<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 3, 1996.
REGISTRATION NO. 333-00821
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PS GROUP HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
DELAWARE 7359 33-0692068
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION OR
ORGANIZATION)
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 LLP
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: [_]
---------------
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
---------------- --------------------------
A. INFORMATION ABOUT THE TRANSACTION
<C> <C> <S>
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;
Risk Factors Relating to the
Reorganization
4. Terms of the Transaction................... Summary; Forepart of
Prospectus/Proxy Statement;
Risk Factors Relating to the
Reorganization; The Annual
Meeting; The Reorganization
5. Pro Forma Financial Information............ Not applicable
6. Material Contacts with the Company Being
Acquired.................................. The Reorganization
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
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>
<PAGE>
PRELIMINARY COPY, SUBJECT TO COMPLETION
[LOGO of PS Group, Inc.]
April , 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"), to be held at the Sheraton Grande Hotel, 333 South Figueroa
Street, Los Angeles, California on Tuesday, May 28, 1996 at 10:00 a.m., local
time.
At the Annual Meeting you will be asked to elect two directors, with terms
expiring in 1999, and the Board recommends that you elect the two individuals
it has nominated (both of whom are current directors). You will also be asked
to consider a stockholder proposal (if properly presented) which the Board
recommends your vote against. In addition, you will also be asked to consider
and vote on a proposal to adopt a Restated Agreement and Plan of
Reorganization recommended for approval by the Board. Pursuant to this
Agreement, the Company will 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.
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, 1995, the Company
believes it had a $95.6 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 the Tax Benefits, the Tax Benefits could be of great
value to the Company. Accordingly, your Board considers the implementation of
the Reorganization an important step to protect the interests of all
stockholders.
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, 1995 summarized above, if an "ownership
change" had occurred in March, 1996, the Company's utilization of its Tax
Benefits would have been limited under most circumstances to a maximum
potential amount of approximately $3.4 million a year for 15 years, or an
aggregate maximum potential amount of approximately $51 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
<PAGE>
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 the "ownership
change."
Generally speaking, an "ownership change" occurs whenever, within a three-
year period, the aggregate ownership of a company's stock by its "5-percent
shareholders" (as defined by the applicable federal income tax regulations)
increases by more than 50 percentage points. Making that calculation is
complex and uncertain. As of the date of this letter, we are unaware of any
facts indicating that an "ownership change" has occurred with respect to the
Company but we estimate that, within the three-year period ended on that date,
the aggregate percentage point increase in the ownership of the Company's
stock by its "5-percent shareholders" was in excess of 35%.
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 (the "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 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 Company shares. However, if the Reorganization is
consummated, subsequent transfers of those Holdings shares will be subject to
the Transfer Restrictions.
In general, under the Transfer Restrictions transfers of Holdings common
stock by stockholders who own less than 5% of the outstanding Holdings common
stock will not be prohibited except in those cases where the person or entity
to whom the shares are transferred is a "5-percent shareholder" (for purposes
of the applicable federal income tax regulations relating to "ownership
changes") of Holdings or would be such a "5-percent shareholder" following the
transfer.
Under the Transfer Restrictions, the treatment of persons who are currently
"5-percent shareholders" of the Company will depend on when they acquired
their Company shares. "Preexisting 5-Percent Shareholders" will be prohibited
from purchasing additional shares of Holdings without the consent of the
Holdings board but 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 8, 1996 provided such transfers do not result in a new
"5-percent shareholder" (or, as to any transfers resulting in a new "5%
shareholder," such transfers do not, in the
Page 2
<PAGE>
determination of the Holdings board, result in an increase in Holdings'
calculated percentage ownership change under the applicable federal income tax
regulations) or increase the ownership percentage of an existing "5-percent
shareholder." (Transfers of interests in "Preexisting 5-Percent Shareholders"
(as distinct from transfers of shares of Holdings owned by them after the
Effective Time) will not be restricted.) "Preexisting 5-Percent Shareholders"
include, generally, specified persons who made Securities and Exchange
Commission filings reporting their ownership of more than 5% of the common
stock of the Company as of February 8, 1996 (the day before we first publicly
announced our proposal for the Reorganization) or who establish to the
satisfaction of the Holdings board on or before April 30, 1996 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 8,
1996.
In contrast, persons who become "5-percent shareholders" of the Company on
or after February 8, 1996 and prior to the consummation of the Reorganization
(as well as persons who were "5-percent shareholders" on February 8, 1996 but
do not qualify as "Preexisting 5-Percent Shareholders" by April 30, 1996) will
be prohibited by the Transfer Restrictions, unless expressly permitted by the
Holdings board, from acquiring or disposing of (whether directly or indirectly
through a transfer of an interest in such shareholder) any shares in Holdings
while the transfer restrictions are in effect.
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.
Since the sole purpose of the Transfer Restrictions is to protect the Tax
Benefits, the Transfer Restrictions will lapse if the "ownership change"
provisions of federal tax law are repealed and the Holdings board determines
that the Transfer Restrictions are no longer necessary for the preservation of
the Tax Benefits or at the beginning of a taxable year of Holdings to which
the Holdings board determines that no Tax Benefits may be carried forward.
They will also automatically expire on the fifteenth anniversary of the
effective date of the Reorganization. However, the Holdings board will have
the power to accelerate the expiration date of the Transfer Restrictions if it
determines in writing that the continuation of the Transfer Restrictions is no
longer reasonably necessary for the preservation of the Tax Benefits and the
power to 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. We have been asked why the Transfer Restrictions
will not automatically expire once the Tax Benefits are fully utilized. The
answer is that a determination as to whether or not the Tax Benefits have been
used up is complex and requires careful scrutiny of detailed information with
regard to the Company's tax position. In
Page 3
<PAGE>
addition, it is possible that tax authorities might take a view different from
the Company on issues relevant to the utilization of the Tax Benefits and we
need to have the flexibility to address that possibility while the Transfer
Restrictions are still in place. For that reason, we have concluded that it is
essential to vest in the Holdings Board the decision as to whether or not the
Transfer Restrictions have ceased to serve their sole purpose, namely the
preservation of the Tax Benefits. We have no interest in restricting transfers
of shares except for that purpose.
