. The Transfer Restrictions will generally prohibit,
from the Effective Time, any "Transfer" by any person to any other person (the
term "Transfer" being broadly defined to include any conveyance, by any means,
of legal or beneficial ownership, directly or indirectly, including indirect
transfers of Holdings Stock accomplished by transferring interests in other
entities that own Holdings Stock) to the extent that the Transfer, if effective,
would:
(a) give rise to a "Prohibited Ownership Percentage," which is defined by
reference to complex federal tax laws and regulations, but generally
means any direct or indirect ownership that would cause any person
(including a "public group," as defined in Section 382, with certain
modifications (a "Public Group")) to be considered a "5-percent
shareholder" under Section 382, with certain modifications;
(b) increase the ownership percentage of any person (including a Public
Group) that is already a "5-percent shareholder" under Section 382, with
certain modifications; or
(c) create a new "public group" as defined in Section 382 (under Section 382,
the transfer of Stock by an existing "5-percent shareholder" to the
public would be deemed to result in the creation of a separate,
segregated "public group" that would be a new "5-percent shareholder,"
each as defined in Section 382).
Holdings will be entitled to require, as a condition to the registration of
any Transfer of Stock, that the proposed transferee furnish to Holdings all
information reasonably requested by it with respect to all the direct and
indirect beneficial or legal ownership interest in, or options to acquire, Stock
of the proposed transferee and its affiliates.
TREATMENT OF PREEXISTING 5-PERCENT SHAREHOLDERS. In order to achieve what
the Company Board believes to be a reasonable balance between the Company's need
to prevent transfers that could cause an Ownership Change and the desire of
Company Stockholders to be able to transfer their shares without undue
restrictions, the Transfer Restrictions will contain exceptions permitting
certain otherwise-prohibited transfers by "Preexisting 5-Percent Shareholders."
In general, "Preexisting 5-Percent Shareholders" include the following persons
and entities, as well as certain persons and entities with specified ownership
interests in such persons or entities: (i) the owners of 5% or more of the
Company Common Stock referred to in the "BENEFICIAL OWNERSHIP OF PRINCIPAL
STOCKHOLDERS" section; (ii) any other person who establishes to the satisfaction
of the Holdings Board that such person was a direct or indirect owner of 5% of
the Company Common Stock on February __, 1996 (the day before the Company's
first public announcement of its intention to seek to implement the Transfer
Restrictions); and (iii) the subsidiaries of Berkshire Hathaway Inc.
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Preexisting 5-Percent Shareholders will receive different treatment in two
respects under the Transfer Restrictions. First, in contrast to the treatment of
all other stockholders of Holdings, a transfer of any interest in any
Preexisting 5-Percent Shareholder (for example, the stock of Berkshire Hathaway
Inc., a partnership interest in ESL Partners, L.P. or a beneficial interest in a
family trust established by Mr. Guerin) will not be prohibited, notwithstanding
the fact that such transfer would constitute a transfer of a proportionate
amount of such Preexisting 5-Percent Shareholder's ownership of Holdings Common
Stock for purposes of Section 382. Second, in contrast to the treatment of
persons who become "5-percent shareholders" of the Company (for purposes of
Section 382) on or after February , 1996, and before the Effective Time, who
will be prohibited (pursuant to the prohibitions described in paragraphs (a),
(b) and (c) under "Prohibited Transfers" above) from disposing of any shares of
Holdings Common Stock without the express consent of the Holdings Board, a
transfer of shares of Holdings Common Stock by (but not to) a Preexisting
5-Percent Shareholder will be permitted if it would otherwise be prohibited by
the prohibition described in paragraph (c) under "Prohibited Transfers" above so
long as such transfer would not also be prohibited by either of the prohibitions
described in paragraph (a) or (b) under "Prohibited Transfers" above and the
transferred shares of Holdings Common Stock were acquired in exchange for shares
of Company Common Stock already owned by such Preexisting 5-Percent Shareholder
on February , 1996. These provisions will not permit the Preexisting 5-Percent
Shareholders to increase their ownership of Holdings Common Stock without
specific approval of the Holdings Board but will provide some measure of
flexibility in the ability of Preexisting 5-Percent Shareholders to dispose of
shares of Holdings Common Stock they receive in exchange for shares of Company
Common Stock already owned by them prior to the Company's first public
announcement of its intention to seek to implement the Transfer Restrictions.
EXEMPTIVE POWER OF HOLDINGS BOARD. The Holdings Board will have the power to
approve any otherwise-prohibited Transfer, conditionally or unconditionally, if
it determines that a specific proposed transaction will not jeopardize Holdings'
full utilization of the Tax Benefits. In addition, the Holdings Board will have
the power to waive any of the Transfer Restrictions in any instance where it
determines that a waiver would be in the best interests of Holdings
notwithstanding the effect of such waiver on the Tax Benefits.
CONSEQUENCES OF PURPORTED PROHIBITED TRANSFER. Any non-exempt purported
Transfer in excess of the shares of Holdings Common Stock that could be
transferred without restriction will not be effective to Transfer ownership of
such excess shares (the "Prohibited Shares") and the purported acquiror thereof
(the "Purported Acquiror") will not be entitled to any rights as a shareholder
of Holdings with respect to the Prohibited Shares.
In the case of a purported Transfer that is prohibited under the provisions
summarized in clauses (a) or (b) of the paragraph set forth above under the sub-
caption "Prohibited Transfers" (but not clause (c) of such paragraph) or in the
case of a Transfer of Holdings Common Stock that would cause a person or Public
Group to become a "Prohibited Party" as discussed below, Holdings will have the
right (and an obligation to exercise such right within 30 business days of
learning of such prohibited Transfer, although failure to act within such period
will not constitute a waiver of or any of Holdings' rights) to demand that the
Purported Acquiror or Prohibited Party Group (as defined below) transfer any
certificate or other evidence of purported ownership of the Prohibited Shares
within the Purported Acquiror's or Prohibited Party Group's possession or
control, along with any dividends or other distributions received thereon from
Holdings ("Prohibited Distributions"), to an agent designated by Holdings (the
"Agent") who will be required to sell the Prohibited Shares in an arm's-length
transaction (through the NYSE, if possible, but in any event consistent with
applicable law), with sale proceeds in excess of the Agent's expenses plus the
purchase price paid by the Purported Acquiror for the Prohibited Shares (if they
were purchased) or the fair market value of the Prohibited Shares (if they were
the subject of a gift or inheritance in favor of the Purported Acquiror), as
well as all Prohibited Distributions, being required to be paid to a tax-exempt
charitable organization designated by Holdings. If the Purported Acquiror has
sold the Prohibited Shares to an unrelated party in an arm's-length transaction,
the Purported Acquiror will be deemed to have done so for the Agent, who will
have the right to allow the Purported Acquiror to retain a portion of the resale
proceeds not exceeding the amount that the Agent would have been required to
remit to the Purported Acquiror out of the proceeds of a resale by the Agent.
Any purported Transfer of the Prohibited Shares by the Purported Acquiror (other
than a Transfer which (a) is described in the preceding sentences of this
paragraph and (b) does not itself violate the Transfer Restrictions) will not be
effective to Transfer any ownership of the Prohibited Shares.
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In addition to its above-described powers, if the Holdings Board determines
that a purported prohibited Transfer or other action in violation of the
Transfer Restrictions has occurred or is proposed, it may take such action as it
deems advisable to prevent or refuse to give effect to such purported Transfer
or other action, including refusing to give effect to such purported Transfer or
other action on Holdings' books or instituting injunctive proceedings.
If any person knowingly violates the Transfer Restrictions (or knowingly
causes any entity under such person's control to do so), such person (and, if
applicable, the controlled entity) will be jointly and severally liable to
Holdings in such amount as will, on an after-tax basis, put Holdings in the same
financial position as it would have been in had such violation not occurred.
With respect to any Transfer of Holdings Stock which does not involve a
transfer of "securities" of Holdings within the meaning of the Delaware
Corporate Law ("Securities") but which would cause any person or Public Group
(the "Prohibited Party") to violate the provisions summarized in clauses (a) or
(b) of the paragraph set forth above under the sub-caption "Prohibited
Transfer," the following procedure will apply. The Prohibited Party and/or any
person or Public Group whose ownership of Holdings Stock is attributed to the
Prohibited Party under Section 382 (collectively, the "Prohibited Party Group")
will be deemed to have disposed of (and will be required to dispose of)
sufficient Securities, simultaneously with the Transfer, to cause the Prohibited
Party not to be in violation of the provisions summarized in either of those
clauses, and such Securities will be treated as Prohibited Shares to be disposed
of through the Agent under the provisions summarized above, with the maximum
amount payable to the Prohibited Party from the proceeds of sale by the Agent
being the fair market value of the Prohibited Shares at the time of the
prohibited Transfer.
Notwithstanding the above-described enforcement provisions, nothing in the
Transfer Restrictions will preclude the settlement of any transaction involving
Holdings Stock entered into through the facilities of the NYSE, the PSE or any
other national securities exchange.
OTHER POWERS OF THE HOLDINGS BOARD. The Holdings Board will have the power
to accelerate or extend the expiration date of the Transfer Restrictions, modify
the definitions of any terms set forth therein or conform certain provisions to
make them consistent with any future changes in federal tax law, in the event of
a change in law or regulation or if it otherwise believes such action is in the
best interests of Holdings, provided the Holdings Board determines in writing
that such action is reasonably necessary or desirable to preserve the Tax
Benefits or that continuation of the Transfer Restrictions is no longer
reasonably necessary for the preservation of the Tax Benefits. In addition, the
Holdings Board will have the power to adopt By-laws, regulations and procedures,
not inconsistent with the Transfer Restrictions, for purposes of determining
whether any acquisition of Stock would jeopardize the ability of Holdings to
preserve and use the Tax Benefits and for the orderly application,
administration and implementation of the Transfer Restrictions. The Holdings
Board will also have the exclusive power and authority to administer, interpret
and make calculations under the Transfer Restrictions, which actions shall be
final and binding on all parties if made in good faith.
Except for amendments made by the Holdings Board of Directors as described
above, the Transfer Restrictions may not be amended or deleted from the Holdings
Certificate of Incorporation unless the approval of 66 2/3% of the holders of
the outstanding shares of Holdings Common Stock is obtained.
ANTI-TAKEOVER EFFECT OF TRANSFER RESTRICTIONS. The Transfer Restrictions (i)
may have the effect of impeding the attempt of a person or entity to acquire a
significant or controlling interest in Holdings, (ii) may render it more
difficult to effect a merger or similar transaction even if such transaction is
favored by a majority of the independent stockholders and (iii) may serve to
entrench management. In addition to the Transfer Restrictions, Holdings will be
subject to certain other provisions of the Holdings Certificate of
Incorporation, which the Company is currently subject to, that may have the
effect of discouraging a takeover or similar transaction, including (a) a
classified Board of
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Directors, (b) the authority, vested in the Holdings Board, to issue up to one
million shares of preferred stock and to fix the preferences and rights thereof,
(c) the requirement that stockholder amendments to the Holdings By-laws be
approved by 66-2/3% of the outstanding shares of Holdings Common Stock, (d) the
elimination of the ability of the stockholders of Holdings to act by written
consent, (e) the requirement that certain business combinations with related
persons be approved by 66-2/3% of the outstanding shares of Holdings Common
Stock and 50% of the shares held by stockholders other than related persons and
(f) the requirement that amendments to the Holdings Certificate of Incorporation
relating to items (a), (d) and (e) be approved by 66-2/3% of the outstanding
shares of Holdings Common Stock and 50% of the shares of Holdings Common Stock
held by stockholders other than related persons. The 66-2/3% and 50% approval
requirements are also applicable to stockholder amendments of the Transfer
Restrictions.
In addition, the Holdings By-laws will contain a provision (identical to a
provision in the Company's By-laws) which permits stockholders to call a special
meeting of the stockholders if, and only if, the purpose of the special meeting
is to remove a director or directors for cause.
The purpose of the Transfer Restrictions is to help preserve the Tax
Benefits, however, not to have an anti-takeover effect. The Company Board and
the Holdings Board believe that the benefits of the Transfer Restrictions
outweigh any anti-takeover effect that they may have. In addition, management
does not presently intend to adopt any anti-takeover measures. For a
description of the effect of the Reorganization on the Company Rights Plan see
"Form of Reorganization" below.
FORM OF THE REORGANIZATION
The Company incorporated Holdings and Merger Sub under the laws of the State
of Delaware in January, 1996 for the purposes of accomplishing the
Reorganization. Pursuant to the Reorganization Agreement, Merger Sub will merge
with and into the Company, with the Company being the surviving corporation. In
connection with the Reorganization, (i) each share of Company Common Stock will
be converted into the right to receive one share of Holdings Common Stock, (ii)
each share of common stock of Merger Sub held by Holdings will be automatically
converted on a one-for-one basis into shares of Company Common Stock, and (iii)
shares of Holdings Common Stock held by the Company prior thereto will be
cancelled. As a result of the Reorganization, Holdings will become the owner of
all of the outstanding shares of Company Common Stock and each Company
Stockholder will become the owner of one share of Holdings Common Stock for each
share of Company Common Stock held immediately prior to the Reorganization. In
addition, each outstanding option to acquire Company Common Stock will become an
option to acquire an equivalent number of shares of Holdings Common Stock. A
vote in favor of the Reorganization will constitute a vote in favor of the
assumption of such options by Holdings for the purposes of Rule 16b-3 under the
Exchange Act. See "EXECUTIVE COMPENSATION -- Stock Options" for a description
of options held by certain executive officers. With the exception of the
assumption of Holdings of the options to purchase Company Common Stock and the
guarantee by Holdings of one long-term obligation of approximately $20 million
relating to certain leased aircraft (which will be provided by Holdings in order
to obtain required consent to the Reorganization from one of the Company's
lenders), it is not generally contemplated that Holdings will assume or
guarantee any of the Company's obligations.
The Reorganization will become effective, and the Effective Time will occur,
immediately upon the filing of a Certificate of Merger in accordance with the
Delaware Corporate Law and upon the satisfaction or waiver of the conditions to
the Reorganization. It is presently contemplated that the Certificate of Merger
will be filed, and the Effective Time will occur, promptly following approval of
the Reorganization by the Company Stockholders at the Annual Meeting, or as soon
as practicable thereafter as the conditions to the Reorganization may be
satisfied. See "Conditions to the Reorganization and Abandonment."
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EFFECT OF REORGANIZATION UNDER THE RIGHTS PLAN
Pursuant to the Rights Plan, one preferred share purchase right (a "Right")
has been issued for, and trades with, each outstanding share of Company Common
Stock. Each Right entitles the holder to buy 1/100th of a share of a junior
participating preferred stock, Series D, at an exercise price (subject to
possible adjustment) of $100 per Right. The Rights become exercisable and
separately transferable only if a party becomes an "Acquiring Person" (as
defined below) or announces a tender offer for 30% or more of the Company Common
Stock. Upon becoming exercisable, the Rights also permit a holder (other than an
Acquiring Person) (i) in the event the Company is merged with another company,
to receive a number of shares of common stock of the surviving company having a
market value of twice the exercise price of each Right, or (ii) in the event a
party becomes an Acquiring Person or in the event of self-dealing by a control
shareholder, to receive a number of shares of Company Common Stock having a
market value of twice the exercise price of each Right. The Rights Plan defines
an Acquiring Person as any party that acquires 20% or more of the Company Common
Stock except that Warren E. Buffett, Berkshire or their affiliates only become
an Acquiring Person if they acquire 45% or more of the Company Common Stock. The
Rights are currently scheduled to expire on July 10, 1996. The Company has
amended the Rights Plan to provide that the Rights will not be triggered by the
consummation of the Reorganization. Immediately following the Reorganization,
Holdings will not have in effect a shareholder rights plan comparable to the
Company Rights Plan. The Company Board has not yet determined what action will
be taken with respect to the Company Rights Plan upon expiration of the Rights
in the event that the Reorganization is not consummated by the time the Rights
expire. There has been no discussion between the Company and Mr. Buffett or
Berkshire with respect to the application of the Berkshire Agreement or the
Buffett Commitment (see footnote (1) to the table under "BENEFICIAL OWNERSHIP OF
PRINCIPAL STOCKHOLDERS"), which by their terms apply to shares of Company Common
Stock and certain actions of Berkshire or Mr. Buffett with respect to the
Company, to the Reorganization and the conversion therein of Company Common
Stock to Holdings Common Stock.
CONDITIONS TO THE REORGANIZATION AND ABANDONMENT
The Reorganization Agreement provides that it shall not become effective
until all of the following first shall have occurred: (i) the Reorganization
Agreement shall have been approved by a vote of the holders of a majority of the
issued and outstanding Company Common Stock; (ii) the Company shall have
received, in form and substance satisfactory to it, an opinion from counsel with
respect to certain federal income tax effects of the Reorganization and the
provisions of the Transfer Restrictions (the Company has determined that this
condition has been satisfied); (iii) Holdings Common Stock to be issued in
exchange for Company Common Stock shall be approved for listing, upon official
notice of issuance, by the NYSE and the PSE; and (iv) the Company and Holdings
shall have obtained any other necessary consents, approvals or authorizations
the Company deems necessary or appropriate for the Reorganization. It is
currently anticipated that none of these conditions will be waived by Holdings
or the Company and that all of them will be satisfied. No material federal or
state regulatory approvals are required in connection with the Reorganization.
An opinion of counsel passing upon the description contained herein of the
federal income tax consequences of the Reorganization has been received. See
"THE REORGANIZATION -- Certain Federal Income Tax Consequences."
If stockholders of the Company approve the Reorganization at the Annual
Meeting, the Reorganization is expected to become effective as soon as
practicable after the other conditions to consummation of the Reorganization
have either been satisfied or waived. If the Reorganization is not approved by
the Company's stockholders, the Company will continue to operate without the
Transfer Restrictions and without a holding company structure. All expenses
which relate to the Reorganization will be paid by the Company whether or not
the Reorganization is approved by its stockholders and the Reorganization is
consummated.
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The Reorganization Agreement provides that the Company and Merger Sub, by
mutual consent of their respective Board of Directors, may amend, modify or
supplement the Reorganization Agreement, and the Board of Directors of the
Company may terminate the Reorganization Agreement or abandon the Reorganization
at any time prior to the Effective Time, even following stockholder approval.
CERTIFICATE OF INCORPORATION AND BY-LAWS
The following is a summary of the material differences between the Holdings
Certificate of Incorporation and Holdings By-laws to be in effect immediately
following the Reorganization, on the one hand, and the Company Certificate of
Incorporation and Company By-laws, on the other. THE FULL TEXT OF THE HOLDINGS
CERTIFICATE OF INCORPORATION AND THE HOLDINGS BY-LAWS TO BE IN EFFECT
IMMEDIATELY FOLLOWING THE REORGANIZATION ARE ATTACHED AS APPENDICES B AND C,
RESPECTIVELY, TO THIS PROSPECTUS/PROXY STATEMENT, AND ANY DISCUSSION OF THE
HOLDINGS CERTIFICATE OF INCORPORATION AND HOLDINGS BY-LAWS CONTAINED HEREIN,
INCLUDING THE DISCUSSION BELOW, IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
THERETO.
The Holdings Certificate of Incorporation will contain provisions
substantially the same as those in the Company's Certificate of Incorporation,
with the following exceptions: (i) The Company's Certificate of Incorporation
does not contain the Transfer Restrictions that will be included in Article XI
of the Holdings Certificate of Incorporation; (ii) Article I of the Company's
Certificate of Incorporation provides that the corporate name is "PS Group,
Inc.", while Article I of the Holdings Certificate of Incorporation will provide
that the corporate name is "PS Group Holdings, Inc."; (iii) Article V of the
Company Certificate of Incorporation classifies the Company Board into three
classes with initial terms ending in 1979, 1980 and 1981, respectively, whereas
the Holdings Certificate of Incorporation will classify the Holdings Board into
three classes but the initial terms will end in 1997, 1998 and 1999,
respectively, thus giving the provision current relevance; and (iv) Article X of
the Company Certificate of Incorporation provides that certain articles therein
may not be amended without approval of holders of at least two-thirds of the
outstanding Company Common Stock; the Holdings Certificate will contain an
identical two-thirds approval requirement but will add to the list of articles
governed by such requirement Article XI containing the Transfer Restrictions.
The Holdings By-laws will be substantially identical to the Company's By-laws
as in effect immediately before the Effective Time, with the following
exceptions: (i) a change in the Holdings By-laws (corresponding to the change
in the Holdings Certificate of Incorporation summarized above) relating to the
initial terms of the three classes of directors on the Holdings Board; (ii) the
provision currently in the Company By-laws relating to the obligations of the
Company and its transfer agent with respect to transfers of stock of the Company
will be included in the Holdings By-laws but will contain a qualifying provision
by reference to the Transfer Restrictions and to any by-laws or other written
rules adopted pursuant thereto; and (iii) a provision in the Company By-laws
concerning consent solicitation procedures will be deleted from the Holdings By-
laws because it would be inconsistent with a provision in the Holdings
Certificate of Incorporation eliminating shareholder action by written consent
in lieu of a meeting. Such provision in the Holdings Certificate of
Incorporation will be identical to a provision in the Company Certificate of
Incorporation which is inconsistent with, and under the Delaware Corporate Law
prevails over, the applicable provision in the Company By-laws. Thus, the
difference between the Holdings By-laws and the Company By-laws referred to in
(iii) will not effect any substantive difference between the rights of holders
of Holdings Common Stock and the rights of holders of Company Common Stock.
APPRAISAL RIGHTS
Pursuant to Section 262 of the Delaware Corporate Law, no holder of Company
Common Stock will have appraisal rights in connection with the Reorganization
because the Company Common Stock is listed on a national securities exchange,
and the Company's stockholders will be required under the terms of the
Reorganization Agreement to accept shares of Holdings Common Stock for their
Company Common Stock.
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BOARD OF DIRECTORS AND MANAGEMENT OF HOLDINGS
BOARD OF DIRECTORS. The Holdings Board will consist of the same five
individuals who comprise the Company Board immediately before the Effective
Time, classified into three classes on the basis of their respective remaining
terms as directors of the Company and with their respective terms as directors
of Holdings expiring when their respective terms of office as directors of the
Company would have expired. For information regarding the Company Board, see
"ELECTION OF DIRECTORS."
The directors of Holdings and of the Company are divided into three
approximately equal classes, with members of one class to be elected annually
for a term of three years and until their successors are elected and qualified.
The first class of directors, whose term expires 1997, consists of Mr. J.P.
Guerin; the second class of directors, whose term expires in 1998, consists of
Messrs. Robert M. Fomon and Gordon C. Luce and in connection with the Annual
Meeting, the stockholders will have the opportunity to elect two directors to
the third class of directors, whose term expires in 1999. The two nominees for
the third class of directors are Messrs. Charles E. Rickershauser, Jr. and
Donald W. Killian, Jr., currently directors of the Company with terms expiring
in 1996. Approval of the Reorganization by the stockholders of the Company will
be deemed to be approval of the directors of Holdings without further action and
without changes in classes and terms. Following expiration of the term of a
class of directors of Holdings, the successors to such directors will be elected
by the stockholders of Holdings. After the Effective Time, the Board of
Directors of the Company will be elected by Holdings, as the sole stockholder of
the Company.
The Holdings Board has established executive and audit committees, which have
the same members as the current comparable committees of the Company Board, and
the entire Holdings Board will serve as its compensation committee, as is
presently the case with the Company.
MANAGEMENT. The three individuals who are executive officers of the Company
immediately before the Effective Time will be the only executive officers of
Holdings immediately following the Effective Time, holding corresponding
offices. The executive officers of Holdings and the Company currently are as
follows: Charles E. Rickershauser, Jr., Chairman of the Board and Chief
Executive Officer; Lawrence A. Guske, Vice President-Finance, Chief Financial
Officer; Johanna Unger, Vice President, Controller and Secretary. At the
present time, Holdings does not intend to have any employees.
Although no determination has yet been made as to the allocation of the
compensation of the present directors and executive officers of the Company as
between their service for Holdings and their service (if any) for the Company
following the Reorganization, the aggregate compensation and benefits of those
individuals will not increase as a result of the Reorganization; they will
continue to receive the same aggregate compensation and benefits as they
presently receive from the Company (unless and until such compensation and
benefits are changed at some future time following the Effective Time by the
Holdings Board). Further, no change is contemplated in the compensation
philosophy established by the Holdings Board sitting as the compensation
committee.
PRO FORMA AND COMPARATIVE FINANCIAL STATEMENTS; ACCOUNTING
Under generally accepted accounting principles, the Reorganization will be
accounted for on an historical cost basis similar to that used in pooling-of-
interest accounting whereby the consolidated assets and liabilities of Holdings
will be recorded at the historical cost of the Company as reflected on the
Company's pre-Effective Time consolidated financial statements. Accordingly, the
consolidated financial statements of Holdings immediately following the
Effective Time will be the same as the consolidated financial statements of the
Company immediately prior to the Effective Time. For this reason, pro forma and
comparative financial information regarding Holdings and its consolidated
subsidiaries giving effect to the Reorganization have not been included herein.
Similarly, no selected historical pro forma and other financial data have been
included because the Reorganization will have no effect on the Company's
historical consolidated financial statements.
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CONVERSION OF SECURITIES IN THE REORGANIZATION
Each share of Company Common Stock outstanding immediately prior to the
Reorganization will be converted, by reason of the Reorganization, pursuant to
the Reorganization Agreement and without any action by the holder thereof, into
the right to receive one share of Holdings Common Stock. The relative powers,
designations, preferences, rights and qualifications of Holdings Common Stock,
as in effect immediately prior to the Reorganization, will be substantially
equivalent in all material respects to the Company Common Stock so converted,
except that Holdings Common Stock will be subject to the Transfer Restrictions
and Holdings will not, at the Effective Time, have in effect a shareholder
rights plan comparable to the Company Rights Plan. Upon consummation of the
Reorganization, the Company's outstanding options will be converted into options
to purchase Holdings Common Stock.
Prior to the Reorganization, the Company Common Stock is listed on the NYSE
and PSE under the symbol "PSG." Following the Reorganization, Holdings Common
Stock will be listed on the NYSE and PSE under the symbol "PSG." On
[____________], 1996, the last full trading day on which shares of Company
Common Stock were traded prior to the announcement of the Reorganization, the
highest and lowest sale price of a share of Company Common Stock were,
respectively, [$____] and [$_____]. On [________], 1996, the closing price of a
share of Company Common Stock on the NYSE was $[_____].
EXCHANGE OF CERTIFICATES
At the Effective Time, holders of certificates representing Company Common
Stock will cease to have any rights with respect to such shares of Company
Common Stock and each such certificate will be deemed to evidence the shares of
Holdings Common Stock for which such shares are exchanged in the Reorganization.
The stock transfer books of the Company will be closed at the close of business
on the business day immediately preceding the Effective Time, and the holders of
record of Company Common Stock as of the Effective Time will be the holders of
record of Holdings Common Stock immediately after the Effective Time.
As soon as practicable after the Effective Time, Holdings will furnish a
letter of transmittal to stockholders for use in exchanging their stock
certificates (each a "Letter of Transmittal"), which will contain instructions
with respect to the surrender of Company Common Stock certificates and the
distribution of Holdings Common Stock certificates. The Company's stockholders
should not send in certificates until they receive the Letter of Transmittal.
The Company's stockholders who fail to exchange their Company Common Stock
certificates on or after the Effective Time by surrendering such certificates,
together with a properly completed Letter of Transmittal, to the agent
designated by the Company and Holdings (the "Exchange Agent") will not receive
certificates representing their Holdings Common Stock. Any dividends declared
or distributions made on shares of Holdings Common Stock which such holders have
a right to receive will be retained by Holdings until such holders surrender
their Company Common Stock certificates in exchange for Holdings Common Stock
certificates or until paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. No interest will accrue or be payable with
respect to any dividends or distributions retained on unissued Holdings Common
Stock certificates. In no event will the Exchange Agent, the Company or
Holdings be liable to any holder of Company Common Stock for dividends or
distributions on shares of Holdings Common Stock delivered in good faith to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
After the Effective Time, there shall be no transfers on the stock transfer
books of the Company of the shares of Company Common Stock which were issued and
outstanding immediately prior to the Effective Time. If, after the Effective
Time, certificates representing shares of Company Common Stock are presented for
transfer, no transfer shall be effected on the stock transfer books of Holdings
with respect to such shares and no certificate shall be issued
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representing the shares of Holdings Common Stock exchangeable for such shares of
Company Common Stock unless and until the Company Common Stock certificate
representing such shares of Company Common Stock is delivered to the Exchange
Agent together with a properly completed Letter of Transmittal (or such other
documents as are satisfactory to Holdings and the Exchange Agent in their sole
discretion). In addition, it will be a condition to the issuance of any
certificate for any shares of Holdings Common Stock in a name other than the
name in which the surrendered Company Common Stock certificate is registered
that the person requesting the issuance of such certificate either pay to the
Exchange Agent any transfer or other taxes required by reason of the issuance of
a certificate of Holdings Common Stock in a name other than the registered
holder of the certificate surrendered, or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Company has received an opinion from Munger, Tolles & Olson, tax counsel
to the Company and Holdings in connection with the Reorganization as to certain
federal income tax considerations with respect to the Reorganization that are
generally applicable to the holders of Company Common Stock, the Company,
Holdings and Merger Sub. These considerations are summarized below. This
summary is qualified in its entirety by reference to, and is based upon, laws,
regulations, rulings and decisions now in effect, all of which are subject to
change, and such changes may or may not be retroactive. This summary does not
discuss all aspects of federal income taxation that may be relevant to a
particular stockholder or to certain types of stockholders subject to special
treatment under the federal income tax laws (for example, banks, insurance
companies, tax-exempt organizations, dealers in securities or foreign
taxpayers), or any aspect of state, local or foreign tax laws. This summary
only applies to stockholders who hold stock of the Company or will hold stock of
Holdings as a capital asset. There can be no assurance that the Internal
Revenue Service (the "Service") will not take a contrary view with respect to
any of the items discussed herein, and no ruling from the Service has been or
will be sought.
EACH STOCKHOLDER SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR TO DETERMINE
THE SPECIFIC TAX CONSEQUENCES OF THE REORGANIZATION TO SUCH STOCKHOLDER.
As a result of the Reorganization, the Company believes that the holders of
Company Common Stock will: (1) recognize no gain or loss upon the receipt of
Holdings Common Stock in exchange for their Company Common Stock; (2) have an
initial tax basis in Holdings Common Stock received that is the same as their
adjusted tax basis in the Company Common Stock exchanged therefor; and (3) have
a holding period for Holdings Common Stock received that includes their holding
period for their Company Common Stock exchanged therefor.
In addition, the Company believes that the Company, Holdings and Merger Sub
should not recognize any taxable gain or loss as a result of the Reorganization,
and the Reorganization and the adoption of the Transfer Restrictions should not
impair the ability of Holdings, the Company and other members of their
affiliated group which file a consolidated federal income tax return, to utilize
the Tax Benefits.
STOCKHOLDER PROPOSAL
Joseph S. Pirinea, 119 Jackson Street, Hempstead, New York 11550, who has
informed the Company that he is the beneficial owner of 60,850 shares of Company
Common Stock, has notified the Company of his intention to introduce a proposal
for consideration and action by the Company Stockholders at the Annual Meeting.
Mr. Pirinea's proposal, for which the Company Board and the Company accept no
responsibility, is set forth below verbatim. THE COMPANY BOARD OPPOSES THIS
STOCKHOLDER PROPOSAL FOR THE REASONS STATED AFTER THIS PROPOSAL.
35
<PAGE>
"WHEREAS, in March, 1994 the management of PS Group, Inc. sold the assets
of USTravel Systems, Inc., and in December 1994 the major asset of Recontek,
Inc. (both were subsidiaries of PS Group).
WHEREAS, in October, 1994 reflecting the reduced operations of PS Group,
management accepted the resignation of its President/CEO and its Vice
President/General Counsel. As a result of the above, it appointed Mr.
Rickershauser, Chief Executive Officer. This position was in addition to his
role as Chairman of the Board. Both positions require only part time service
by Mr. Rickershauser.
WHEREAS, the corporations major asset and cash flow generator is its
aircraft leasing subsidiary which leases the bulk of its fleet to US Air,
Inc.
WHEREAS, in 1995 PS Group, Inc. continued to sell at an approximate 50%
discount to book value despite the sale of its money losing operations in
1994; and the return to profitability in 1995. It should be noted that US
Air, Inc. also returned to profitability in 1995.
RESOLVED, Shareholders request the Board of Directors to approve the
engagement of an Investment Banking Firm to assist management in determining
the most efficient way to maximize shareholder value and utilize its Federal
and State tax loss carryforwards and tax credits. The retention of an
Investment Banking Firm would assist management in evaluating different
alternatives to increasing shareholder value, while avoiding the necessity to
increase General and Administrative expenses which were reduced as a result
of its downsizing in 1994. Managements' engagement agreement with the
Investment Banking Firms should include: the feasibility of the sale or spin
off of PS Groups' subsidiaries (PS Trading and Statex), utilization of excess
cash flow to pay down debt, institute regular liquidating dividend payments
and or buying back stock. In addition the Investment Banking Firm should be
instructed to explore the possibility of utilizing excess cash flow to
purchase a profitable entity subject to a high corporate tax rate to offset
our tax loss carryforward benefits."
THE COMPANY BOARD RECOMMENDS A VOTE AGAINST THE STOCKHOLDER PROPOSAL FOR THE
-------
FOLLOWING REASONS:
The Company Board does not believe that it is in the best interests of the
Company or the Company Stockholders to adopt the stockholder proposal. The
Company Board believes that engaging an investment banking firm at this time
would be an unproductive use of the Company's funds.
The Company Board continuously monitors the Company's assets and resources
with a view to the interests of the Company Stockholders. For example: the
Company Board directed and oversaw the sale of the assets of the Company's
travel management and metallic waste recycling businesses in 1994; in December,
1995, the Company Board, based on an evaluation of the Company's condition at
year-end 1995, directed that a special distribution of $1.50 per share be made
to stockholders; and, in 1996, the Company Board has proposed that the Company
Stockholders approve the Reorganization in order to protect the Company's
substantial Tax Benefits.