One of our two largest shareholders, ESL Partners, has expressed (in a
publicly-filed letter to the Board) its view that taking action to close what
it claims to be a gap between the Company's stock price and its intrinsic
value through, among other steps, a cash distribution of $2.50 per share
should be a higher priority for the Company than preserving the Tax Benefits
through the Transfer Restrictions and has indicated its current intention to
vote against the Reorganization. As more fully set forth in the accompanying
Prospectus/Proxy Statement, your Board strongly disagrees with this position.
While we are fully committed to continuing consideration of ways to enhance
stockholder value, we have concluded, after careful evaluation, that it would
not be prudent at this time to make an additional cash distribution beyond the
$1.50 per share paid last December. Moreover, we believe it is contrary to the
best interests of all stockholders to link the implementation of the
Reorganization to any particular use of the Company's cash. On the contrary,
your Board is convinced that preserving the Tax Benefits is a top priority and
that the consummation of the Reorganization at this time is the best way to
accomplish this crucial goal.
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 the 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.
Please do not send us any of your stock certificates at this time. If the
Reorganization is consummated, we will send you instructions regarding the
procedure for surrendering your stock certificates and receiving certificates
for the shares of Holdings common stock issued in exchange for your Company
shares.
Sincerely,
/S/ Charles E. Rickershauser, Jr.
-------------------------------------------
Charles E. Rickershauser, Jr.
Chairman of the Board and Chief Executive
Officer
Page 4
<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 MAY 28, 1996
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of PS Group,
Inc. (the "Company") will be held at the Sheraton Grande Hotel, located at 333
South Figueroa Street, Los Angeles, California, on Tuesday, May 28, 1996 at
10:00 a.m., Pacific Time, for the following purposes:
1. To elect two directors, with terms expiring in 1999;
2. To consider and vote upon a proposal to adopt a Restated 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 as in effect 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 as in effect immediately prior to the Reorganization. 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
immediately following the Reorganization will be the same as the authorized
equity capital of the Company immediately prior to the Reorganization;
3. To consider and vote 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 March 29, 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.
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.
<PAGE>
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
/S/ Johanna Unger
---------------------
Johanna Unger
Secretary
April , 1996
San Diego, California
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED APRIL 3, 1996
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 the Sheraton Grande Hotel, located at 333 South
Figueroa Street, Los Angeles, California, on May 28, 1996, at 10:00 a.m.,
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 March 29, 1996 (the "Record Date"), will be asked to
elect two directors, with terms expiring in 1999. The Company Board recommends
a vote FOR its two nominees. See "ELECTION OF DIRECTORS." The stockholders will
also vote on a proposal to adopt a Restated Agreement and Plan of
Reorganization dated as of January 31, 1996 (the "Reorganization Agreement")
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"), pursuant to
which Merger Sub will merge with and into the Company, with the Company being
the surviving corporation (the "Reorganization"). The Company Board recommends
a vote FOR approval of the Reorganization Agreement. See "THE REORGANIZATION."
In addition, one of the Company's stockholders has proposed a resolution (the
"Stockholder Proposal") recommending that the Company engage an investment
banking firm to assist the Company in evaluating various courses of action. If
the Stockholder Proposal is properly presented at the Annual Meeting by the
proponent or his representative, the stockholders will be asked to vote on it.
The Company Board recommends a vote AGAINST the Stockholder Proposal. See
"STOCKHOLDER PROPOSAL."
----------- (continued on following page)
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 "RISK FACTORS RELATING TO THE REORGANIZATION" ON PAGES 9 TO 10 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.
THE DATE OF THIS PROSPECTUS/PROXY STATEMENT IS APRIL , 1996.
<PAGE>
(continued from previous page)
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. As a result of the Reorganization,
certain transfer restrictions (the "Transfer Restrictions") will be included
in Holdings' Restated Certificate of Incorporation (the "Holdings Certificate
of Incorporation") and noted in legends on the stock certificates representing
Holdings Common Stock, 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 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 immediately 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 (the "NYSE")
and the Pacific Stock Exchange (the "PSE") under the symbol "PSG." Following
the Reorganization, Holdings Common Stock will be listed on the NYSE and the
PSE 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 April , 1996.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION...................................................... 5
SUMMARY.................................................................... 6
RISK FACTORS RELATING TO THE REORGANIZATION................................ 9
Market Considerations.................................................... 9
Continuation of Net Operating Loss Carryforwards......................... 9
Limitations on the Company's Ability to Use Tax Benefits................. 10
THE ANNUAL MEETING......................................................... 10
Matters to be Considered................................................. 10
Shares Outstanding and Entitled To Vote; Record Date..................... 10
Votes Required........................................................... 10
Voting, Solicitation and Revocation of Proxies........................... 11
ELECTION OF DIRECTORS...................................................... 12
Nominees for Director.................................................... 12
Certain Information Concerning Other Directors........................... 12
Information Regarding the Board of Directors and its Committees.......... 13
Compensation of Directors................................................ 13
EXECUTIVE COMPENSATION..................................................... 14
Report On Executive Compensation......................................... 14
Compensation Committee Interlocks and Insider Participation.............. 15
Summary Compensation Table............................................... 15
Stock Options............................................................ 16
Retirement Benefits...................................................... 16
Executive Employment Agreements.......................................... 17
Stock Performance Graph.................................................. 17
BENEFICIAL OWNERSHIP OF DIRECTORS AND OFFICERS............................. 19
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS............................. 20
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934....... 21
THE REORGANIZATION......................................................... 21
General.................................................................. 21
Recommendation of the Board of Directors................................. 23
Preservation of Tax Benefits............................................. 23
Summary of Transfer Restrictions......................................... 25
Form of the Reorganization............................................... 28
Effect of Reorganization Under the Rights Plan........................... 29
Conditions to the Reorganization and Abandonment......................... 30
Certificate of Incorporation and By-laws................................. 30
Appraisal Rights......................................................... 31
Board of Directors and Management of Holdings............................ 31
Pro Forma and Comparative Financial Statements; Accounting............... 32
Conversion of Securities in the Reorganization........................... 32
Exchange of Certificates................................................. 32
Federal Income Tax Consequences.......................................... 33
Certain Additional Information .......................................... 34
STOCKHOLDER PROPOSAL....................................................... 35
LEGAL MATTERS.............................................................. 36
OTHER MATTERS.............................................................. 36
Independent Auditors..................................................... 36
Stockholder Proposals.................................................... 36
</TABLE>
3
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<TABLE>
<S> <C>
APPENDIX A: RESTATED 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 PRIOR TO THE REORGANIZATION... B-1
APPENDIX C: RESTATED BY-LAWS OF PS GROUP HOLDINGS, INC. TO BE IN EFFECT
IMMEDIATELY PRIOR TO THE REORGANIZATION........................ C-1
</TABLE>
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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 NYSE and 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.
5
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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 prior to 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 the Sheraton Grande Hotel, located at 333 South
Figueroa Street, Los Angeles, California, on May 28, 1996, at 10:00 a.m.,
Pacific Time. Company Stockholders at the close of business on the Record Date
(March 29, 1996) 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 (1) to elect two directors, (2) to consider and vote on a
proposal to adopt the Reorganization Agreement, (3) to consider and vote on (if
properly presented) the Stockholder Proposal and (4) to transact 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 did 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 Holdings 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
acquisition of any shares of stock of 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."
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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."
RISK FACTORS RELATING TO THE REORGANIZATION. See "RISK FACTORS 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
corporation. 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 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 the Record Date, 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 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." As of the
Record Date, 2,875,402 shares of Company Common Stock, representing 47.3% of
the aggregate number of votes entitled to be cast at the Annual Meeting, were
held by persons (other than one of the Company's directors) who had reported to
the Commission beneficial ownership (including voting power) of more than five
percent of Company Common Stock. One of such persons, ESL, which has reported
to the Commission beneficial ownership (including voting power) of 1,198,270
shares of Company Common Stock, representing 19.7% of the aggregate number of
votes entitled to be cast at the Annual Meeting, has publicly announced a
current intention to vote against the Reorganization. See "BENEFICIAL OWNERSHIP
OF PRINCIPAL STOCKHOLDERS" and "THE REORGANIZATION--Certain Additional
Information."
7
<PAGE>
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."
STOCKHOLDER PROPOSAL
One of the Company Stockholders has proposed the Stockholder Proposal
recommending that the Company engage an investment banking firm to assist the
Company in evaluating various courses of action. If the Stockholder Proposal is
properly presented at the Annual Meeting by the proponent or his
representative, Company Stockholders will be asked to vote on it. The Company
Board recommends a vote AGAINST the Stockholder Proposal. See "STOCKHOLDER
PROPOSAL."
8
<PAGE>
RISK FACTORS 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 by certain transferees of Preexisting 5-Percent
Shareholders, as well as transfers of interests in Preexisting 5-Percent
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 9, 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 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
9
<PAGE>
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."
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 the Sheraton Grande Hotel, located at 333
South Figueroa Street, Los Angeles, California, on May 28, 1996, at 10:00
a.m., Pacific Time, and at any adjournment or adjournments thereof.
MATTERS TO BE CONSIDERED
At the Annual Meeting, Company Stockholders will be asked: (1) to elect two
directors, with terms expiring in 1999; (2) to consider and vote on a proposal
to adopt the Reorganization Agreement, the purpose of which is to adopt the
Transfer Restrictions; (3) to consider and vote on (if properly presented at
the meeting by the proponent or his representative) the Stockholder Proposal;
and (4) to transact such other business as may properly come before the Annual
Meeting.
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 the Record Date will be entitled to notice of and
to vote at the Annual Meeting. On the Record Date, there were 6,068,313 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. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is required to
approve the Reorganization. The affirmative vote of a majority of the shares
of Company Common Stock represented at the meeting in person or by proxy is
required to approve the Stockholder Proposal.
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. In general, 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.
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<PAGE>
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. However, broker
"non-votes" will not be treated as present at the Annual Meeting for the
purpose of determining whether the Stockholder Proposal has received the
required number of votes. Accordingly, while abstentions will have the same
effect as a vote against the Stockholder Proposal, broker "non-votes" will
not.
As of the Record Date, 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." As of
the Record Date, 2,875,402 shares of Company Common Stock, representing 47.3%
of the aggregate number of votes entitled to be cast at the Annual Meeting,
were held by persons (other than one of the Company's directors) who had
reported to the Commission beneficial ownership (including voting power) of
more than five percent of Company Common Stock. One of such persons, ESL
Partners, L.P. ("ESL"), which has reported to the Commission beneficial
ownership (including voting power) of 1,198,270 shares of Company Common
Stock, representing 19.7% of the aggregate number of votes entitled to be cast
at the Annual Meeting, has publicly announced a current intention to vote
against the Reorganization. See "BENEFICIAL OWNERSHIP OF PRINCIPAL
STOCKHOLDERS" and "THE REORGANIZATION--Certain Additional Information."
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.
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<PAGE>
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 director 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 individuals who
are the directors and officers of the Company immediately prior to the
Reorganization. See "THE REORGANIZATION--Board of Directors and Management of
Holdings."
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
12
<PAGE>
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.
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.
13
<PAGE>
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."
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.
- --------
/1Mr./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.
14
<PAGE>
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 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.
15
<PAGE>
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").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------
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
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.
16
<PAGE>
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
OPTIONS/SARS AT
DECEMBER 31, 1995
NAME (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 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.
17
<PAGE>
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 Company Board. This benefit is in lieu of any
participation by Mr. Rickershauser in the Plan.
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 Company
Stockholders with the S&P 500 index and with the peer group described below.
The performance graph assumes $100 is invested in Company 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.
18
<PAGE>
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:
<TABLE>
<S> <C> <C>
Fuel sales and distribution: Oil and gas: Aircraft leasing:
International Recovery Corp. Alta Energy Corp. USAir Group, Inc.