Engaging an investment banking firm to perform any meaningful analysis of
prospective transactions would be expensive. Given the current condition,
prospects and operations of the Company and its subsidiaries, with which the
Company Board considers itself fully familiar, the Company Board believes that
any advice received from an investment banking firm would not be of sufficient
practical value to justify the expense.
In addition, the stockholder proposal recommends that several different
possible transactions be studied by an investment banking firm. The Company
Board believes that these proposed transactions are inadvisable at this time.
The bulk of the Company's revenues are derived from aircraft leases with USAir,
Inc. ("USAir"). Because of
36
<PAGE>
USAir's high operating costs and other factors, the future financial viability
of USAir continues to be uncertain, despite the fact that USAir showed a profit
in 1995. This uncertainty surrounding USAir creates uncertainty regarding the
Company's future cash flow revenues from its aircraft leases with USAir.
Accordingly, the Company does not believe it would be prudent at this time to
expend significant funds to consider any proposal (such as proposals to pay down
debt, institute regular dividend payments or make a substantial acquisition for
cash) that would require substantial future cash commitments. In addition,
because of the restrictions imposed under Section 382 and because any such
repurchase program could adversely affect the Company's Tax Benefits, it would
be unwise for the Company to expend significant funds to consider the adoption
of a stock repurchase program. See "THE REORGANIZATION -- Preservation of Tax
Benefits." Finally, the Company Board does not believe that it is appropriate
at this time to expend significant resources to consider the sale or spin-off of
any of the Company's subsidiaries, because, in the Company Board's view, none of
them is an appropriate acquisition candidate or viable stand-alone entity at
this time.
For the foregoing reasons, the Company Board recommends that stockholders
vote AGAINST the stockholder proposal.
LEGAL MATTERS
The validity of the securities being distributed hereby will be passed upon
for Holdings by Irell & Manella, Los Angeles, California. Munger, Tolles &
Olson, Los Angeles, California, will render an opinion to Holdings and the
Company as to certain federal income tax consequences of the Reorganization and
the Transfer Restrictions.
OTHER MATTERS
INDEPENDENT AUDITORS
Ernst & Young LLP were the Company's auditors for 1995 and have been
appointed to serve as auditors during 1996. A representative of Ernst & Young
LLP is expected to be present at the Annual Meeting with the opportunity to make
a statement if the representative desires to do so and to be available to
respond to appropriate questions. In the event the Reorganization is
consummated, it is contemplated that Ernst & Young LLP will serve as the
independent auditors of Holdings after the Effective Time.
STOCKHOLDER PROPOSALS
Under Article II, Section 10 of the Company By-laws, matters (other than a
nomination for the Company Board) may be brought before the annual meeting of
the Company by a stockholder only if pursuant to a timely notice to the
Secretary of the Company, which must include information about the matter and
the stockholder proposing such matter as required by the Company By-laws. To be
timely, notice must be delivered to or mailed and received at the Company's
executive offices not less than 30 days nor more than 60 days prior to the date
of an annual meeting; provided, however, that if less than 40 days' notice or
prior public disclosure of an annual meeting is given, a stockholder's notice
must be received at the principal offices of the Company not later than the
close of business on the 10th day following the day that notice of the meeting
was mailed or public disclosure of such meeting was made.
Under Article III, Section 3, of the Company By-laws, nominations of persons
for election to the Company Board, other than those made by the Company Board,
may be made at the Annual Meeting only if pursuant to a timely notice delivered
to the Secretary of the Company. To be timely, a stockholder's notice must be
delivered not less than thirty days prior to the date of the Annual Meeting. A
notice of nomination must set forth each nominee's name, age, business and
residential address, principal occupation or employment, beneficial ownership of
Company Common
37
<PAGE>
Stock and any other information relating to the nominee that is required to be
disclosed in solicitation of proxies pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended. Such notice shall also be
accompanied by a signed consent to serve as a director of the Company of each
such nominee.
Under the rules promulgated pursuant to the Securities Exchange Act of 1934
(the "Exchange Act Rules"), stockholders are entitled, subject to satisfaction
of the requirements of the Exchange Act Rules, to require the Company to include
a stockholder proposal in the proxy materials distributed by the Company. To be
considered for inclusion in the Company's 1997 proxy materials, stockholder
proposals must, in addition to complying with the procedures set forth in the
Company By-laws, comply with the Exchange Act Rules and must be submitted to the
Secretary of the Company at the Company's principal executive offices not later
than [_________, 1996]. Under the Exchange Act Rules, the Company is not
required to include in its proxy materials any stockholder proposal relating to
an election to office.
Following the Reorganization, all of the rules described above will apply to
stockholder proposals with respect to Holdings.
By Order of the Board of Directors
[Signature]
JOHANNA UNGER
Secretary
Dated: [________, 1996]
38
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF
REORGANIZATION BY AND AMONG
PS GROUP, INC., PS GROUP HOLDINGS, INC. AND
PSG MERGER SUBSIDIARY, INC.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
January 31, 1996, among PS Group, Inc., a Delaware corporation (the "Company"),
PS Group Holdings, Inc., a Delaware corporation ("Holdings"), and PSG Merger
Subsidiary, Inc., a Delaware corporation ("Merger Sub").
WITNESSETH:
WHEREAS, the Company has an authorized capital stock consisting of
10,500,000 shares of common stock, par value $1.00 per share (the "Company
Common Stock"), of which 6,068,313 shares are issued and outstanding on the date
hereof, and 1,000,000 shares of preferred stock, par value $1.00 per share, none
of which are outstanding on the date hereof; and
WHEREAS, Holdings has an authorized capital stock consisting of 10,500,000
shares of common stock, par value $1.00 per share (the "Holdings Common Stock"),
of which 100 shares are issued and outstanding and are held by the Company on
the date hereof, and 1,000,000 shares of preferred stock, par value $1.00 per
share, none of which are outstanding on the date hereof (the "Holdings Preferred
Stock"); and
WHEREAS, Merger Sub has an authorized capital stock consisting of 100
shares of common stock (the "Merger Sub Common Stock"), all of which are issued
and outstanding and are held by Holdings on the date hereof; and
WHEREAS, the Company, Holdings and Merger Sub desire to effect a
reorganization of the Company into a holding company structure (the
"Reorganization") by means of the Merger (as defined below), pursuant to which
the Company will become a wholly-owned subsidiary of Holdings and shareholders
of the Company will exchange their shares of Company Common Stock for shares of
Holdings Common Stock; and
WHEREAS, the boards of directors of the Company and Merger Sub each desire
that, to facilitate the Reorganization, Merger Sub merge with and into the
Company (the "Merger") pursuant to Section 251 of the General Corporation Law of
the State of Delaware (the "DGCL") on the terms set forth in this Agreement,
which is intended to constitute, inter alia, an agreement of merger for the
----------
purposes of the DGCL, and the boards of directors of the Company and Merger Sub
have each approved this Agreement; and
WHEREAS, the board of directors of Holdings has approved this Agreement and
authorized Holdings to join and be bound by it; and
WHEREAS, the board of directors of the Company has directed that this
Agreement be submitted to a vote of the Company's stockholders at a special
meeting of stockholders (the "Special Meeting"); and
WHEREAS, Holdings, as the sole stockholder of Merger Sub, and the Company,
as the sole stockholder of Holdings, have each adopted this Agreement;
NOW, THEREFORE, in consideration of the promises and mutual agreements
herein contained, the parties hereto agree as follows:
A-1
<PAGE>
ARTICLE 1: THE MERGER
1.1 The Merger; Effect of Merger. At the Effective Time (as defined in
----------------------------
Section 1.2 below), Merger Sub shall be merged with and into the Company
pursuant to Section 251 of the DGCL, the separate existence of Merger Sub shall
cease, and the Company, as the surviving corporation, shall continue its
corporate existence under the laws of the State of Delaware under the name of
"PS Group, Inc.," all with the effect provided in the DGCL. The Company, as the
surviving corporation, shall succeed, insofar as permitted by law, to all
rights, assets, liabilities and obligations of Merger Sub in accordance with the
General Corporation Law of the State of Delaware.
1.2 Effective Time. The Effective Time shall be the time at which a duly
--------------
executed and certified copy of a Certificate of Merger with respect to the
Merger (the "Certificate of Merger") is filed in the office of the Secretary of
State of Delaware in accordance with the provisions of the DGCL.
1.3 Company Certificate of Incorporation. The restated certificate of
------------------------------------
incorporation, as amended, of the Company, as in effect immediately prior to the
Effective Time, shall be and remain the restated certificate of incorporation,
as amended, of the Company, as the surviving corporation, following the
Effective Time until it shall be amended as provided by law.
1.4 Company By-laws. The by-laws of the Company, as in effect immediately
---------------
prior to the Effective Time, shall be and remain the bylaws of the Company, as
the surviving corporation, following the Effective Time until the same shall be
altered, amended or repealed.
1.5 The Company's Directors and Officers. The directors and officers,
------------------------------------
respectively, of the Company immediately prior to the Effective Time shall
continue as the directors and officers, respectively, of the Company following
the Effective Time, to hold office until the expiration of their current terms
or their prior resignation, removal or death.
1.6 Holdings' Certificate of Incorporation and By-laws. Prior to the
-------------------------------------------------
Effective Time, Holdings shall cause its Certificate of Incorporation and Bylaws
to read in their entirety substantially as set forth in Annexes A and B,
respectively.
ARTICLE 2: CONVERSION OF SHARES
2.1 Company Common Stock. At the Effective Time, automatically by virtue
--------------------
of the Merger and without any further action by any of the parties hereto or any
other person, each share of Company Common Stock issued and outstanding or held
in the treasury of the Company immediately prior to the Effective Time shall be
converted into the right to receive one share of Holdings Common Stock upon
compliance with the procedures specified in Article 3 of this Agreement. No
shares of Company Common Stock shall be issued or outstanding after the
Effective Time except as set forth in Section 2.2 below.
2.2 Merger Sub Common Stock. At the Effective Time, automatically by
-----------------------
virtue of the Merger and without any further action by any of the parties hereto
or any other person, each share of Merger Sub Common Stock outstanding
immediately prior to the Effective Time shall be converted into one share of
Company Common Stock and, as a result thereof, Holdings shall become the sole
stockholder of the Company.
A-2
<PAGE>
2.3 Holdings Common Stock. At the Effective Time, automatically by virtue
---------------------
of the Merger and without any further action by any of the parties hereto or any
other person, each share of Holdings Common Stock issued and outstanding and
held by the Company immediately prior to the Effective Time shall be cancelled
and cease to be issued or outstanding.
2.4 Stock Option Plans. At the Effective Time, Holdings shall assume and
------------------
continue the Company's 1984 Stock Incentive Plan, as amended, and the Recontek,
Inc. 1987 Employment Stock Option Plan (together with the 1984 Stock Incentive
Plan, the "Stock Option Plans"), be substituted as the "Company" under the terms
and provisions of each of the Stock Option Plans and assume all rights and
obligations of the Company under each of the Stock Option Plans as theretofore
in effect and all stock options outstanding thereunder (the "Outstanding
Options"). The Stock Option Plans and the Outstanding Options shall, pursuant
to their terms, thereafter apply to shares of Holdings Common Stock in the same
manner as they theretofore applied to shares of Company Common Stock. Prior to
the Effective Time, the Company shall take such action with respect to the Stock
Option Plans as is appropriate to facilitate performance of the foregoing
provisions of this Section 2.4.
ARTICLE 3: EXCHANGE OF STOCK CERTIFICATES
3.1 Appointment of Exchange Agent. At or prior to the Effective Time,
-----------------------------
Holdings shall appoint a bank or trust company selected by Holdings as exchange
agent ("Exchange Agent") for the purpose of facilitating the exchange of
certificates representing shares of Company Common Stock ("Company
Certificates") for certificates representing shares of Holdings Common Stock
("Holdings Certificates").
3.2 Exchange of Certificates. As soon as practicable after the Effective
------------------------
Time, the Exchange Agent shall mail to each holder of record of Company
Certificates a form letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Company Certificates shall
pass, only upon delivery of the Company Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the Company Certificates in
exchange for Holdings Certificates. Upon proper surrender of a Company
Certificate for exchange and cancellation to the Exchange Agent, together with
such properly completed letter of transmittal, duly executed, the holder of such
Company Certificate shall be entitled to receive in exchange therefor a Holdings
Certificate representing a number of shares of Holdings Common Stock equal to
the number of shares of Company Common Stock represented by the surrendered
Company Certificate.
3.3 Restriction on Payment of Dividends and Distributions. No dividends
-----------------------------------------------------
or other distributions declared after the Effective Time with respect to
Holdings Common Stock shall be paid to the holder of any unsurrendered Company
Certificate until the holder thereof shall surrender such Company Certificate in
accordance with Section 3.2. After the surrender of a Company Certificate in
accordance with Section 3.2, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of Holdings Common
Stock represented by such Company Certificate. Notwithstanding the foregoing,
none of Holdings, the Company, the Exchange Agent or any other person shall be
liable to any former holder of shares of Company Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
A-3
<PAGE>
3.4 Issuance of a Holdings Certificate in a Different Name. If any
------------------------------------------------------
Holdings Certificate is to be issued in a name other than that in which the
Company Certificate surrendered in exchange therefor is registered, it shall be
a condition of the issuance thereof that the Company Certificate so surrendered
shall be properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer, and that the person
requesting such exchange shall pay to the Exchange Agent in advance any transfer
or other taxes required by reason of the issuance of a Holdings Certificate in
any name other than that of the registered holder of the Company Certificate
surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
3.5 No Transfers of Company Common Stock after the Effective Time. After
-------------------------------------------------------------
the Effective Time, there shall be no transfers on the stock transfer books of
the Company of the shares of Company Common Stock which were issued and
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Company Certificates representing such shares are presented for transfer,
no transfer shall be effected on the stock transfer books of Holdings with
respect to such shares and no Holdings Certificate shall be issued representing
the shares of Holdings Common Stock exchangeable for such shares of Company
Common Stock unless and until such Company Certificate is delivered to the
Exchange Agent together with properly completed and duly executed copies of all
documents required by Section 3.2 (or such other documents as are satisfactory
to Holdings and the Exchange Agent in their sole discretion).
3.6 Lost Company Certificates. In the event any Company Certificate shall
-------------------------
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Company Certificate to be lost, stolen or
destroyed and, if required by Holdings, the posting by such person of a bond in
such amount as Holdings may determine is reasonably necessary as indemnity
against any claim that may be made against it with respect to such Company
Certificate, the Exchange Agent will issue, in exchange for such lost, stolen,
or destroyed Company Certificate, a Holdings Certificate representing the shares
of Holdings Common Stock deliverable in respect of such Company Certificate
pursuant to this Agreement.
ARTICLE 4: CONDITIONS TO REORGANIZATION
4.1 Conditions to Merger. The consummation of the Reorganization is
--------------------
subject to the satisfaction, or (to the extent permitted by law) waiver by the
Company, of the following conditions prior to the Effective Time:
(a) Consents. Any consents, approvals or authorizations that the
--------
Company deems necessary or appropriate to be obtained in connection with the
consummation of the Reorganization shall have been obtained;
(b) Stockholder Approval. This Agreement shall have been adopted by
--------------------
the holders of Company Common Stock in accordance with the DGCL;
(c) Listing. Holdings Common Stock to be issued or reserved for
-------
issuance in connection with the Reorganization shall have been approved for
listing, upon official notice of issuance, by the New York Stock Exchange and
the Pacific Stock Exchange; and
A-4
<PAGE>
(d) Tax Opinion. The Company shall have received, in form and
-----------
substance satisfactory to it, an opinion from Munger, Tolles & Olson with
respect to certain federal income tax effects of the Reorganization and the
provisions of Article XI of Annex A hereto.
ARTICLE 5: AMENDMENT, DEFERRAL AND TERMINATION
5.1 Amendment. Subject to Section 251(d) of the DGCL, the parties hereto,
---------
by mutual consent of their respective boards of directors, may amend this
Agreement prior to the filing of the Certificate of Merger with the Secretary of
State of Delaware.
5.2 Deferral. Consummation of the Reorganization may be deferred by the
--------
board of directors of the Company or any authorized officer of the Company for a
reasonable period of time following the Special Meeting if said board of
directors or authorized officer determines that such deferral would be in the
best interests of the Company and its stockholders.
5.3 Termination. This Agreement may be terminated and the Reorganization
-----------
may be abandoned at any time prior to the filing of the Certificate of Merger
with the Secretary of State of Delaware, whether before or after adoption of
this Agreement by the stockholders of the Company, by action of the board of
directors of the Company, if said board of directors determines that the
consummation of the Reorganization would not, for any reason, be in the best
interests of the Company and its stockholders.
ARTICLE 6: MISCELLANEOUS
6.1 Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Delaware.
6.2 Further Assurances. From time to time on and after the Effective
------------------
Time, each party hereto agrees that it will execute and deliver or cause to be
executed and delivered all such further assignments, assurances or other
instruments, and shall take or cause to be taken all such further actions, as
may be necessary or desirable to consummate the Reorganization. Merger Sub
hereby authorizes and empowers the Company, as the surviving corporation, to
execute and deliver all such assignments, assurances and other instruments and
to take all such further actions in the name of Merger Sub following the
Effective Time.
6.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts and each such counterpart hereof shall be deemed to be an original
instrument but all such counterparts together shall constitute but one
agreement.