Mercury Air Group Inc. Hallador Petroleum Corp. Continental Airlines, Inc.
Hallador Energy Corp. America West Airlines, Inc.
</TABLE>
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>
19
<PAGE>
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.
(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.
20
<PAGE>
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 Common Stock as of the Record Date.
<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(3)...................................... 319,693 5.3
355 South Grand Avenue
Los Angeles, CA 90071
Alpha Assurances I.A.R.D. Mutuelle, Alpha Assurances
Vie Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA
Assurances Vie Mutuelle and Uni Europe Assurance
Mutuelle, as a group, AXA and The Equitable
Companies Incorporated(4).......................... 469,100 7.7
</TABLE>
- --------
(1) Ownership information obtained from Berkshire Hathaway Inc. ("Berkshire
Hathaway") Schedule 13D dated December 14, 1990 (the "Berkshire Hathaway
13D"). The Berkshire Hathaway 13D was also filed on behalf of Warren E.
Buffett, who may be deemed to control Berkshire Hathaway, and the
following subsidiaries of Berkshire Hathaway (the amount of the Company's
stock owned by each such subsidiary as reported in the Berkshire Hathaway
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). The Berkshire Hathaway 13D reports
that Berkshire Hathaway 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 Plan") permitting
Warren E. Buffett, Berkshire Hathaway and their respective affiliates to
acquire up to 45% of the Company Common Stock without triggering the
provisions of the Plan, Berkshire Hathaway entered into an agreement with
the Company dated December 13, 1990 (the "Berkshire Hathaway 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 Hathaway not in
excess of 22.5%, as to the voting of which Berkshire Hathaway and its
subsidiaries are not restricted by the Berkshire Hathaway 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 NYSE; (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
21
<PAGE>
while Berkshire Hathaway 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 obtained from Amendment No. 10, dated March 6, 1996,
to Schedule 13D dated December 10, 1993 and prior amendments thereto
(collectively, the "ESL 13D"). According to the ESL 13D, ESL exercises
sole voting and dispositive power over all shares listed.
(3) See footnote (2) to the table set forth under the caption "BENEFICIAL
OWNERSHIP OF DIRECTORS AND OFFICERS."
(4) Ownership information obtained from Schedule 13G dated February 9, 1996
filed on behalf of the entities listed in the table (the "DLJ 13G"). In
the DLJ 13G all of such entities except The Equitable Companies
Incorporated disclaim beneficial ownership of the shares listed. The DLJ
Schedule 13G reports all of the listed shares as held for investment
purposes by Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
one of the subsidiaries of The Equitable Companies Incorporated, and DLJ
is shown as having sole voting and dispositive power over such shares.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act 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 Commission and the
NYSE 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 Commission 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
Company Stockholders 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 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 organized 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 organized 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.
22
<PAGE>
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 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
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 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."
Under Section 202 of the General Corporation Law of the State of Delaware
(the "Delaware Corporate Law"), a restriction on the transfer or registration
of transfer of securities of a corporation may be imposed either by the
certificate of incorporation or the bylaws or by an agreement among any number
of security holders or among such holders and the corporation. However, no
such restriction is binding with respect to securities issued prior to the
adoption of the restriction unless the holders of the securities are parties
to an agreement or voted in favor of the restriction. In determining the most
effective method for imposing the Transfer Restrictions, the Company, with the
advice of its Delaware counsel, Morris, Nichols, Arsht & Tunnell, reviewed
these provisions of the Delaware Corporate Law, relevant cases decided
thereunder, and other instances where public companies had imposed transfer
restrictions on their shares in order to protect their tax benefits against an
"ownership change" under Section 382 or for other purposes. The Company
concluded that, while there was no structure under which the enforceability of
the Transfer Restrictions with respect to shares held by shareholders not
voting in favor of the transaction was certain, the structure that was most
likely to result in such enforceability under Section 202 of the Delaware
Corporate Law, and had accordingly been used in such other instances, was one
in which the Company was a party to a merger pursuant to which new shares
would be issued in exchange for all outstanding shares because such newly
issued shares would, for purposes of the provisions of the Delaware Corporate
Law applicable to mergers and consolidations, be issued as of the effective
time of such merger and should, accordingly, be subject to the Transfer
Restrictions from their initial issuance for purpose of Section 202 of the
Delaware Corporate Law. The Company selected the issuance of shares of
Holdings Common Stock to all shareholders of the Company in exchange for their
shares of Company Common Stock pursuant to the Reorganization as the means of
accomplishing such a merger with the least change in the business, financial
condition, assets, management or contractual relations of the Company. Section
202 of the Delaware Corporate Law also provides that transfer restrictions
permitted by that Section will not be effective with respect to securities
unless they are noted conspicuously on the certificates representing such
securities or the holder or transferee of such securities has actual knowledge
of such restrictions. For information with respect to the exchange of Company
Common Stock certificates for Holdings Common Stock certificates (which will
be legended to reflect the Transfer Restrictions) if the Reorganization is
consummated, see "Exchange of Certificates." For certain potential limitations
on the effectiveness of the Transfer Restrictions, see "RISK FACTORS RELATING
TO THE REORGANIZATION--Continuation of Net Operating Loss Carryforwards."
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
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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. 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, 1995, Tax Benefits which included
(among other items): (a) a federal tax net operating loss carryforward ("NOL")
of $95.6 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
"Section 382 Annual Limit"). Similar rules apply to the Company's other Tax
Benefits. The Section 382 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 March 1996, was 5.31%. The Company
estimates that, based on the Tax Benefits as of December 31, 1995 summarized
above, and subject to increase under the "built-in gain" rules discussed
below, as of March 1996 an Ownership Change would have resulted in a Section
382 Annual Limit of approximately $3.4 million a year for 15 years, or an
aggregate maximum potential amount of approximately $51 million (assuming that
the Company would otherwise have income against which the reduced amount of
Tax Benefits could be utilized). If the Company did not continue its business
enterprise for at least two years after an Ownership Change, the Company's
Section 382 Annual Limit would be zero (subject to increase as described in
the next paragraph).
The Company's Section 382 Annual Limit would be increased by the amount of
the Company's "recognized built-in gains" for those taxable years any portion
of which falls within the 5-year period beginning on the date of the Ownership
Charge. A "recognized built-in gain" is gain recognized by the Company upon
the disposition of an asset to the extent the gain recognized was inherent in
the asset on the date of the Ownership Change, if the Company (i) held the
asset immediately before the Ownership Change, (ii) recognized the gain during
the five-year period beginning on the date of the Ownership Change, and (iii)
had an overall "net unrealized built-in gain" inherent in its assets (the
excess of the fair market value of the Company's assets, other than cash and
certain other liquid assets, over the Company's tax basis in those assets) on
the date of the Ownership Change that exceeded a certain threshold amount. The
increase to the Company's Section 382 Annual
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Limit attributable to recognized built-in gains during a year would be limited
to the Company's overall "net unrealized built-in gain" (described in the
previous sentence) as of the date of the Ownership Change, reduced by the
recognized built-in gains for prior years ending in the five-year period
beginning on the date of the Ownership Change.
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, as of any testing date, the
aggregate of the increase (expressed in terms of percentage points) of the
total amount of a corporation's stock owned by each of those "5-percent
shareholders" (within the meaning of Section 382) whose percentage ownership
of the stock has increased as of such date over the lowest percentage of the
stock owned by each such "5-percent shareholder" at any time during the three-
year period preceding such date (a "Percentage Point Change in Ownership") is
more than 50%. In general, under Section 382 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 Company's Percentage Point Change in Ownership 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). As of
the date of this Prospectus/Proxy Statement, the Company is unaware of any
facts indicating that an Ownership Change has occurred with respect to the
Company. However, the Company estimates that its aggregate Percentage Point
Change in Ownership over the three year period ended on that date was in
excess of 35%. 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.
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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 prior to the Reorganization. See Appendix B. The
following summary is subject in its entirety to Appendix B to this
Prospectus/Proxy Statement. 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 for the preservation of the
Tax Benefits, 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, as the case may be. This
power is vested in the Holdings Board to ensure that the Company retains the
power to make, in light of all relevant circumstances (including positions
that might be taken by tax authorities and contested by the Company), the
complex determination whether or not the Tax Benefits have been fully utilized
or are otherwise available.
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" of Holdings
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" of Holdings under Section
382, with certain modifications; or
(c) create a new "public group" of Holdings 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"
and certain of their transferees. "Preexisting 5-Percent Shareholders"
include: (i) Berkshire Hathaway and any direct or indirect majority-owned
subsidiary of Berkshire Hathaway; (ii) J.P. Guerin, Fabienne M. Guerin, the
John Patrick Guerin Trust, the Guerin Family Trust, and the J. Patrick Guerin
III Trust, (iii) ESL; (iv) DLJ, The Equitable Companies Incorporated, and the
other entities described in the DLJ Schedule 13G (see footnote (4) to the
table under "BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS" above), or any
direct or indirect majority-owned subsidiary of the foregoing; (v) any person
or entity who establishes, on or before April 30, 1996, to the satisfaction of
the Holdings Board, that such person or entity was a direct or indirect owner
of 5% of the Company Common Stock on February 8, 1996 (the day before the
Company's first public announcement of its intention to seek to implement the
Transfer Restrictions); and, (vi) certain persons and entities with specified
ownership interests in the foregoing persons or entities. The Company Board is
proposing a cutoff date of April 30, 1996 under clause (v) above in order to
enable it, prior to
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the Effective Time, to identify definitively the "5-percent shareholders" (as
defined in Section 382) who will qualify for treatment as Preexisting 5-
Percent Shareholders if the Reorganization is consummated and to confirm the
currently available information being used by the Company to estimate its
Annual Percentage Point Ownership Change.
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, a partnership interest in ESL 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.
In addition, Preexisting 5-Percent Shareholders (as well as, in some cases,
certain transferees of Preexisting 5-Percent Shareholders) will receive
different treatment in two respects than that received by persons who become
"5-percent shareholders" of the Company (for purposes of Section 382) on or
after February 9, 1996, and before the Effective Time (or who were "5-percent
shareholders" under Section 382 on February 8, 1996 but who fail to establish,
to the satisfaction of the Holdings Board by April 30, 1996 that they owned
their Company Common Stock on February 8, 1996), 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:
(1) First, the Holdings Board will be required to consent to any Transfer
by a Preexisting 5-Percent Shareholder that would otherwise be prohibited
by the prohibition described in paragraph (a) under "Prohibited Transfers"
above so long as (i) such Transfer would not also be prohibited by the
prohibition described in paragraph (b) under "Prohibited Transfers" above,
(ii) all of the transferred shares of Holdings Common Stock were acquired
in exchange for shares of Company Common Stock owned by such Preexisting 5-
Percent Shareholder on February 8, 1996 and (iii) the Holdings Board
determines that the Transfer would not result in an increase in the
Company's Percentage Point Change in Ownership. In general, this exception
would permit a Preexisting 5-Percent Shareholder to dispose of blocks of 5%
or more of the Holdings Common Stock to individuals or entities that did
not previously own (within the meaning of Section 382) any Holdings Common
Stock, as long as the Holdings Common Stock disposed of had been held by
such Preexisting 5-Percent Shareholder for three years or less at the time
of the disposition. This exception (as well as the special rule regarding
Permitted Transferees, described below) was included in the Transfer
Restrictions in response to comments made by ESL to the Company following
the filing with the Commission of the initial preliminary version of this
Prospectus/Proxy Statement. The only Preexisting 5-Percent Shareholders
which, to the Company's knowledge (based, in the case of Berkshire
Hathaway, ESL and DLJ, on their respective public filings), have held their
shares of Company Common Stock for less than three years as of the date of
this Prospectus/Proxy Statement, and therefore which would be eligible for
this exception, are DLJ and ESL (and the persons related to them that are
treated as Preexisting 5-Percent Shareholders). To the Company's knowledge,
Berkshire Hathaway and Mr. Guerin (and the persons related to them that are
treated as Preexisting 5-Percent Shareholders) have held their Company
Common Stock for more than three years and therefore would not be eligible
for this exception. (The individuals or entities to which Holdings Common
Stock is transferred pursuant to the exception described in this
subparagraph (1) are referred to as "Permitted Transferees.")