6.4 Description Headings. The descriptive headings herein are inserted
--------------------
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto, pursuant to authority duly
granted by its board of directors, has caused this Agreement to be executed by a
duly authorized officer thereof, and has further caused its corporate seal to be
hereunto affixed and attested, as of the date first written above.
A-5
<PAGE>
PS GROUP, INC.
/s/ Charles E. Rickershauser, Jr.
_________________________________
Charles E. Rickershauser, Jr.
Chief Executive Officer
PS GROUP HOLDINGS, INC.
/s/ Charles E. Rickershauser, Jr.
_________________________________
Charles E. Rickershauser, Jr.
Chief Executive Officer
PSG MERGER SUBSIDIARY, INC.
/s/ Charles E. Rickershauser, Jr.
_________________________________
Charles E. Rickershauser, Jr.
Chief Executive Officer
A-6
<PAGE>
ANNEX A
(INCLUDED AS APPENDIX B TO THIS PROSPECTUS/PROXY STATEMENT)
A-7
<PAGE>
ANNEX B
(INCLUDED AS APPENDIX C TO THIS PROSPECTUS/PROXY STATEMENT)
A-8
<PAGE>
APPENDIX B
RESTATED CERTIFICATE OF
INCORPORATION OF PS GROUP
HOLDINGS, INC. TO BE IN EFFECT
IMMEDIATELY FOLLOWING THE
REORGANIZATION
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
PS GROUP HOLDINGS, INC.
ARTICLE I
The name of this corporation is PS Group Holdings, Inc.
ARTICLE II
The address of this corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle and the name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The purpose of this corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
(A) The total number of shares of all classes of capital stock which this
corporation shall have the authority to issue is eleven million five hundred
thousand (11,500,000) shares, of which ten million five hundred thousand
(10,500,000) shares shall be of the par value of $1.00 per share and designated
"Common Stock" and one million (1,000,000) shares shall be of the par value of
$1.00 per share and designated "Preferred Stock".
(B) The Board of Directors is expressly authorized at any time, and from
time to time, to provide for the issuance of shares of Preferred Stock in one or
more series, with such voting powers, full or limited, or without voting powers,
and with such designation, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions thereof as
shall be stated and expressed in the resolution or resolutions providing for the
issue thereof adopted by the Board of Directors, and as are not stated and
expressed in this Certificate of Incorporation, or any amendment thereto,
including (but without limiting the generality of the foregoing) the following:
(1) The designation of and number of shares constituting such series;
(2) The dividend rate of such series, the conditions and dates upon
which such dividends shall be payable, the preference or relation which
such dividends shall bear to the dividends payable on any other class or
classes or of any other class of capital stock or series thereof and
whether such dividends shall be cumulative or noncumulative;
B-1
<PAGE>
(3) Whether the shares of such series shall be subject to redemption
by this corporation, and, if made subject to such redemption, the times,
prices and other terms and conditions of such redemption;
(4) The terms and amount of any sinking fund provided for the purchase
or redemption of the shares of such series;
(5) Whether or not the sales of such series shall be convertible into
or exchangeable for shares of any other class or classes or of any other
series of any class or classes of capital stock of this corporation, and if
provision be made for conversion or exchange, the times, prices, rates,
adjustments, and other terms and conditions of such conversion or exchange;
(6) Whether or not the shares of such series shall have voting rights,
in addition to the voting rights provided by law, and, if so, the terms and
conditions of such voting rights;
(7) The restrictions, if any, on the issue or reissue of any
additional Preferred Stock; and
(8) The rights of the holders of the shares of such series upon the
dissolution of, or upon the distribution of assets of, this corporation.
ARTICLE V
(A) The number of directors of this corporation shall be fixed and may be
altered from time to time as may be provided in the By-laws. The directors of
this corporation need not be stockholders therein.
(B) The Board of Directors shall be and is divided into three classes,
Class I, Class II and Class III, which shall be as nearly equal in number as
possible. Each director shall serve for a term ending on the date of the third
annual meeting following the annual meeting at which such director was elected;
provided, however, that each initial director in Class I shall hold office until
the annual meeting of stockholders in 1997; each initial director in Class II
shall hold office until the annual meeting of stockholders in 1998; and each
initial director in Class III shall hold office until the annual meeting of
stockholders in 1999.
(C) In the event of any increase or decrease in the authorized number of
directors, (i) each director then serving as such shall nevertheless continue as
a director of the class of which he is a member until the expiration of his
current term, or his prior death, retirement, resignation, or removal, and (ii)
the newly created or eliminated directorships resulting from such increase or
decrease shall be apportioned by the Board of Directors among the three classes
of directors so as to maintain such classes as nearly equal as possible.
(D) Notwithstanding any of the foregoing provisions of this Article, each
director shall serve until his successor is elected and qualified or until his
death, retirement, resignation or removal. Should a vacancy occur or be
created, whether arising through death, resignation or removal of a director or
through an increase in the number of directors of any class, such vacancy shall
be filled by a majority vote of the remaining directors of the class in which
such
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vacancy occurs, or by the sole remaining director of that class if only one such
director remains, or by the majority vote of the remaining directors of the
other two classes if there be no remaining member of the class in which the
vacancy occurs. A director so elected to fill a vacancy shall serve for the
remainder of the then present term of office of the class to which he was
elected.
ARTICLE VI
All of the powers of this corporation, insofar as the same may be lawfully
vested by this Certificate of Incorporation in the Board of Directors, are
hereby conferred upon the Board of Directors of this corporation. In
furtherance and not in limitation of that power, the Board of Directors shall
have the power to make, adopt, alter, amend and repeal from time to time By-laws
of this corporation, subject to the right of the stockholders entitled to vote
with respect thereto to adopt, alter, amend and repeal By-laws made by the Board
of Directors; provided, however, that By-laws shall not be adopted, altered,
amended or repealed by the stockholders of the corporation except by the vote of
the holders of not less than 66-2/3% of the outstanding shares of Common Stock.
ARTICLE VII
To the fullest extent permitted by the General Corporation Law of the State
of Delaware as the same exists or may hereafter be amended, a director of the
corporation shall not be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director.
Any repeal or modification of this Article shall not result in any
liability for a director with respect to any action or omission occurring prior
to such repeal or modification.
ARTICLE VIII
Action shall be taken by the stockholders only at annual or special
meetings of stockholders and stockholders may not act by written consent.
ARTICLE IX
(A) Subject to the provisions of any series of Preferred Stock which may at
the time be outstanding, the affirmative vote of the holders of not less than
66-2/3% of the outstanding shares of Common Stock of this corporation, which
shall include the affirmative vote of at least 50% of the outstanding shares of
Common Stock held by stockholders other than a "related person" (as hereinafter
defined), shall be required for the approval or authorization of any "business
combination" (as hereinafter defined) of this corporation with any related
person; provided, however, that such 66-2/3% voting requirement shall not be
applicable if:
(1) The business combination was approved by the Board of Directors of
the corporation either (a) prior to the acquisition by such related person
of the beneficial ownership of 20% or more of the outstanding shares of the
Common Stock of the
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corporation, or (b) after such acquisition, but only so long as such
related person has sought and obtained the unanimous approval by the Board
of Directors of such acquisition of more than 20% of the Common Stock prior
to such acquisition being consummated; or
(2) The business combination is solely between this corporation and
another corporation, 50% or more of the voting stock of which is owned by
this corporation and none of which is owned by a related person; provided
that each stockholder of this corporation receives the same type of
consideration in such transaction in proportion to his stockholdings; or
(3) All of the following conditions are satisfied:
(a) The cash or fair market value of the property, securities or
other consideration to be received per share by holders of Common
Stock of this corporation in the business combination is not less than
the higher of (i) the highest per share price (including brokerage
commissions, soliciting dealers' fees, dealer-management compensation,
and other expenses, including, but not limited to, costs of newspaper
advertisements, printing expenses and attorneys' fees) paid by such
related person in acquiring any of its holdings of this corporation's
Common Stock or (ii) an amount which bears the same or a greater
percentage relationship to the market price of this corporation's
Common Stock immediately prior to the announcement of such business
combination as the highest per share price determined in (i) above
bears to the market price of this corporation's Common Stock
immediately prior to the commencement of acquisition of this
corporation's Common Stock by such related person, but in no event in
excess of two times the highest per share price determined in (i),
above; and
---
(b) After becoming a related person and prior to the consummation
of such business combination, (i) such related person shall not have
acquired any newly issued shares of capital stock, directly or
indirectly, from this corporation (except upon conversion of
convertible securities acquired by it prior to becoming a related
person or upon compliance with the provision of this Article IX or as
a result of a pro rata stock dividend or stock split) and (ii) such
--- ----
related person shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder) of any loans,
advances, guarantees, pledges or other financial assistance or tax
credits provided by this corporation, or made any major changes in
this corporation's business or equity capital structure; and
---
(c) A proxy statement responsive to the requirements of the
Securities Exchange Act of 1934, whether or not this corporation is
then subject to such requirements, shall be mailed to the public
stockholders of this corporation for the purpose of soliciting
stockholder approval of such business combination and shall contain at
the front thereof, in a prominent place (i) any recommendations as to
the advisability (or inadvisability) of the business combination which
the continuing directors, or any outside directors, may choose to
state, and (ii) the opinion of a reputable national investment banking
firm as to the fairness (or not) of the terms of such business
combination, from the point of view of the remaining public
stockholders of this corporation (such investment banking firm to be
engaged solely on behalf of the remaining public stockholders,
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to be paid a reasonable fee for its services by this corporation upon
receipt of such opinion, to be one of the so-called major bracket
investment banking firms which has not previously been associated with
such related person and, if there are at the time any such directors,
to be selected by a majority of the continuing directors and outside
directors).
(B) For purposes of this Article IX:
(1) The term "business combination" shall mean (a) any merger or
consolidation of this corporation with or into a related person, (b) any
sale, lease, exchange, transfer or other disposition, including without
limitation, a mortgage or any other security device, of all or any
substantial part of the assets of this corporation (including without
limitation any voting securities of a subsidiary) or of a subsidiary, to a
related person, (c) any merger or consolidation of a related person with or
into this corporation or a subsidiary of this corporation, (d) any sale,
lease, exchange, transfer or other disposition of all or any substantial
part of the assets of a related person to this corporation or a subsidiary
of this corporation, (e) the issuance of any securities of this corporation
or a subsidiary of this corporation to a related person, (f) the
acquisition by this corporation or a subsidiary of this corporation of any
securities of a related person, (g) any reclassification of Common Stock of
this corporation, or any recapitalization involving Common Stock of this
corporation, consummated within five years after a related person becomes a
related person, and (h) any agreement, contract or other arrangement
providing for any of the transactions described in this definition of
business combination;
(2) The term "related person" shall mean and include any individual,
corporation, partnership or other person or entity which, together with its
"affiliates" and "associates" (defined below), "beneficially" owns (as this
term is defined in Rule 13d-3 of the General Rules and Regulations under
the Securities Exchange Act of 1934), in the aggregate 20% or more of the
outstanding shares of the Common Stock of this corporation, and any
"affiliate" or "associate" (as those terms are defined in Rule 12b-2 under
the Securities Exchange Act of 1934) of any such individual, corporation,
partnership or other person or entity;
(3) The term "substantial part" shall mean more than 10% of the total
assets of the corporation in question, as of the end of its most recent
fiscal year ending prior to the time the determination is being made;
(4) Without limitation, any shares of Common Stock of this corporation
which any related person has the right to acquire pursuant to any
agreement, or upon exercise of conversion rights, warrants or options, or
otherwise, shall be deemed beneficially owned by such related person;
(5) For the purposes of subparagraph (A)(3) of this Article IX, the
term "other consideration to be received" shall include, without
limitation, Common Stock of this corporation retained by its existing
public stockholders in the event of a business combination with such
related person in which this corporation is the surviving corporation; and
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(6) With respect to any proposed business combination, the term
"continuing director" shall mean a director who was a member of the Board
of Directors of this corporation immediately prior to the time that any
related person involved in the proposed business combination acquired 20%
or more of the outstanding shares of Common Stock of the corporation, and
the term "outside director" shall mean a director who is not (a) an officer
or employee of this corporation or any relative of an officer or employee,
(b) a related person or an officer, director, employee, associate or
affiliate of a related person, or a relative of any of the foregoing, or
(c) a person having a direct or indirect material business relationship
with this corporation.
ARTICLE X
The provisions set forth in this Article X and in Articles V, VI, VIII, IX
and XI herein may not be repealed or amended in any respect, and no article
imposing cumulative voting in the election of directors may be added, unless
such action is approved by the affirmative vote of the holders of not less than
66-2/3% of the outstanding shares of Common Stock of this corporation, subject
to the provisions of any series of Preferred Stock which may at the time be
outstanding; provided, however, that if there is a related person (as defined in
Article IX), such 66-2/3% vote must include the affirmative vote of at least 50%
of the outstanding shares of Common Stock held by stockholders other than the
related person; and provided further that, notwithstanding this Article X,
Article XI hereof may be amended or modified by the Board of Directors as
provided in Article XI.
ARTICLE XI
(A) TRANSFER RESTRICTIONS. In order to preserve the net operating loss
carryforwards (including any "net unrealized built-in loss," as defined under
applicable law), capital loss carryforwards, general business credit
carryforwards, alternative minimum tax credit carryforwards and other tax
benefits (collectively, the "Tax Benefits") to which the corporation or any
member of the corporation's "affiliated group" as that term is used in Section
1504 of the Internal Revenue Code of 1986, as amended from time to time, or any
successor statute (collectively, the "Code"), is or becomes entitled prior to
the Expiration Date (as hereinafter defined) pursuant to the Code and the
Treasury Regulations promulgated thereunder, as amended from time to time
("Treasury Regulations") or any applicable state statute, the following
restrictions shall apply until the earlier of (x) the day after the fifteenth
(15th) anniversary of the effective time of the merger of PSG Merger Subsidiary,
Inc. with and into PS Group, Inc. (the "Merger"), (y) the repeal of Section 382
of the Code if the Board of Directors determines that the restrictions in this
Article XI are no longer necessary, and (z) the beginning of a taxable year of
the corporation to which the Board of Directors determines that no Tax Benefits
may be carried forward, unless the Board of Directors shall fix an earlier or
later date in accordance with Section (E) of this Article XI. (The date on
which the restrictions of this Article XI expire hereunder is sometimes referred
to herein as the "Expiration Date.")
(1) Definitions. For purposes of this Article XI:
-----------
(a) a "Preexisting 5-Percent Shareholder" shall mean (i)
Berkshire Hathaway Inc. or any direct or indirect majority-owned
subsidiary of Berkshire Hathaway Inc.; (ii) J.P. Guerin, Fabienne M.
Guerin, the John Patrick Guerin
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<PAGE>
Trust, the Guerin Family Trust and the J. Patrick Guerin III Trust;
(iii) ESL Partners, L.P.; (iv) any Person who establishes to the
satisfaction of the Board of Directors that such Person was a "5-
percent shareholder" of PS Group, Inc. within the meaning of Treasury
Regulation Section 1.382-2T(g)(1)(i) or a "first tier entity" of PS
Group, Inc. within the meaning of Treasury Regulation Section 1.382-
2T(f)(9) on [______________, 1996] [the day before PS Group, Inc.
first announced its intention to seek to implement the Transfer
Restrictions]; and (v) any "5-percent owner," or "higher tier entity,"
of any Person described in parts (i) through (iv) above, within the
meaning of Treasury Regulation Section 1.382-2T(f)(10) and 1.382-
2T(f)(14), respectively;
(b) a "Prohibited Ownership Percentage" shall mean any Stock
ownership that would cause a Person or Public Group to be a "5-percent
shareholder" of the corporation within the meaning of Treasury
Regulation Section 1.382-2T(g)(1)(i) or (ii); for this purpose,
whether a Person or Public Group would be a "5 percent shareholder"
shall be determined (i) without giving effect to the following
provisions: Treasury Regulation Sections 1.382-2T(g)(2), 1.382-
2T(g)(3), 1.382-2T(h)(2)(iii) and 1.382-2T(h)(6)(iii), (ii) by
treating every Person or Public Group which owns Stock, whether
directly or by attribution, as directly owning such Stock
notwithstanding any further attribution of such Stock to other Persons
and notwithstanding Treasury Regulation Section 1.382-2T(h)(2)(i)(A),
(iii) by substituting the term "Person" in place of "individual" in
Treasury Regulation Section 1.382-2T(g)(1)(i), (iv) by taking into
account ownership of Stock at any time during the "testing period" as
defined in Treasury Regulation Section 1.382-2T(d)(1), and (v) by
treating each day during the testing period as if it were a "testing
date" as defined in Treasury Regulation Section 1.382-2(a)(4)(i); in
addition, for the purpose of determining whether any Person or Public
Group has a Prohibited Ownership Percentage as of any date, the
definition of Stock set forth in part (e) of this subparagraph (A)(1)
shall be applied in lieu of the definition in Treasury Regulation
Section 1.382-2T(f)(18), except that any Option shall be treated as
Stock only to the extent treating it as Stock would cause an increase
in ownership of Stock by such Person and such Option would be deemed
exercised pursuant to Treasury Regulations in effect from time to time
(disregarding whether treating such Option as exercised would cause an
ownership change);
(c) a "Public Group" shall have the meaning contained in Treasury
Regulation Section 1.382-2T(f)(13), excluding any "direct public
group" with respect to the corporation, as that term is used in
Treasury Regulation Section 1.382-2T(j)(2)(ii);
(d) a "Person" shall mean any individual, corporation, estate,
trust, association, company, partnership, joint venture, or similar
organization (including the corporation), or any other entity
described in Treasury Regulation Section 1.382-3(a)(1)(i);
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(e) "Stock" refers to all classes of stock of the corporation,
all Options to acquire stock of the corporation and all other
interests that would be treated as stock in the corporation pursuant
to Treasury Regulation Section 1.382-2T(f)(18)(iii), other than (i)
stock described in Section 1504(a)(4) of the Code and (ii) stock that
would be described in such Section 1504(a)(4) but is not so described
solely because it is entitled to vote as a result of dividend
arrearages;
(f) "Option" shall have the meaning set forth in Treasury
Regulation Section 1.382-4;
(g) "Transfer" shall mean any conveyance, by any means, of legal
or beneficial ownership (direct or indirect) of shares of Stock,
whether such means are direct or indirect, voluntary or involuntary,
including, without limitation, the transfer of any ownership interest
in any entity that owns (directly or indirectly) shares of Stock (and
any reference in this Article XI to a Transfer of Stock shall include
any Transfer of any interest in any such entity and references to the
Persons to whom Stock is Transferred shall include Persons to whom any
interest in any such entity shall have been Transferred); and
(h) "Transferee" means any Person to whom Stock is Transferred.
(2) Prohibited Transfers. From and after the effective time of the
--------------------
Merger, no Person shall Transfer any Stock to any other Person to the
extent that such Transfer, if effected: (a) would cause the Transferee or
any Person or Public Group to have a Prohibited Ownership Percentage; (b)
would increase the Stock ownership percentage (determined in accordance
with Section 382 of the Code and the Treasury Regulations thereunder) of
any Transferee or any Person or Public Group having a Prohibited Ownership
Percentage; or (c) would create, under Treasury Regulation Section 1.382-
2T(j)(3)(i), a new "public group" as that term is used in Treasury
Regulation Section 1.382-2T(f)(13); provided, however, that (x) part (c) of
this subparagraph (A)(2) shall not apply to any Transfer of Stock by (but
not to) a Preexisting 5-Percent Shareholder if such Transfer is not
prohibited by part (a) or (b) of this subparagraph (A)(2) and if such Stock
was acquired by such Preexisting 5-Percent Shareholder in exchange for
shares of stock of PS Group, Inc. that were owned by such Preexisting 5-
Percent Shareholder (within the meaning of Section 382) on [____________,
1996], [the day before PS Group, Inc. first announced its intention to seek
to implement the Transfer Restrictions], and (y) nothing in this Article XI
shall prohibit the Transfer of any interest in any Preexisting 5-Percent
Shareholder.
(3) Board of Directors Consent to Certain Transfers. The Board of
------------------------------------------------
Directors may permit any Transfer of shares of Stock that would otherwise
be prohibited pursuant to subparagraph (A)(2) of this Article XI if
information relating to a specific proposed transaction is presented to the
Board of Directors and the Board of Directors determines that, based on the
facts in existence at the time of such determination, such transaction will
not delay, prevent or otherwise jeopardize the corporation's full
utilization of the Tax Benefits. The Board of Directors may impose any
conditions that it deems reasonable and appropriate in connection with such
a Transfer, including without limitation, restrictions on the ability of
any Transferee to Transfer shares of Stock acquired through such Transfer;
provided, however, that any such restrictions shall be
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consented to by such Transferee and the certificates representing such
shares of Stock shall include an appropriate legend.
(4) Waiver of Restrictions. Notwithstanding anything herein to the
----------------------
contrary, the Board of Directors may waive any of the restrictions
contained in subparagraph (A)(2) of this Article XI in any instance in
which the Board of Directors determines that a waiver would be in the best
interests of the corporation, notwithstanding the effect of such waiver on
the Tax Benefits.
(B) PURPORTED TRANSFER IN VIOLATION OF TRANSFER RESTRICTION. Unless the
approval or waiver of the Board of Directors is obtained as provided in
subparagraphs (A)(3) or (A)(4) of this Article XI, any purported Transfer of
Stock in excess of the shares that could be Transferred to the Transferee
without restriction under subparagraph (A)(2) of this Article XI shall not be
effective to Transfer record, legal, beneficial or any other ownership of such
excess shares (the "Prohibited Shares") to the purported acquiror of any form of
such ownership (the "Purported Acquiror"), who shall not be entitled to any
rights as a stockholder of the corporation with respect to the Prohibited Shares
(including, without limitation, the right to vote or to receive dividends with
respect thereto). Any purported record, beneficial, legal or other owner of
Prohibited Shares shall be deemed to be a "Purported Acquiror" of such
Prohibited Shares. If there is more than one Purported Acquiror with respect to
certain Prohibited Shares (for example, if the Purported Acquiror of record
ownership of such Prohibited Shares is not the Purported Acquiror of beneficial
ownership of such Prohibited Shares), then references to "Purported Acquiror"
shall include any or all of such Purported Acquirors, as appropriate.
Subparagraphs (B)(1) and (B)(2) below shall apply only in the case of violations
of the restrictions contained in parts (a) and (b) of subparagraph (A)(2) of
this Article XI.
(1) Transfer of Prohibited Shares and Prohibited Distributions to
-------------------------------------------------------------
Agent. Upon demand by the corporation, the Purported Acquiror shall
-----
transfer or cause the transfer of any certificate or other evidence of
purported ownership of the Prohibited Shares within the Purported
Acquiror's possession or control, along with any dividends or other
distributions paid by the corporation with respect to the Prohibited Shares
that were received by the Purported Acquiror (the "Prohibited
Distributions"), to an agent designated by the corporation (the "Agent").
The Agent shall sell in an arms-length transaction (through the New York
Stock Exchange, if possible, but in any event consistent with applicable
law) any Prohibited Shares transferred to the Agent by the Purported
Acquiror. (The proceeds of such sale shall be referred to as "Sales
Proceeds.") If the Purported Acquiror has sold the Prohibited Shares to an
unrelated party in an arms-length transaction after purportedly acquiring
them, the Purported Acquiror shall be deemed to have sold the Prohibited
Shares for the Agent, and in lieu of transferring the Prohibited Shares and
Prohibited Distributions to the Agent shall transfer to the Agent the
Prohibited Distributions and the proceeds of such sale (the "Resale
Proceeds"), except to the extent that the Agent grants written permission
to the Purported Acquiror to retain a portion of the Resale Proceeds not
exceeding the amount that would have been payable by the Agent to the
Purported Acquiror pursuant to subparagraph (B)(2) below if the Prohibited
Shares had been sold by the Agent rather than by the Purported Acquiror.
Any purported Transfer of the Prohibited Shares by the Purported Acquiror
other than a transfer which (a) is described in the preceding sentences of
this subparagraph (B)(1) and (b) does not itself violate the provisions of
this Article XI shall not be effective to transfer any ownership of the
Prohibited Shares.
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(2) Allocation of Sale Proceeds, Resale Proceeds and Prohibited
-----------------------------------------------------------
Distributions. The Sale Proceeds or the Resale Proceeds, if applicable,
-------------
shall be allocated to the Purported Acquiror up to the following amount:
(a) where applicable, the purported purchase price paid or value of
consideration surrendered by the Purported Acquiror for the Prohibited
Shares, or (b) where the purported Transfer of the Prohibited Shares to the
Purported Acquiror was by gift, inheritance, or any similar purported
Transfer, the fair market value of the Prohibited Shares at the time of
such purported Transfer. Any Resale Proceeds or Sales Proceeds in excess
of the Agent's expenses incurred in performing its duties hereunder and the
amount allocable to the Purported Acquiror pursuant to the preceding
sentence, together with any Prohibited Distributions (such excess amount
and Prohibited Distributions are collectively the "Subject Amounts"), shall
be paid over to an entity designated by the corporation that is described
in Section 501(c)(3) of the Code. In no event shall any such Prohibited
Shares or Subject Amounts inure to the benefit of the corporation or the
Agent, but such amounts may be used to cover expenses incurred by the Agent
in performing its duties hereunder.
(3) Prompt Enforcement Against Purported Acquiror. Within thirty (30)
---------------------------------------------
business days of learning of the purported Transfer of Prohibited Shares to
a Purported Acquiror or a Transfer of Stock which would cause a Person or
Public Group to become a Prohibited Party (as hereinafter defined), the
corporation through its Secretary shall demand that the Purported Acquiror
or the Prohibited Party Group (as hereinafter defined) surrender to the
Agent the certificates representing the Prohibited Shares, or any Resale
Proceeds, and any Prohibited Distributions, and if such surrender is not
made by the Purported Acquiror or Prohibited Party Group within thirty (30)
business days from the date of such demand, the corporation shall institute
legal proceedings to compel such transfer; provided, however, that nothing
in this subparagraph (B)(3) shall preclude the corporation in its
discretion from immediately bringing legal proceedings without a prior
demand, and provided further that failure of the corporation to act within
the time periods set out in this subparagraph (B)(3) shall not constitute a
waiver of any right of the corporation to compel any transfer required by,
or take any action permitted by, this Article XI. Upon a determination by
the Board of Directors that there has been or is threatened a purported
Transfer of Prohibited Shares to a Purported Acquiror or a Transfer of
Stock which would cause a Person or Public Group to become a Prohibited
Party or any other violation of Section (A) of this Article XI, the Board
of Directors may authorize such additional action as it deems advisable to
give effect to the provisions of this Article XI, including, without
limitation, refusing to give effect on the books of the corporation to any
such purported Transfer or instituting proceedings to enjoin any such
purported Transfer.
(4) Other Remedies. In the event that the Board of Directors
--------------
determines that a Person proposes to take any action in violation of
subparagraph (A)(2) of this Article XI, or in the event that the Board of
Directors determines after the fact that an action has been taken in
violation of subparagraph (A)(2) of this Article XI, the Board of
Directors, subject to subparagraph (B)(5) of this Article XI, may take such
action as it deems advisable to prevent or to refuse to give effect to any
purported Transfer or other action which would result, or has resulted, in
such violation, including, but not limited to, refusing to give effect to
such purported Transfer or other action on the books of the corporation or
instituting proceedings to enjoin such purported Transfer or other action.
If any Person shall knowingly violate, or knowingly cause any other Person
under the control of such Person ("Controlled Person") to violate,
subparagraph (A)(2) of this
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Article XI, then that Person and any Controlled Person shall be jointly and
severally liable for, and shall pay to the corporation, such amount as
will, after taking account of all taxes imposed with respect to the receipt
or accrual of such amount and all costs incurred by the corporation as a
result of such violation, put the corporation in the same financial
position as it would have been in had such violation not occurred.
(5) No Restriction on Settlement of Exchange Transactions. Nothing
-----------------------------------------------------
contained in this Article XI shall preclude the settlement of any
transaction involving Stock entered into through the facilities of the New
York Stock Exchange, the Pacific Stock Exchange or any other national
securities exchange. The application of the provisions and remedies
described in this Section (B) of this Article XI shall be deemed not to so
preclude any such settlement.
(6) Modification of Remedies For Certain Indirect Transfers. In the
-------------------------------------------------------
event of any Transfer of Stock which does not involve a transfer of
"securities" of the corporation within the meaning of the Delaware General
Corporation Law, as amended ("Securities"), but which would cause a Person
or Public Group (the "Prohibited Party") to violate a restriction provided
for in part (a) or (b) of subparagraph (A)(2) of this Article XI, the
application of subparagraphs (B)(1) and (B)(2) shall be modified as
described in this subparagraph (B)(6). In such case, the Prohibited Party
and/or any Person or Public Group whose ownership of the corporation's
Securities is attributed to the Prohibited Party pursuant to Section 382 of
the Code and the Treasury Regulations thereunder (collectively, the
"Prohibited Party Group") shall not be required to dispose of any interest
which is not a Security, but shall be deemed to have disposed of, and shall
be required to dispose of, sufficient Securities (which Securities shall be
disposed of in the inverse order in which they were acquired by members of
the Prohibited Party Group), to cause the Prohibited Party, following such
disposition, not to be in violation of part (a) or (b) of subparagraph
(A)(2) of this Article XI. Such disposition shall be deemed to occur
simultaneously with the Transfer giving rise to the application of this
provision, and such number of Securities which are deemed to be disposed of
shall be considered Prohibited Shares and shall be disposed of through the
Agent as provided in subparagraphs (B)(1) and (B)(2) of this Article XI,
except that the maximum aggregate amount payable to the Prohibited Party
Group in connection with such sale shall be the fair market value of the
Prohibited Shares at the time of the Prohibited Transfer.
(C) OBLIGATION TO PROVIDE INFORMATION. The corporation may require as a
condition to the registration of the Transfer of any Stock that the proposed
Transferee furnish to the corporation all information reasonably requested by
the corporation with respect to all the direct or indirect beneficial or legal
ownership of Stock or Options to acquire Stock by the proposed Transferee and by
Persons controlling, or controlled by or under common control with the proposed
Transferee.
(D) LEGENDS. All certificates issued by the corporation evidencing
ownership of shares of Stock of this corporation that are subject to the
restrictions on Transfer contained in this Article XI shall bear a conspicuous
legend referencing the restrictions set forth in this Article XI.
(E) FURTHER ACTIONS. Subject to subparagraph (B)(5) of this Article XI,
nothing contained in this Article XI shall limit the authority of the Board of
Directors to take such other action to the extent permitted by law as it deems
necessary or advisable to protect the
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corporation in preserving the Tax Benefits. Without limiting the generality of
the foregoing, in the event of a change in law (including applicable
regulations) making one or more of the following actions necessary or desirable
or in the event that the Board of Directors believes one or more of such actions
is in the best interest of the corporation, the Board of Directors may (1)
accelerate or extend the Expiration Date, (2) modify the definitions of any
terms set forth in this Article XI or (3) conform any provisions of Section (A)
of this Article XI to the extent necessary to make such provisions consistent
with the Code and Treasury Regulations following any changes therein; provided
that the Board of Directors shall determine in writing that such acceleration,
extension, change or modification is reasonably necessary or desirable to
preserve the Tax Benefits or that the continuation of these restrictions is no
longer reasonably necessary for the preservation of the Tax Benefits, which
determination may be based upon an opinion of legal counsel to the corporation
and which determination shall be filed with the Secretary of the corporation and
mailed by the Secretary to the stockholders of this corporation within ten (10)
days after the date of any such determination. In addition, the Board of
Directors may, to the extent permitted by law, from time to time establish,
modify, amend or rescind By-laws, regulations and procedures of the corporation
not inconsistent with the express provisions of this Article XI for purposes of
determining whether any acquisition of Stock would jeopardize the corporation's
ability to preserve and use the Tax Benefits, and for the orderly application,
administration and implementation of the provisions of this Article XI. Such
procedures and regulations shall be kept on file with the Secretary of the
corporation and with its transfer agent and shall be made available for
inspection by the public and, upon request, shall be mailed to any holder of
Stock. The Board of Directors of the corporation shall have the exclusive power
and authority to administer this Article XI and to exercise all rights and
powers specifically granted to the Board of Directors or the corporation, or as
may be necessary or advisable in the administration of this Article XI,
including without limitation, the right and power to (1) interpret the
provisions of this Article XI, and (2) make all calculations and determinations
deemed necessary or advisable for the administration of this Article XI. All
such actions, calculations, interpretations and determinations which are done or
made by the Board of Directors in good faith shall be final, conclusive and
binding on the corporation, the Agent, and all other parties.
(F) BENEFITS OF THIS ARTICLE XI. Nothing in this Article XI shall be
construed to give to any Person other than the corporation or the Agent any
legal or equitable right, remedy or claim under this Article XI. This Article
XI shall be for the sole and exclusive benefit of the corporation and the Agent.
(G) SEVERABILITY. If any provision of this Article XI or the
application of any such provision to any Person or under any circumstance shall
be held invalid, illegal, or unenforceable in any respect by a court of
competent jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision of this Article XI.
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<PAGE>
APPENDIX C
RESTATED BY-LAWS OF PS GROUP HOLDINGS, INC.
TO BE IN EFFECT IMMEDIATELY
FOLLOWING THE REORGANIZATION
<PAGE>
RESTATED BY-LAWS OF
PS GROUP HOLDINGS, INC.
Table of Contents
-----------------
Page
----
ARTICLE I Offices C-1
ARTICLE II Meetings of Stockholders C-1
ARTICLE III Directors C-3
ARTICLE IV Officers C-7
ARTICLE V Seal C-9
ARTICLE VI Form of Stock Certificate C-9
ARTICLE VII Representation of Shares of
Other Corporations C-9
ARTICLE VIII Transfers of Stock C-9
ARTICLE IX Lost, Stolen or Destroyed
Certificates C-10
ARTICLE X Record Date C-10
ARTICLE XI Registered Stockholders C-10
ARTICLE XII Fiscal Year C-10
ARTICLE XIII Notices C-11
ARTICLE XIV Amendments C-11
ARTICLE XV Indemnification and Insurance C-11
(i)
<PAGE>
RESTATED BY-LAWS
OF
PS GROUP HOLDINGS, INC.