(2) Second, 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 all of 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 8, 1996. The treatment described in this subparagraph (2) but not
in subparagraph (1) above will also be available to the Permitted
Transferees of Preexisting 5-Percent Shareholders, as long as all of the
shares of Holdings Common Stock owned by such Permitted Transferees were
acquired from Preexisting 5-Percent Shareholders in transactions with
respect to which the consent of the Holdings Board is obtained pursuant to
the exception described in subparagraph (1) above.
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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. As indicated above, the
Holdings Board will be required to approve certain Transfers by Preexisting 5-
Percent Shareholders under certain circumstances. 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
(i) is described in the preceding sentences of this paragraph and (ii) does not
itself violate the Transfer Restrictions) will not be effective to Transfer any
ownership of the Prohibited Shares.
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
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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 Transfers," 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 (which it will be
empowered to delegate in whole or part to a committee of the Holdings Board) 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.
Subject to any modifications approved by the Holdings Board as described
above, the Transfer Restrictions may not be amended or deleted from the
Holdings Certificate of Incorporation without the approval of the holders of 66
2/3% of the outstanding shares of Holdings Common Stock and 50% of the
outstanding shares of Holdings Common Stock held by any stockholders other than
any "related person" (as defined by Article X of the Holdings Certificate of
Incorporation, this term means, in general, any person or entity which,
together with its "affiliates" and "associates," as defined by reference to the
Commission's rules under the Exchange Act, beneficially owns in the aggregate
20% or more of the outstanding shares).
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, to which the Company is currently subject, that may have the
effect of discouraging a takeover or similar transaction, including (a) a
classified Board of 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 the holders of 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.
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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. In accordance with the Reorganization Agreement, by no later
than immediately prior to the Effective Time, Holdings will cause the Holdings
Certificate of Incorporation and the Holdings By-Laws to read in their
entirety substantially as set forth in Appendices B and C, respectively, to
this Prospectus/Proxy Statement. 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 a long-term obligation of the Company 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.")
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
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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; see "THE REORGANIZATION--Federal Income Tax
Consequences"); (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 (this condition has been satisfied with
respect to the NYSE); 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.
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.
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
prior to 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 PRIOR TO 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
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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.
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.
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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; and 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.
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.
Company Common Stock is presently listed on the NYSE and PSE under the
symbol "PSG." Following the Reorganization, Company Common Stock will cease to
be so listed and Holdings Common Stock will be so listed under the same
symbol. On February 8, 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 and the closing price of a
share of Company Common Stock on the NYSE were, respectively, $10, $9 7/8 and
$10. 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 right to
receive an equivalent number of shares of Holdings Common Stock. The stock
transfer books of the Company will be closed at the close of business on the
business day immediately preceding the
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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 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.
FEDERAL INCOME TAX CONSEQUENCES
The following general summary of the material federal income tax
consequences of the Reorganization to the holders of Company Common Stock, the
Company, Holdings and Merger Sub has been based upon an opinion of Munger,
Tolles & Olson, tax counsel to the Company and Holdings. 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 that are subject to
special treatment under the federal income tax laws (for example, banks,
insurance companies, tax-exempt organizations, dealers in securities,
stockholders who received Company Common Stock as compensation or upon the
exercise of options received as compensation, or foreign taxpayers), or any
aspect of state, local or foreign tax laws. This summary only applies to
stockholders who hold Company Common Stock and will hold Holdings Common Stock
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.
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Holders of Common Stock. As a result of the Reorganization 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.
The Company, Holdings and Merger Sub. The Company, Holdings and Merger Sub
will not recognize any taxable gain or loss as a result of the Reorganization,
and neither the Reorganization nor the adoption of the Transfer Restrictions,
by themselves, will 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 Company's federal net operating loss carryforwards,
federal investment tax credit carryforwards and other material federal tax
benefits.
CERTAIN ADDITIONAL INFORMATION
One of the Company's two largest stockholders, ESL (see "BENEFICIAL
OWNERSHIP OF PRINCIPAL STOCKHOLDERS"), in a letter dated March 6, 1996 (the
"ESL Letter") addressed to the Company Board and filed with the Commission,
expressed the view that closing what it claims to be a gap between the market
price of the Company Common Stock and the Company's intrinsic value should be
the Company Board's number one priority and that the Company has not expressed
any concrete plan to address this issue; that, based on publicly-available
information with respect to USAir, Inc. ("USAir"), USAir has turned around its
performance; that, based on publicly-available information with respect to the
Company, an additional cash distribution of $2.50 per share would be a more
appropriate use of the Company's unrestricted cash than retention of such cash
as a protection against future contingencies; and that the Company should, in
addition, be aggressively pursuing ways to realize value on its existing
assets. The ESL letter also stated that, in light of the foregoing, ESL's
current intention would be to vote against the Reorganization. The foregoing
summary of the ESL Letter is subject to the full text thereof, which has been
filed with the Commission as Amendment No. 10, dated March 6, 1996, to the ESL
13D.
The Company Board respects ESL's right to express its views with regard to
these important matters and has given the ESL Letter careful consideration as
part of the Company Board's ongoing review of appropriate ways in which it can
best serve the interests of all of the Company's stockholders. However, the
Company Board strongly disagrees with ESL's assessment of what is prudent
under the current circumstances.
When the Company Board approved a $1.50 per share cash distribution in
December 1995 (the "1995 Distribution"), it carefully evaluated the available
information about USAir (which leases sixteen of the twenty-five aircraft
owned in whole or part by the Company, lease revenues from which leases
represented 79% of total 1995 lease revenues and 64% of 1995 gross profit;
reference is made to note 11 to the consolidated financial statements in the
1995 Annual Report to Stockholders enclosed herewith for the computation of
gross profit), as well as information with respect to the Company's other
businesses and its anticipated cash needs. The Company Board decided at that
time that it was important to retain a substantial amount of cash in the
Company to protect against the risk that the apparent turnaround in USAir's
financial condition might not continue, as well as general uncertainty with
respect to the future profitability of the commercial airline industry and the
possible adverse impact of competitive pressures on Continental Airlines, Inc.