-----------------------
a Delaware corporation
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered office of this Corporation
-----------------
shall be in the City of Wilmington, County of New Castle, State of Delaware, and
the name of the resident agent in charge thereof is The Corporation Trust
Company.
SECTION 2. Other Offices. The Corporation may also have offices at such
-------------
other places, either within or without the State of Delaware, as the Board of
Directors (the "Board") may from time to time designate or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. Meetings of stockholders shall be held at
-----------------
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
SECTION 2. Annual Meetings. Annual meetings of stockholders shall be
---------------
held on the fourth Tuesday of May, if not a legal holiday, and if a legal
holiday, then on the next secular day following, at 10:00 a.m., or at such other
date and time set by the Board and stated in the notice of the meeting, at which
the stockholders shall elect a Board, and transact such other business as may
properly be brought before the meeting.
SECTION 3. Special Meetings. Special meetings of stockholders, for any
----------------
purpose or purposes, unless otherwise prescribed by applicable law or by the
Certificate of Incorporation, may be called by the Chairman of the Board (or, if
the Board does not appoint a Chairman of the Board, the Chief Executive Officer)
and shall be called by the Chairman of the Board (or, if the Board does not
appoint a Chairman of the Board, the Chief Executive Officer) or Secretary at
the request in writing of a majority of the Board, or if, and only if, the
special meeting is to be called for the purpose of removing a member of the
Board (a "Director") director or directors for cause, at the request in writing
of stockholders owning a majority in amount of the entire capital stock of the
Corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting and the business
transacted at any such special meeting of stockholders shall be limited to the
purposes set forth in the notice. Stockholders may not request the call of a
special meeting for any purpose other than as provided herein.
SECTION 4. Stockholder Lists. The officer who has charge of the stock
-----------------
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a
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complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or at the place of the meeting, and the list shall also be available at
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 5. Notice of Meetings. Written notice of each meeting of
------------------
stockholders, whether annual or special, stating the place, date and hour of the
meeting shall be given to each stockholder entitled to vote at such meeting not
less than ten nor more than sixty days before the date of the meeting.
SECTION 6. Quorum and Adjournment. The holders of a majority of the stock
----------------------
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum for holding all meetings of
stockholders, except as otherwise provided by applicable law or by the
Certificate of Incorporation. If it shall appear that such quorum is not
present or represented at any meeting of stockholders, the Chairman of the
meeting shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such 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 noticed. The Chairman of the meeting may determine
that a quorum is present based upon any reasonable evidence of the presence in
person or by proxy of stockholders holding a majority of the outstanding votes,
including without limitation, evidence from any record of stockholders who have
signed a register indicating their presence at the meeting.
SECTION 7. Voting. In all matters, the vote of the holders of a majority
------
of the capital stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which by express provision of applicable law or of the Certificate
of Incorporation, a different vote is required in which case such express
provision shall govern and control the decision of such question.
SECTION 8. Proxies. Each stockholder entitled to vote at a meeting of
-------
stockholders may authorize in writing or by any other means as is provided in
Section 212 of the Delaware General Corporation Law another person or persons to
act for him by proxy, but no proxy shall be voted or acted upon after eleven
months from its date, unless the person executing the proxy specifies therein
the period of time for which it is to continue in force.
SECTION 9. Judges of Election. The Board may appoint a Judge or Judges of
------------------
Election for any meeting of stockholders. Such Judges shall decide upon the
qualification of the voters and report the number of shares represented at the
meeting and entitled to vote, shall conduct the voting and accept the votes, and
when the voting is completed shall ascertain and report the number of shares
voted respectively for and against each position upon which a vote is taken by
ballot. The Judges need not be stockholders, and any officer of the Corporation
may be a Judge
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on any position other than a vote for or against a proposal in which he shall
have a material interest.
SECTION 10. Notice of Stockholder Business. At an annual meeting of the
------------------------------
stockholders, only such business shall be conducted as shall have been brought
before the meeting (a) by or at the direction of the Board or (b) by any
stockholder of the Corporation who complies with the notice procedures set forth
in this Section 10. For business to be properly brought before an annual meeting
by a stockholder, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation, not less than 30 days nor more than 60 days prior to
the meeting; provided, however, that in the event that less than 40 days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the 10th day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the Corporation's books, of the stockholder proposing
such business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder and (d) any material interest of the
stockholder in such business. Notwithstanding anything in the By-laws to the
contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 10. The Chairman of an
annual meeting shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting in accordance with the
provisions of this Section 10, and if he should so determine, he shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted.
ARTICLE III
DIRECTORS
SECTION 1. Powers. The Board shall have the power to manage or direct the
------
management of the property, business and affairs of the Corporation, and except
as expressly limited by law, to exercise all of its corporate powers. The Board
may establish procedures and rules, or may authorize the Chairman of any meeting
of stockholders to establish procedures and rules, for the fair and orderly
conduct of any stockholders meeting, including without limitation, registration
of the stockholders attending the meeting, adoption of an agenda, establishing
the order of business at the meeting, recessing and adjourning the meeting for
the purposes of tabulating any votes and receiving the result thereof, the
timing of the opening and closing of the polls, and the physical layout of the
facilities for the meeting.
SECTION 2. Number. The Board shall consist of one or more members in such
------
number as shall be determined from time to time by resolution of the Board.
Until otherwise determined by such resolution, the Board shall consist of five
members. Directors need not be stockholders, and each Director shall serve
until his successor is elected and qualified or until his death, retirement,
resignation or removal.
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<PAGE>
SECTION 3. Nominations. Nominations of candidates for election as
-----------
Directors of the Corporation may be made by the Board or by any stockholder
entitled to vote at a meeting at which one or more Directors are to be elected
(an "Election Meeting").
Nominations made by the Board shall be made at a meeting of the Board or by
written consent of Directors in lieu of a meeting, not less than thirty days
prior to the date of an Election Meeting. At the request of the Secretary of
the Corporation, each proposed nominee shall provide the Corporation with such
information concerning himself as is required, under the rules of the Securities
and Exchange Commission, to be included in the Corporation's proxy statement
soliciting proxies for his election as a Director.
Not less than thirty days prior to the date of an Election Meeting any
stockholder who intends to make a nomination at the Election Meeting shall
deliver a notice to the Secretary of the Corporation setting forth (i) the name,
age, business address, and residence address of each nominee proposed in such
notice, (ii) the principal occupation or employment of each such nominee, (iii)
the number of shares of capital stock of the Corporation which are beneficially
owned by each such nominee and (iv) such other information concerning each such
nominee as would be required, under the rules of the Securities and Exchange
Commission, in a proxy statement soliciting proxies for the election of such
nominees. Such notice shall include a signed consent to serve as a Director of
the Corporation, if elected, of each such nominee.
In the event that a person is validly designated as a nominee and shall
thereafter become unable or unwilling to stand for election to the Board, the
Board or the stockholder who proposed such nominee, as the case may be, may
designate a substitute nominee.
If the chairman of the Election Meeting determines that a nomination was
not made in accordance with the foregoing procedures, such nomination shall be
void.
SECTION 4. Class Division and Term. The Board shall be and is divided
-----------------------
into three classes, Class I, Class II, and Class III, which shall be as nearly
equal in number as possible. Each Director shall serve for a term ending on the
date of the third annual meeting following the annual meeting at which such
Director was elected; and until his successor shall have been elected and
qualified; provided, however, that each initial Director in Class I shall hold
office until the annual meeting of stockholders in 1997; each initial Director
in Class II shall hold office until the annual meeting of stockholders in 1998;
and each initial Director in Class III shall hold office until the annual
meeting of stockholders in 1999.
In the event of any increase or decrease in the authorized number of
Directors, (i) each Director then serving as such shall nevertheless continue as
a Director of the class of which he is a member until the expiration of his
current term, or his prior death, retirement, resignation or removal, and (ii)
the newly created or eliminated directorships resulting from such increase or
decrease shall be apportioned by the Board among the three classes of Directors
so as to maintain such classes as nearly equal as possible.
SECTION 5. Vacancies and Newly Created Directorships. Any vacancy in the
-----------------------------------------
Board caused by death, resignation, removal or otherwise, or through an increase
in the number of Directors of a class, shall be filled by a majority vote of the
remaining Directors of the class in which such vacancy occurs, or by the sole
remaining Director of that class if only one Director remains, or by the
majority vote of the remaining Directors of the other two classes if there be no
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<PAGE>
remaining members of the class in which the vacancy occurs. A Director so
elected to fill a vacancy shall serve for the remainder of the then present term
of the office of the class to which he was elected.
SECTION 6. Initial Meeting. The Board shall meet as soon as practicable
---------------
after the annual election of Directors and notice of such first meeting shall
not be required.
SECTION 7. Regular Meeting. Regular meetings of the Board shall be held
---------------
without call or notice at such time and place as shall from time to time be
fixed by standing resolution of the Board.
SECTION 8. Special Meetings. Special meetings of the Board may be called
----------------
at any time, and for any purpose permitted by law, by the Chairman of the Board,
the Chief Executive Officer or by the Secretary on the request (whether written
or oral) of any two members of the Board, which meetings shall be held at the
time and place designated by the person or persons calling the meeting. Notice
of the time and place of any such meetings shall be given to the Directors by
the Secretary, or in case of his absence, refusal or inability to act, by any
other officer. Any such notice may be given by mail, by private express courier
service, by telegraph, by telecopier, by telephone, by personal service, or by
any thereof as to different Directors.
Notice to a Director by mail or by private express courier service shall be
deemed to have been given if addressed to such Director at the address shown
upon the records of the Corporation for such Director (or as may have been given
to the Corporation by such Director for purposes of notice) and deposited in a
United States Post Office or delivered to such private express courier service,
as the case may be, at least forty-eight hours before the time of the meeting.
Any other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted to the recipient by the person giving the
notice by electronic means. Oral notice shall be deemed to have been given at
the time it is communicated, in person or by telephone or wireless, to the
recipient or to a person at the office or home of the recipient who may
reasonably be expected to communicate the notice to the recipient.
A notice need not specify the purpose of any special meeting of the Board
of Directors. Whenever any Director has been absent from any meeting of the
Board of Directors for which notice has not been dispensed with, an entry in the
minutes of such meeting to the effect that notice has been duly given shall be
conclusive and incontrovertible evidence that due notice of such meeting was
given to such Director.
SECTION 9. Quorum. At all meetings of the Board a majority of the whole
------
Board shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the Directors present at
any meeting at which there is a quorum shall be the act of the Board, except as
may be otherwise specifically provided by applicable law or by the Certificate
of Incorporation or by these By-laws. Any meeting of the Board may be adjourned
to meet again at a stated day and hour. Even though no quorum is present, as
required in this Section, a majority of the Directors present at any meeting of
the Board, either regular or special, may adjourn from time to time until a
quorum be had, but no later than the time fixed for the next regular meeting of
the Board. Notice of any adjourned meeting need not be given.
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<PAGE>
SECTION 10. Fees and Compensation. Each Director and each member of a
---------------------
committee of the Board shall receive such fees and reimbursement of expenses
incurred on behalf of the Corporation or in attending meetings as the Board may
from time to time determine.
SECTION 11. Meetings by Telephonic Communication. Members of the Board or
------------------------------------
any committee thereof may participate in a regular or special meeting of such
Board or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, if the standing resolutions fixing the time and place of a regular
meeting or if the notice of the time and place of any regular or special meeting
provides for such participation. Participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting.
SECTION 12. Qualification of Directors. No person can be elected a
--------------------------
Director of this Corporation (whether by vote of the stockholders or the
Directors) if, were he or she to be elected a Director, less than a majority of
the total number of directors would be Outside Directors. If such a person is
nominated for Director, no votes cast for his or her election shall be counted
and, for this purpose, the announcement of the results of any election of
Directors, shall be delayed pending the determination by the Board referred to
below. An Outside Director is a person who is not: (a) an officer or employee
of the Corporation or any relative of an officer or employee; (b) a Related
Person (as that term is defined in Article X of the Corporation's Certificate of
Incorporation) or an officer, director, employee, associate or affiliate of a
Related Person, or a relative of any of the foregoing; or (c) a person having a
direct or indirect material business relationship with the Corporation. The
Board shall be empowered to determine in its sole and absolute discretion
whether a person is or is not an Outside Director within the meaning of the
foregoing.
SECTION 13. Committees. The Board may, by resolution passed by a majority
----------
of the whole Board, designate one or more committees, each committee to consist
of one or more of the Directors of the Corporation. The Board may designate one
or more Directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the absence
or disqualification of a member of a committee and if the Board has not
designated one or more alternates (or if such a designation has been made, in
the absence or disqualification of such alternate(s)), the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board to act at the meeting in the place of any such absent or disqualified
member or alternate. Any such committee, to the extent provided in the
resolution of the Board shall have and may exercise all the powers and authority
of the Board in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it; but no such committee shall have the power or authority in
reference to amending the Certificate of Incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the By-laws of the Corporation; and,
unless the resolution expressly so provides, no such committee shall have the
power or authority to declare a dividend or to authorize the issuance of stock.
SECTION 14. Action Without Meetings. Unless otherwise restricted by
-----------------------
applicable law or by the Certificate of Incorporation or by these By-laws, any
action required or permitted to be taken at any meeting of the Board or of any
committee thereof may be taken without meeting if
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all members of the Board or of such committee consent thereto in writing as the
case may be, and the writing or writings are filed with the minutes of
proceedings of the Board or committee. Action shall be taken by the
stockholders only at annual or special meetings of stockholders and stockholders
may not act by written consent.
ARTICLE IV
OFFICERS
SECTION 1. Appointment and Salaries. The Board shall appoint the
------------------------
executive officers who shall include a Chief Executive Officer, one or more Vice
Presidents (one or more of whom may be designated as Executive Vice Presidents
or as Senior Vice Presidents), a Secretary, a Controller, and a Treasurer. The
Board may also appoint a Chairman of the Board and a President and the Board or
the Chief Executive Officer may appoint such other officers (including Assistant
Vice Presidents, Assistant Secretaries, Assistant Treasurers and Assistant
Controllers) as the Board or they may deem necessary or desirable. The Board
shall fix the salaries of all officers appointed by it. Unless prohibited by
applicable law or by the Certificate of Incorporation or by these By-laws, one
person may be elected or appointed to serve in more than one official capacity.
SECTION 2. Removal and Resignation. Any officer may be removed, either
-----------------------
with or without cause, by the Board or, in the case of an officer not appointed
by the Board by the Chief Executive Officer (or if the Board does not appoint a
Chief Executive Officer, the President). Any officer may resign at any time by
giving notice to the Board or to the Chief Executive Officer (or if the Board
does not appoint a Chief Executive Officer, the President), or to the Secretary
of the Corporation. Any such resignation shall take effect at the date of
receipt of such notice or at any later time specified therein; and, unless
otherwise specified in such notice, the acceptance of the resignation shall not
be necessary to make it effective.
SECTION 3. The Chairman of the Board. The Board may, at its election,
-------------------------
appoint a Chairman of the Board. If such an officer be elected, he shall, if
present, preside at all meetings of the stockholders and of the Board and shall
have such other powers and duties as may from time to time be assigned to him by
the Board.
SECTION 4. The Chief Executive Officer. Subject to such powers, if any,
---------------------------
as may be given by the Board to the Chairman of the Board, if there is such an
officer, the Chief Executive Officer shall be the chief executive officer of the
Corporation with the powers of general manager, and he shall have supervision
over and may exercise general executive powers concerning all of the operations
and business of the Corporation, with the authority from time to time to
delegate to other officers such executive and other powers and duties as he may
deem advisable. If there be no Chairman of the Board or if he is absent, the
Chief Executive Officer shall preside at all meetings of the stockholders and of
the Board, unless the Board appoints another person who need not be a
stockholder, officer or Director of the Corporation, to preside at a meeting of
stockholders.
SECTION 5. The Vice President. In the absence of the Chief Executive
------------------
Officer (or, if the Board does not appoint a Chief Executive Officer, the
President) or in the event of his inability or refusal to act, the Vice
President (or if there be more than one Vice President, the Vice
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Presidents in the order of their rank or, if of equal rank, then in the order
designated by the Board or the Chief Executive Officer (or, if the Board does
not appoint a Chief Executive Officer, the President) or, in the absence of any
designation, then in the order of their appointment) shall perform the duties of
the Chief Executive Officer (or, if the Board does not appoint a Chief Executive
Officer, the President) and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Chief Executive Officer (or, if the
Board does not appoint a Chief Executive Officer, the President). The rank of
Vice Presidents in descending order shall be Executive Vice President, Senior
Vice President, Vice President, and Assistant Vice President. The Vice
President shall perform such other duties and have such other powers as the
Board may from time to time prescribe.
SECTION 6. The Secretary. The Secretary shall attend all meetings of the
-------------
Board and all meetings of the stockholders and record all the proceedings of the
meetings of the Corporation and of the Board in a book to be kept for that
purpose and shall perform like duties for the committees when required. He
shall give, or cause to be given, notice of all meetings of stockholders and
special meetings of the Board. He shall have custody of the corporate seal of
the Corporation and he, or an Assistant Secretary, shall have authority to affix
the same to any instrument requiring it and when so affixed, it may be attested
by his signature or by the signature of such Assistant Secretary. The Board may
give general authority to any other officer to affix the seal of the Corporation
and to attest the affixing by his signature. The Secretary shall perform such
other duties and have such other powers as the Board or the Chief Executive
Officer (or, if the Board does not appoint a Chief Executive Officer, the
President) may from time to time prescribe.