("Continental") and America West Airlines, Inc. ("America West"), which lease
the nine other aircraft owned in whole or part by the Company. For that
reason, in announcing the 1995 Distribution the Company Board emphasized that
it should not be interpreted as the implementation of a continuing policy.
Nothing that has occurred since that announcement has caused the Company Board
(which has addressed for several years the challenges presented to the
Company's own survival by USAir's uncertain situation) to change its view that
USAir's future financial performance remains uncertain and that the entire
airline industry is facing intensive competitive pressures that could
adversely affect the Company. Accordingly, and having again evaluated the
Company's cash needs, the Company Board has unanimously concluded that it
would not be prudent at this time to commit to an additional cash
distribution.
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The Company Board is committed to a continuing examination of the
possibility that the Company's cash position could safely accommodate
additional special distributions in the future (since the use of any excess
cash to repurchase shares could have adverse effects under Section 382 by
increasing the Company's Percentage Point Change in Ownership (see
"Preservation of Tax Benefits"), repurchases are not viable unless and until
the Tax Benefits are fully utilized or otherwise no longer available). In
addition, the Company Board continuously evaluates other possible measures to
enhance stockholder value (for instance, the Company has initiated preliminary
discussions with a specialized investment banking firm about the feasibility
of selling one or more of the Company's McDonnell Douglas MD-80 and/or Boeing
737-300 aircraft). However, there is no assurance that any opportunity will
develop for a transaction that would be feasible or that the Company Board (or
the Holdings Board, if the Reorganization is consummated) would be willing to
endorse. In the Company Board's opinion, this is not the time to commit to any
specific additional cash distribution, whether of the substantial magnitude
suggested in the ESL Letter or otherwise.
Moreover, the Company Board rejects ESL's linkage of the question how best
to use the Company's unrestricted cash with the decision of our stockholders
regarding the immediate implementation of the Reorganization. On the contrary,
the Company Board believes that the preservation of the Tax Benefits is a top
priority and that the imposition of the Transfer Restrictions through the
Reorganization at this time is the most appropriate method of accomplishing
this goal. While there is no assurance that the Company will be able fully to
utilize the Tax Benefits (see "RISK FACTORS RELATING TO THE REORGANIZATION"),
if in fact USAir, Continental and America West are all able to remain current
on their lease obligations, the Tax Benefits will have real financial value
for the Company by enabling it to retain income that would otherwise be
required to be paid in taxes, thereby enhancing the Company's flexibility in
the future to take actions to increase returns to stockholders.
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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
the Stockholder Proposal for consideration and action by the Company
Stockholders at the Annual Meeting. The Stockholder Proposal, for which the
Company Board and the Company accept no responsibility, is set forth below
verbatim. THE COMPANY BOARD OPPOSES THE STOCKHOLDER PROPOSAL FOR THE REASONS
STATED BELOW THE TEXT THEREOF.
"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
for a general open-ended assignment such as that suggested in the Stockholder
Proposal would be an unproductive use of the Company's funds.
As indicated under "THE REORGANIZATION--Certain Additional Information," 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 1995, the
Company sold two Boeing 747-100 freighter aircraft that had been offered for
sale for several years (resulting in a pre-tax loss on disposition of $1.7
million) and approximately $20 million of recourse obligation was paid; in
December, 1995, the Company Board, based on an evaluation of the Company's
financial condition and cash needs at year-end 1995, approved the 1995
Distribution; in 1996, the Company Board has proposed that the Company
Stockholders approve the Reorganization in order to protect the Company's
substantial Tax Benefits; and the Company has initiated
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preliminary discussions with a specialized investment banking firm about the
feasibility of selling one or more of the Company's MD-80 and/or Boeing 737-
300 aircraft, although there is no assurance that any opportunity will develop
for a transaction that would be feasible or that the Company Board (or the
Holdings Board, if the Reorganization is consummated) would be willing to
endorse (the Company Board has determined that there is no practical
possibility of selling any of its British Aerospace Bae 146-200 aircraft under
present market conditions).
Engaging an investment banking firm to perform any meaningful analysis of
prospective transactions would be expensive. Given the current financial
condition, operations and prospects 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 in
connection with such a general open-ended assignment would not be of
sufficient practical value to justify the expense.
In addition, a number of the possible transactions that the Stockholder
Proposal specifically recommends be studied by an investment banking firm are,
in the Board's view, inadvisable at this time by reason of the Company's need
to conserve its cash to protect against the uncertainties associated with the
viability of USAir and the commercial airline industry in general, and the
impact of that uncertainty on the Company's aircraft lease reserve. See "THE
REORGANIZATION--Certain Additional Information."
Further, several of such suggested transactions are impractical for other
reasons: (i) the Company's PS Trading and Statex subsidiaries need further
Company investment to generate internal growth and are not marketable
acquisition candidates or viable stand-alone entities at this time; (ii) any
paydown of debt would result in substantial prepayment penalties at this time;
(iii) the institution of regular liquidating dividend payments would require
the Company to make a premature commitment not only to distribute its cash but
also to sell off assets under inopportune market conditions; and (iv)
repurchasing stock would result in an increase in the Company's Percentage
Point Change in Ownership (and could result in an Ownership Change) and is
therefore not feasible unless and until the Tax Benefits are fully utilized or
otherwise cease to be available (see "THE REORGANIZATION--Preservation of Tax
Benefits").
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 has been passed upon
for Holdings by Irell & Manella LLP, Los Angeles, California. Munger, Tolles &
Olson, Los Angeles, California, has rendered 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
38
<PAGE>
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 30 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 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
/S/ Johanna Unger
JOHANNA UNGER
Secretary
Dated: April , 1996
39
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APPENDIX A
RESTATED AGREEMENT AND PLAN OF
REORGANIZATION BY AND AMONG
PS GROUP, INC., PS GROUP HOLDINGS, INC. AND
PSG MERGER SUBSIDIARY, INC.