SECTION 7. The Treasurer and the Controller. The Treasurer and the
--------------------------------
Controller shall each have custody of the corporate funds and securities and
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all monies and other valuable
effects in the name and to the credit of the Corporation in such depositories as
may be designated by the Board. Either the Treasurer or the Controller may
disburse the funds of the Corporation as may be ordered by the Board or the
Chief Executive Officer (or, if the Board does not appoint a Chief Executive
Officer, the President), taking proper vouchers for such disbursements, and
shall render to the Board and Chief Executive Officer (or, if the Board does not
appoint a Chief Executive Officer, the President) an account of transactions and
of the financial condition of the Corporation. The Treasurer and the Controller
each shall perform such other duties and have such other powers as the Board or
the Chief Executive Officer (or, if the Board does not appoint a Chief Executive
Officer, the President) may from time to time prescribe.
SECTION 8. Assistant Officers. An Assistant Officer shall, in the absence
------------------
of the officer to whom he is an assistant or in the event of such officers
inability or refusal to act (or, if there be more than one such assistant
officer, the assistant officers in the order designated by the Board or the
Chief Executive Officer (or, if the Board does not appoint a Chief Executive
Officer, the President) or, in the absence of any designation then in the order
of their appointment), perform the duties and exercise the powers of such
officer. An Assistant Officer shall perform such other duties and have such
other powers as the Board or the Chief Executive Officer (or, if the Board does
not appoint a Chief Executive Officer, the President) may from time to time
prescribe.
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ARTICLE V
SEAL
It shall not be necessary to the validity of any instrument executed by any
authorized officer or officers of the Corporation, that the execution of such
instrument be evidenced by the corporate seal, and all documents, instruments,
contracts, and writings of all kinds signed on behalf of the Corporation by any
authorized officer or officers thereof shall be as effectual and binding on the
Corporation without the corporate seal, as if the execution of the same had been
evidenced by affixing the corporate seal thereto.
ARTICLE VI
FORM OF STOCK CERTIFICATE
Every holder of stock in the Corporation shall be entitled to have a
certificate signed by, or in the name of, the Corporation by the Chief Executive
Officer or a Vice President, and by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by him in the Corporation. Any or all of the signatures
on the certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of the issue.
ARTICLE VII
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The Chief Executive Officer or any other officer or officers authorized by
the Board or the Chief Executive Officer are each authorized to vote, represent,
and exercise on behalf of the Corporation all rights incident to any and all
shares of any other corporation or corporations standing in the name of the
Corporation. The authority herein granted may be exercised either by any such
officer in person or by any other person authorized so to do by proxy or power
of attorney duly executed by said officer.
ARTICLE VIII
TRANSFERS OF STOCK
Subject to any provisions relating to restrictions on transfer of the
Corporation's shares contained in, or adopted pursuant to, these By-laws or the
Certificate of Incorporation, upon surrender to the Corporation or a transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction upon its books.
C-9
<PAGE>
ARTICLE IX
LOST, STOLEN OR DESTROYED CERTIFICATES
The Board may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of the fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
ARTICLE X
RECORD DATE
The Board may fix in advance a date, which shall not be more than sixty
days nor less than ten days preceding the date of any meeting of stockholders,
or the date for the payment of any dividend, or the date for the allotment of
rights, or the date when any change or conversion or exchange of capital stock
shall go into effect, as a record date for the determination of stockholders
entitled to notice of, and to vote at, any such meeting and any adjournment
thereof, or entitled to receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of any such change,
conversion or exchange of capital stock, and in such case such stockholders, and
only such stockholders as shall be stockholders of record on the date so fixed
shall be entitled to such notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, as the case may be, not
withstanding any transfer of any stock on the books of the Corporation after any
such record date fixed as aforesaid.
ARTICLE XI
REGISTERED STOCKHOLDERS
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 other person, whether or not it shall have express or
other notice thereof, save as expressly provided by applicable law.
ARTICLE XII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the
Board.
C-10
<PAGE>
ARTICLE XIII
NOTICES
SECTION 1. Manner of Notice. Whenever under the provisions of the
----------------
statutes or of the Certificate of Incorporation or of these By-laws notice is
required to be given to any Director, committee member, officer or stockholder,
it shall not be construed to mean personal notice, but such notice may be given,
in the case of stockholders, in writing, by mail, by depositing the same in the
post office or letterbox, in a postpaid sealed wrapper, addressed to such
stockholder, at such address as appears on the books of the Corporation, or, in
default of other address, to such stockholder at the General Post Office in the
City of Wilmington, Delaware, and, in the case of Directors, committee members
and officers, by telephone, or by mail or by telegram to the last business
address known to the Secretary of the Corporation, and such notice shall be
deemed to be given at the time when the same shall be thus mailed or telegraphed
or telephoned.
SECTION 2. Waiver of Notice. Whenever any notice is required to be given
----------------
under the provisions of the statutes or of the Certificate of Incorporation or
of these By-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE XIV
AMENDMENTS
The Board shall have the power to make, adopt, alter, amend and repeal from
time to time By-laws of this Corporation, subject to the right of the
stockholders entitled to vote with respect thereto to adopt, alter, amend, and
repeal By-laws made by the Board; provided, however, that By-laws shall not be
adopted, altered, amended or repealed by the stockholders of the Corporation,
except by the vote of the holders of not less than sixty-six and two-thirds
percent (66-2/3%) of the outstanding shares of Common Stock.
ARTICLE XV
INDEMNIFICATION AND INSURANCE
SECTION 1. Right to Indemnification. Each person who was or is a party or
------------------------
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a Director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
or inaction in an official capacity or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent permitted by the laws of Delaware, as the
same exist or may hereafter be amended, against all costs, charges, expenses,
liabilities and losses (including attorneys' fees, judgements, fines, ERISA
excise taxes or penalties and amounts paid or to be
C-11
<PAGE>
paid in settlement) reasonably incurred or suffered by such person in connection
therewith, and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in Section 2 hereof, the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board. The right to indemnification conferred in this Article
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the Delaware General
Corporation Law requires, the payment of such expenses incurred by a director or
officer in his or her capacity as a director of officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of its Board, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
SECTION 2. Right of Claimant to Bring Suit. If a claim under Section 1 of
-------------------------------
this Article is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has failed to meet a standard of conduct which
makes it permissible under Delaware law for the Corporation to indemnify the
claimant for the amount claimed. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is permissible in the circumstances
because he or she has met such standard of conduct, nor an actual determination
by the Corporation (including its Board, independent legal counsel, or its
stockholders) that the claimant has not met such standard of conduct, shall be a
defense to the action or create a presumption that the claimant has failed to
meet such standard of conduct.
SECTION 3. Non-Exclusivity of Rights. The right to indemnification and
-------------------------
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 4. Insurance. The Corporation may maintain insurance, at its
---------
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability, loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under Delaware law.
C-12
<PAGE>
SECTION 5. Expenses as a Witness. To the extent that any director,
---------------------
officer, employee or agent of the Corporation is by reason of such position, or
a position with another entity at the request of the Corporation, a witness in
any action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or her or on his or her behalf
in connection therewith.
SECTION 6. Indemnity Agreements. The Corporation may enter into
--------------------
agreements with any director, officer, employee or agent of the Corporation
providing for indemnification to the full extent permitted by Delaware law.
C-13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Holdings By-laws will provide that Holdings shall indemnify and advance
expenses to any person to the fullest extent permitted by the General
Corporation Law of the State of Delaware (the "Delaware Corporate Law"),
whenever they are defendants or threatened to be made defendants in any legal or
administrative proceeding by reason of the fact that such person is or was a
director or officer of Holdings or is or was serving at the request of Holdings
as a director, officer, employee or agent of another entity. Section 145 of the
Delaware Corporate Law provides that a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if such
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had not reasonable cause to believe was
unlawful. A similar standard of care is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with defense or settlement of such an
action and then, where the person is adjudged to be liable to the corporation,
only if and to the extent that the Court of Chancery of the State of Delaware or
the court in which such action was brought determines that such person is fairly
and reasonably entitled to such indemnity and then only for such expenses as the
court shall deem proper.
The Company and Holdings have entered into Indemnity Agreements with their
directors and officers contractually obligating the Company and Holdings to
provide indemnification rights substantially similar to those described above.
Holdings is empowered by Section 102(b)(7) of the Delaware Corporate Law to
include a provision in its Certificate of Incorporation that limits a director's
liability to Holdings or its stockholders for monetary damages for breaches of
his or her fiduciary duty as a director. The Holdings Certificate of
Incorporation will state that directors shall not be liable for monetary damages
for breaches of their fiduciary duty to the fullest extent permitted by the
Delaware Corporate Law.
The Company maintains (and after the Reorganization, Holdings plans to
maintain) directors' and officers' insurance for certain expenses and losses for
which indemnification is permitted by the Delaware Corporate Law and the Company
By-laws, including liabilities under the securities laws.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
2.1 Agreement and Plan of Reorganization by and among PS Group, Inc., PS Group
Holdings, Inc. and PSG Merger Subsidiary, Inc. (included as Appendix A to
the Prospectus/Proxy Statement)
3.1 Restated Certificate of Incorporation of the Registrant to be in effect
immediately following the Reorganization (included as Appendix B to the
Prospectus/Proxy Statement)
II-1
<PAGE>
3.2 Restated By-laws of the Registrant to be in effect immediately following
the Reorganization (included as Appendix C to the Prospectus/Proxy
Statement)
4.1 Specimen of Holdings Common Stock Certificate
5.1 Opinion of Irell & Manella, counsel to the Registrant in connection with
the Reorganization/*/
8.1 Opinion of Munger, Tolles & Olson, tax counsel to the Registrant in
connection with the Reorganization/*/
10.1 Form of Indemnity Agreement
23.1 Consent of Irell & Manella/*/
23.2 Consent of Munger, Tolles & Olson (included in Exhibit 8.1)
24.1 Power of Attorney appointing Charles E. Rickershauser, Jr. and J. P.
Guerin to sign and file amendments hereto (included on Signature Page)
99.1 Form of proxy to be distributed to the stockholders of the Company
_______________
/*/ To be filed by amendment
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
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 the Securities 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 proceedings) 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 Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) Prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement, by
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form; and
(2) Every prospectus (i) that is filed pursuant to paragraph (1) immediately
preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of
the Securities Act, and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the registration
statement
II-2
<PAGE>
and will not be used until such amendment is effective, and that, for purposes
of determining any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4 of this form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant, PS Group Holdings, Inc., a Delaware corporation, has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Los Angeles, State of California,
on the 8th day of February, 1996.
PS GROUP HOLDINGS, INC.
a Delaware corporation
By: /s/ Charles E. Rickershauser, Jr.
__________________________________________
Charles E. Rickershauser, Jr.
Chairman of the Board and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below does hereby constitute and appoint Charles E. Rickershauser, Jr. and J.P.
Guerin, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including,
without limitation, post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, and each of them, or his or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities indicated on January 8, 1996.
Signature Title
--------- -----
/s/ Charles E. Rickershauser, Jr. Director, Chairman of the Board
_________________________________ and Chief Executive Officer
Charles E. Rickershauser, Jr. (principal executive officer)
/s/ Lawrence A. Guske Vice President-Finance and
_________________________________ Chief Financial Officer
Lawrence A. Guske (principal financial officer)
/s/ Johanna Unger Vice President, Controller
_________________________________ and Secretary (Controller and
Johanna Unger principal accounting officer)
/s/ J.P. Guerin
_________________________________ Director
J.P. Guerin
II-4
<PAGE>
Signature Title
--------- -----
/s/ Robert M. Fomon
_________________________________ Director
Robert M. Fomon
/s/ Gordon C. Luce
_________________________________ Director
Gordon C. Luce
/s/ Donald W. Killian, Jr.
_________________________________ Director
Donald W. Killian, Jr.
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
<S> <C> <C>
2.1 Agreement and Plan of Reorganization by and among PS Group, Inc.,
PS Group Holdings, Inc. and PSG Merger Subsidiary, Inc. (included
as Appendix A to the Prospectus/Proxy Statement)
3.1 Restated Certificate of Incorporation of the Registrant to be in
effect immediately following the Reorganization (included as
Appendix B to the Prospectus/Proxy Statement)
3.2 Restated By-laws of the Registrant to be in effect immediately
following the Reorganization (included as Appendix C to the
Prospectus/Proxy Statement)
4.1 Specimen of Holdings Common Stock Certificate
5.1 Opinion of Irell & Manella, counsel to the Registrant in
connection with the Reorganization/*/
8.1 Opinion of Munger, Tolles & Olson, tax counsel to the Registrant
in connection with the Reorganization/*/
10.1 Form of Indemnity Agreement
23.1 Consent of Irell & Manella/*/
23.2 Consent of Munger, Tolles & Olson (included in Exhibit 8.1)
24.1 Power of Attorney appointing Charles E. Rickershauser, Jr.
and J.P. Guerin to sign and file amendments hereto (included
on Signature Page)
99.1 Form of proxy to be distributed to the stockholders of the Company
</TABLE>
_______________
/*/ To be filed by amendment.
<PAGE>
EXHIBIT 4.1
SPECIMEN OF HOLDINGS
COMMON STOCK CERTIFICATE
<PAGE>
[LOGO OF PS GROUP, INC.]
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
Common Stock
Number Shares
See reverse for certain definitions
This Certifies that is the owner of
CUSIP
[LOGO OF PS GROUP, INC.]
THE FOLLOWING WORDS WILL BE STAMPED ON ISSUED CERTIFICATES ACROSS THE PARAGRAPH
SET FORTH IMMEDIATELY BELOW:
"THIS CERTIFICATE REPRESENTS SHARES OF COMMON STOCK
OF PS GROUP HOLDINGS, INC."
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE ONE DOLLAR
($1.00) PER SHARE, OF PS GROUP, INC., TRANSFERRABLE ON THE BOOKS OF THE
CORPORATION IN PERSON OR BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS
CERTIFICATE PROPERLY ENDORSED. THIS CERTIFICATE IS NOT VALID UNLESS
COUNTERSIGNED AND REGISTERED BY THE TRANSFER AGENT AND REGISTRAR.
WITNESS THE FACSIMILE SIGNATURES OF THE DULY AUTHORIZED OFFICERS OF THE
CORPORATION.
Dated:
------------------------- --------------------------
Secretary President
COUNTERSIGNED AND REGISTERED:
THIS CERTIFICATE IS TRANSFERABLE CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C.
IN THE CITIES OF NEW YORK, TRANSFER AGENT AND REGISTRAR
LOS ANGELES OR SAN FRANCISCO
BY:
AUTHORIZED SIGNATURE
SEE REVERSE SIDE FOR CERTAIN RESTRICTIONS ON TRANSFER OF STOCK AND REQUIREMENT.
<PAGE>
[LOGO OF PS GROUP, INC.]
The Corporation will furnish without charge to each shareholder who so
requests a copy of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof, and the qualifications, limitations or restrictions of such preferences
and/or rights. Such request should be made to the office of the Secretary of the
Corporation, 3225 North Harbor Drive, San Diego, California 92101.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT-- Custodian
-----------------
TEN ENT--as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with right under Uniform
of survivorship and not as Gifts to Minors
tenants in common Act
--------------
(State)
Additional abbreviations may also be used though not in the above list.
For value Received ____________ hereby sell, assign, and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares
- -------------------------------------------------------------------------
of the capital stock represented by the within Certificate and do hereby
irrevocably constitute and appoint
Attorney
- -----------------------------------------------------------------------
to transfer the said stock on the books of the within-named Corporation, with
full power of substitution in the promises.
Dated
------------------------------
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
NOTICE: WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
RESTRICTIONS ON TRANSFER OF STOCK AND REQUIREMENTS TO TRANSFER STOCK
Article XI of the certificate of incorporation of the Corporation ("Article
XI") restricts the direct or indirect sale, transfer, disposition, purchase or
acquisition ("Transfer") of shares of stock of the Corporation ("Stock"), and
requires the transfer of Stock, under certain circumstances.
In general, Article XI prohibits any Transfer of Stock on or prior to
(_____________, 2011) (or such earlier or later date as may be determined by
the board of directors of the Corporation (the "Board of Directors")) without
prior approval of the Board of Directors by or to any holder (a) who
beneficially owns directly or through attribution 5% or more of the Stock (as
determined under section 382 of the Internal Revenue Code of 1966 and the
applicable Treasury Regulations thereunder, as amended from time to time
(collectively, "Section 382") with certain modifications, or (b) who, upon such
Transfer of Stock, would beneficially own directly or through attribution 5% or
more of the Stock (as determined under Section 382, with certain modifications).
If any person or entity attempts to Transfer Stock in violation of Article
XI, such purported Transfer shall be null and void and the purported acquiror
shall have no rights with respect thereto. Among other things, Article XI
permits the Corporation to require the sale of any Stock Transferred in
violation of Article XI, and the purported acquiror shall not be entitled to
receive any proceeds of such sale in excess of the amount paid by such purported
acquiror for such Stock, minus certain expenses and shall be required to return
any dividends or distributions on such Stock. In addition, certain holders of
Stock will be required to transfer Stock as a result of certain transfers of
interests in entities that own Stock and the proceeds of such sale to be
received by the holder shall be limited to the fair market value of such Stock
at the time of the transfer of such interests.
Under Article XI, the Corporation may require as a condition to the
registration of the Transfer of any Stock that the proposed transferee furnish
to the Corporation information regarding the ownership of Stock by the proposed
transferee as well as the ownership of Stock by any persons or entities
controlling, controlled by or under common control with such proposed
transferee.
Under certain circumstances, Article XI authorizes the Board of Directors
to extend or accelerate the expiration date of the Article XI transfer
restrictions and to modify certain provisions of Article XI.
The foregoing is a summary description only of certain of the provisions of
Article XI, to which reference is made for a complete description of the
restrictions on the transfer of Stock and the provisions requiring the transfer
of Stock and the consequences of the violation thereof. The Corporation will
furnish a copy of Article XI to the holder of record of this certificate without
charge upon written request to the Corporation at its principal place of
business. By acceptance of this certificate, the holder hereof and any
beneficial owner of the shares represented hereby shall be bound in all respects
by such Article XI, as modified from time to time by the Board of Directors.
<PAGE>
EXHIBIT 10.1
FORM OF INDEMNITY AGREEMENT
(A SIMILAR FORM OF THIS DOCUMENT WILL BE USED FOR EACH
OFFICER AND DIRECTOR.)
<PAGE>
INDEMNITY AGREEMENT
This Indemnity Agreement (the "Agreement") is made as of January 31, 1996 by and
between PS Group Holdings, Inc., a Delaware corporation (the "Company"), and
____________________ (the "Indemnitee"), a director of the Company.
R E C I T A L S
- - - - - - - -
A. The Indemnitee is currently serving as a director of the Company and in
such capacity has rendered valuable services to the Company.
B. The Company has investigated the availability and sufficiency of
liability insurance and Delaware statutory indemnification provisions to provide
its directors and officers with adequate protection against various legal risks
and potential liabilities to which such individuals are subject due to their
positions with the Company and has concluded that such insurance and statutory
provisions may provide inadequate and unacceptable protection to certain
individuals requested to serve as its directors and officers.
C. In order to induce and encourage highly experienced and capable persons
such as the Indemnitee to continue to serve as a director of the Company, the
Board of Directors has determined, after due consideration and investigation of
the terms and provisions of this Agreement and the various other options
available to the Company and the Indemnitee in lieu hereof, that this Agreement
is not only reasonable and prudent but necessary to promote and ensure the best
interests of the Company and its stockholders.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of the continued services of the
Indemnitee and in order to induce the Indemnitee to continue to serve as a
director, the Company and the Indemnitee do hereby agree as follows:
1. Definitions. As used in this Agreement:
-----------
(a) The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, whether brought in the name of the
Company or otherwise and whether of a civil, criminal or administrative or
investigative nature, by reason of the fact that the Indemnitee is or was a
director of the Company, or is or was serving at the request of the Company
as a director, officer, employee or agent of another enterprise, whether or
not he is serving in such capacity at the time any liability or expense is
incurred for which indemnification or reimbursement is to be provided under
this Agreement.
(b) The term "Expenses" includes, without limitation, attorneys' fees,
disbursements and retainers, accounting and witness fees, travel and
deposition costs, expenses of investigations, judicial or administrative
proceedings and appeals, amounts paid in settlement by or on behalf of the
Indemnitee, and any expenses of establishing a right to indemnification,
pursuant to this Agreement or otherwise, including reasonable compensation
for time spent by the Indemnitee in connection with the investigation,
defense or appeal of a Proceeding or action for indemnification for which
he is not
-1-
<PAGE>
otherwise compensated by the Company or any third party. The term
"Expenses" does not include the amount of judgments, fines, penalties or
ERISA excise taxes actually levied against the Indemnitee.
2. Agreement to Serve. The Indemnitee agrees to continue to serve as a
------------------
director of the Company at the will of the Company for so long as he is duly
elected or appointed or until such time as he tenders his resignation in
writing.
3. Indemnification in Third Party Actions. The Company shall indemnify
--------------------------------------
the Indemnitee in accordance with the provisions of this section if the
Indemnitee is a party to or threatened to be made a party to or is otherwise
involved in any Proceeding (other than a Proceeding by or in the name of the
Company to procure a judgment in its favor), by reason of the fact that the
Indemnitee is or was a director of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another
enterprise, against all Expenses, judgments, fines, penalties and ERISA excise
taxes actually and reasonably incurred by the Indemnitee in connection with the
defense or settlement of such a Proceeding, to the fullest extent permitted by
Delaware law; provided that any settlement of a Proceeding be approved in
writing by the Company.
4. Indemnification in Proceedings By or In the Name of the Company. The
---------------------------------------------------------------
Company shall indemnify the Indemnitee in accordance with the provisions of this
section if the Indemnitee is a party to or is threatened to be made a party to
or otherwise involved in any Proceedings by or in the name of the Company to
procure a judgment in its favor by reason of the fact that the Indemnitee was or
is a director of the Company, or is or was serving at the request of the Company
as a director, officer, employee or agent of another enterprise, against all
Expenses actually and reasonably incurred by the Indemnitee in connection with
the defense or settlement of such a Proceeding, to the fullest extent permitted
by Delaware law.
5. Conclusive Presumption Regarding Standards of Conduct. The Indemnitee
-----------------------------------------------------
shall be conclusively presumed to have met the relevant standards of conduct, as
defined by Delaware law, for indemnification pursuant to this Agreement, unless
a determination is made that the Indemnitee has not met such standards (i) by
the Board of Directors by a majority vote of a quorum thereof consisting of
directors who were not parties to the Proceeding due to which a claim is made
under this Agreement, (ii) by the stockholders of the Company by majority vote
of a quorum thereof consisting of stockholders who were not parties to such a
Proceeding, or (iii) in a written opinion of independent legal counsel,
selection of whom has been approved by the Indemnitee in writing.
6. Indemnification of Expenses of Successful Party. Notwithstanding any
-----------------------------------------------
other provisions of this Agreement, to the extent that the Indemnitee has been
successful in defense of any Proceeding or in defense of any claim, issue or
matter therein, on the merits or otherwise, including the dismissal of a
Proceeding without prejudice, the Indemnitee shall be indemnified against all
Expenses incurred in connection therewith to the fullest extent permitted by
Delaware law.
7. Advances of Expenses. The Expenses incurred by the Indemnitee in any
--------------------
Proceeding shall be paid promptly by the Company in advance of the final
disposition of the Proceeding at the written request of the Indemnitee to the
fullest extent permitted by Delaware law; provided that as long as Delaware law
requires such an undertaking, the Indemnitee shall
-2-
<PAGE>
undertake in writing to repay any advances to the extent that it is ultimately
determined that the Indemnitee is not entitled to indemnification.
8. Partial Indemnification. If the Indemnitee is entitled under any
-----------------------
provision of this Agreement to indemnification by the Company for a portion of
the Expenses, judgments, fines, penalties or ERISA excise taxes actually and
reasonably incurred by him in the investigation, defense, appeal or settlement
of any Proceeding but not, however, for the total amount thereof, the Company
shall nevertheless indemnify the Indemnitee for that portion of Expenses,
judgments, fines, penalties or ERISA excise taxes to which the Indemnitee is
entitled.
9. Indemnification Procedure; Determination of Right to Indemnification.
--------------------------------------------------------------------
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of any Proceeding, the Indemnitee shall, if a claim in respect
thereof is to be made against the Company under this Agreement, notify the
Company of the commencement thereof in writing. The omission to so notify
the Company will not relieve it from any liability which it may have to the
Indemnitee otherwise than under this Agreement.
(b) If a claim for indemnification or advances under this Agreement is
not paid by the Company within 30 days of receipt of written notice, the
rights provided by this Agreement shall be enforceable by the Indemnitee in
any court of competent jurisdiction. The burden of proving by clear and
convincing evidence that indemnification or advances are not appropriate
shall be on the Company. Neither the failure of the directors or
stockholders of the Company or its independent legal counsel to have made a
determination prior to the commencement of such action that indemnification
or advances are proper in the circumstances because the Indemnitee has met
the applicable standard of conduct, nor an actual determination by the
directors or stockholders of the Company or independent legal counsel that
the Indemnitee has not met the applicable standard of conduct, shall be a
defense to the action or create a presumption that the Indemnitee has not
met the applicable standard of conduct.
(c) The Indemnitee's Expenses incurred in connection with any
proceeding concerning his right to indemnification or advances in whole or
in part pursuant to this Agreement shall also be indemnified by the Company
regardless of the outcome of such a proceeding, unless a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in the proceeding was not made in good faith or was frivolous.
(d) With respect to any Proceeding for which indemnification is
requested, the Company will be entitled to participate therein at its own
expense and, except as otherwise provided below, to the extent that it may
wish, the Company may assume the defense thereof, with counsel satisfactory
to the Indemnitee. After notice from the Company to the Indemnitee of its
election to assume the defense of a Proceeding, the Company will not be
liable to the Indemnitee under this Agreement for any Expenses subsequently
incurred by the Indemnitee in connection with the defense thereof, other
than as provided below. The Company shall not settle any Proceeding in any
manner which would impose any penalty or limitation on the Indemnitee
without the Indemnitee's written consent. The Indemnitee shall have the
right to employ his counsel in any Proceeding but the fees and expenses of
such counsel incurred after notice from the
-3-
<PAGE>
Company of its assumption of the defense of the Proceeding shall be at the
expense of the Indemnitee, unless (i) the employment of counsel by the
Indemnitee has been authorized by the Company, (ii) the Indemnitee shall
have reasonably concluded that there may be a conflict of interest between
the Company and the Indemnitee in the conduct of the defense of a
Proceeding, or (iii) the Company shall not in fact have employed counsel to
assume the defense of a Proceeding, in each of which cases the fees and
expenses of the Indemnitee's counsel shall be advanced by the Company. The
Company shall not be entitled to assume the defense of any Proceeding
brought by or on behalf of the Company or as to which the Indemnitee has
made the conclusion that there may be a conflict of interest between the
Company and the Indemnitee.
10. Limitations on Indemnification. No payments pursuant to this
------------------------------
Agreement shall be made by the Company:
(a) To indemnify or advance funds to the Indemnitee for expenses with
respect to proceedings initiated or brought voluntarily by the Indemnitee
and not by way of defense, except with respect to proceedings brought to
establish or enforce a right to indemnification under this Agreement or any
other statute or law or otherwise as required under Delaware law, but such
indemnification or advancement of expenses may be provided by the Company
in specific cases if the Board of Directors finds it to be appropriate;
(b) To indemnify the Indemnitee for any Expenses, judgements, fines,
penalties or ERISA excise taxes sustained in any Proceeding for which
payment is actually made to the Indemnitee under a valid and collectible
insurance policy, except in respect of any excess beyond the amount of
payment under such insurance;
(c) To indemnify the Indemnitee for any Expenses, judgements, fines or
penalties sustained in any Proceeding for an accounting of profits made
from the purchase or sale by Indemnitee of securities of the Company
pursuant to the provisions of Section 16(b) of the Securities Exchange Act
of 1934, the rules and regulations promulgated thereunder and amendments
thereto or similar provisions of any federal, state or local statutory law;
(d) To indemnify the Indemnitee for any Expenses, judgements, fines,
penalties or ERISA excise taxes resulting from the Indemnitee's conduct
which is finally adjudged to have been willful misconduct, knowingly
fraudulent or deliberately dishonest; or
(e) If a court of competent jurisdiction finally determines that any
indemnification hereunder is unlawful.
11. Maintenance of Liability Insurance.
----------------------------------
(a) The Company hereby covenants and agrees that, as long as the
Indemnitee shall continue to serve as a director of the Company and
thereafter as long as the Indemnitee may be subject to any possible
Proceeding, the Company, subject to subsection (c) below, shall promptly
obtain and maintain in full force and effect
-4-
<PAGE>
directors' and officers' liability insurance ("D&O Insurance") in
reasonable amounts from established and reputable insurers.
(b) In all D&O Insurance policies, the Indemnitee shall be named as an
insured in such a manner as to provide the Indemnitee the same rights and
benefits as are accorded to the most favorably insured of the Company's
directors.
(c) Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines in
good faith that such insurance is not reasonably available, the premium
costs for such insurance are disproportionate to the amount of coverage
provided, the coverage provided by such insurance is so limited by
exclusions that it provides an insufficient benefit, or the Indemnitee is
covered by similar insurance maintained by a subsidiary of the Company.
12. Indemnification Hereunder Not Exclusive. The indemnification provided
---------------------------------------
by this Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may be entitled under the Certificate of Incorporation, Bylaws, any
agreement, any vote of disinterested stockholders or directors, provision of
Delaware law, or otherwise, both as to action in his official capacity and as to
action in another capacity on behalf of the Company while holding such office.
13. Successors and Assigns. This Agreement shall be binding upon, and
----------------------
shall enure to the benefit of the Indemnitee and his heirs, personal
representatives and assigns, and the Company and its successors and assigns.
14. Separability. Each provision of this Agreement is a separate and
------------
distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions hereof. To the extent required, any provision of this
Agreement may be modified by a court of competent jurisdiction to preserve its
validity and to provide the Indemnitee with the broadest possible
indemnification permitted under Delaware law.
15. Savings Clause. If this Agreement or any portion hereof is
--------------
invalidated on any ground by any court of competent jurisdiction, the Company
shall nevertheless indemnify the Indemnitee as to any Expenses, judgments,
fines, penalties or ERISA excise taxes incurred with respect to any Proceeding
to the full extent permitted by any applicable provision of this Agreement that
shall not have been invalidated or by applicable Delaware law.
16. Interpretation; Governing Law. This Agreement shall be construed as a
-----------------------------
whole and in accordance with its fair meaning. Headings are for convenience
only and shall not be used in construing meaning. This Agreement shall be
governed and interpreted in accordance with the laws of the State of Delaware.
17. Amendments. No amendment, waiver, modification, termination or
----------
cancellation of this Agreement shall be effective unless in writing signed by
the party against whom enforcement is sought. The indemnification rights
afforded to the Indemnitee hereby are contract rights and may not be diminished,
eliminated or otherwise affected by amendments to the Certificate of
Incorporation, Bylaws or by other agreements, including D&O Insurance policies.
-5-
<PAGE>
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party and delivered to the other.
19. Notices. Any notice required to be given under this Agreement shall
-------
be directed to PS Group Holdings, Inc. at 4370 LaJolla Village Drive, Suite
1050, San Diego, California 92122, Attention: Corporate Secretary and to
Indemnitee at__________________________________________________________________
________________, or to such other address as either shall designate
in writing.
IN WITNESS WHEREOF, the parties have executed this Indemnity Agreement as
of the date first written above.
INDEMNITEE
_________________________________
PS GROUP HOLDINGS, INC.
By_______________________________
Its:
-6-
<PAGE>
EXHIBIT 99.1
FORM OF PROXY SUBMITTED TO THE STOCKHOLDERS
OF THE COMPANY
<PAGE>
PROXY
PS GROUP, INC.
ANNUAL MEETING _______________ (DAY) (DATE)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints LAWRENCE A. GUSKE and JOHANNA UNGER and each of
them, proxies, with power of substitution, to vote all shares which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of PS
Group, Inc. called to be held at _________________________________________,
at _________________, Los Angeles, California, on _____________________, 1996,
at _________ a.m. local time and all adjournments.
(Continued and to be signed on other side.)
<PAGE>
Please mark your
votes as indicated [X]
in this example
__________________ _____________
ACCOUNT NUMBER SHARES
Please specify your choices by marking the appropriate boxes below. If no
designation is made, your proxy will be voted FOR Items 1 and 2 and AGAINST
Item 3.
- --------------------------------------------------------------------------------
The Board of Directors Recommends Voting FOR Items 1 and 2
- -------------------------------------------------------------------------------
Item 1 - ELECTION OF DIRECTORS WITHHELD FOR: (Write that
Nominees: FOR WITHHELD nominee's name in the space
provided below.)
Charles E. Rickershauser, Jr. [_] [_] ___________________________
Donald W. Killian, Jr.
- --------------------------------------------------------------------------------
The Board of Directors Recommends a Vote AGAINST Item 3
- -------------------------------------------------------------------------------
Item 2 - AGREEMENT AND
PLAN OF REORGANIZATION FOR AGAINST ABSTAIN
[_] [_] [_]
- -------------------------------------------------------------------------------
Item 3 - STOCKHOLDER FOR AGAINST ABSTAIN
PROPOSAL
(To be voted upon if properly [_] [_] [_]
presented at the meeting.)
- -------------------------------------------------------------------------------
Item 4 - By executing this proxy,
the undersigned hereby authorizes
the proxy holders to vote upon such
other business as may properly come
before the meeting or any adjournment
thereof, as to which the undersigned
hereby confers discretionary authority
upon said proxies.
IMPORTANT: Please sign exactly as
name or names appear hereon. If
signed as executor, trustee or other
fiduciary, give your full title as
such.
Dated: _______________________, 1996
____________________________________
Signature
____________________________________
Signature
I PLAN TO ATTEND THE MEETING [_]
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE U.S.A.