<PAGE>
RESTATED AGREEMENT AND PLAN OF REORGANIZATION
THIS RESTATED 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, with the intent that
this Agreement amend and restate in its entirety the Agreement and Plan of
Reorganization among the parties dated as of January 31, 1996:
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
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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. No later than
immediately 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.
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.
A-2
<PAGE>
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.
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.
A-3
<PAGE>
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
(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 Descriptive 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.
A-4
<PAGE>
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.
PS GROUP, INC.
By /s/ Charles E. Rickershauser, Jr.
___________________________________
Charles E. Rickershauser, Jr.
Chief Executive Officer
PS GROUP HOLDINGS, INC.
By /s/ Charles E. Rickershauser, Jr.
___________________________________
Charles E. Rickershauser, Jr.
Chief Executive Officer
PSG MERGER SUBSIDIARY, INC.
By /s/ Charles E. Rickershauser, Jr.
___________________________________
Charles E. Rickershauser, Jr.
Chief Executive Officer
A-5
<PAGE>
ANNEX A
(INCLUDED AS APPENDIX B TO THIS PROSPECTUS/PROXY STATEMENT)
A-6
<PAGE>
ANNEX B
(INCLUDED AS APPENDIX C TO THIS PROSPECTUS/PROXY STATEMENT)
A-7
<PAGE>
APPENDIX B
RESTATED CERTIFICATE OF
INCORPORATION OF PS GROUP
HOLDINGS, INC. TO BE IN EFFECT
IMMEDIATELY PRIOR TO 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;
(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;
B-1
<PAGE>
(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 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.
B-2
<PAGE>
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 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
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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, 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
(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.
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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 for the preservation
of the Tax Benefits, 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) "Option" shall have the meaning set forth in Treasury Regulation
Section 1.382-4;
(b) a "Permitted Transferee" shall mean any Person if, and only for
so long as, all of the Stock owned (directly or indirectly) by such
Person was Transferred to such Person by a Preexisting 5-Percent
Shareholder in a Transfer with respect to which the consent of the
Board of Directors was obtained pursuant to the penultimate sentence of
subparagraph (A)(3).
(c) 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);
(d) 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 Trust, the Guerin Family Trust and the J. Patrick Guerin
III Trust; (iii) ESL Partners, L.P.; (iv) Donaldson, Lufkin & Jenrette
Securities Corporation, The Equitable Companies Incorporated, AXA, AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, Alpha
Assurances I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle, Uni Europe
Assurance Mutuelle, or any direct or indirect majority-owned subidiary
of the foregoing; (v) any other Person who establishes, on or before
April 30, 1996, to the satisfaction of the Board of Directors of the
corporation 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 February 8,
1996; and (vi) any "5-percent owner" or "higher tier entity" (within
the meaning of Treasury Regulation Section 1.382-2T(f)(10) and 1.382-
2T(f)(14), respectively) of any Person described in clauses (i) through
(v) above;
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(e) 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),
(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
1.382-2T(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 effect for
time to time (disregarding whether treating such Option as exercised
would cause an ownership change);
(f) 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);
(g) "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;
(h) "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
(i) "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 prohibit 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 on February 8, 1996, (y) part (c) of this subparagraph
(A)(2) shall not prohibit any Transfer of Stock by (but not to) a Permitted
Transferee if such Transfer is not prohibited by part (a) or (b) of this
subparagraph (A)(2), and (z) nothing in this Article XI shall prohibit the
Transfer of any interest in any Preexisting 5-Percent Shareholder.
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(3) Board of Directors Consent to Certain Transfers. The Board of
Directors may permit any Transfer 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 Stock acquired through such Transfer; provided,
however, that any such restrictions shall be consented to by such
Transferee and the certificates representing such Stock shall include an
appropriate legend. Notwithstanding the foregoing, the Board of Directors
shall consent to any proposed Transfer of Stock by (but not to) a
Preexisting 5-Percent Shareholder that is otherwise prohibited by part (a)
of subparagraph (A)(2) (but is not prohibited by part (b) of subparagraph
(A)(2)) without the imposition of any conditions if the Board of Directors
determines that (i) the Percentage Point Change In Ownership immediately
following such Transfer of Stock would not exceed the Percentage Point
Change In Ownership immediately prior to such Transfer, and (ii) the Stock
to be Transferred 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 on February 8, 1996; provided, however,
such consent shall not constitute consent with respect to any subsequent
Transfer or any Transfer of any other Stock. "Percentage Point Change in
Ownership" shall mean, on any date, the aggregate of the increase
(expressed in terms of percentage points) of the total amount of Stock
owned by each of those "5-percent shareholders" of the corporation (within
the meaning of Treasury Regulation Section 1.382-2T(g)(1)) whose percentage
ownership of Stock has increased as of such date over the lowest percentage
of Stock owned by each such 5-percent shareholder at any time during the
three-year period preceding such date, such determination to be made in
accordance with Treasury Regulation Section 1.382-2T(c) as if such date
were a "testing date."
(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
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<PAGE>
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.
(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
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<PAGE>
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 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 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
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<PAGE>
necessary for the preservation of the Tax Benefits, as the case may be, 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;
provided, however, the Board of Directors may delegate all or any portion of
its duties and powers under this Article XI to a committee of the Board of
Directors as it deems necessary or advisable.
(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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APPENDIX C
RESTATED BY-LAWS OF PS GROUP HOLDINGS, INC.
TO BE IN EFFECT IMMEDIATELY
PRIOR TO THE REORGANIZATION
<PAGE>
RESTATED BY-LAWS OF
PS GROUP HOLDINGS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I Offices............................................................ C-1
ARTICLE II Meetings of Stockholders........................................... C-1
ARTICLE III Directors.......................................................... C-3
ARTICLE IV Officers........................................................... C-6
ARTICLE V Seal............................................................... C-7
ARTICLE VI Form of Stock Certificate.......................................... C-7
ARTICLE VII Representation of Shares of Other Corporations..................... C-7
ARTICLE VIII Transfers of Stock................................................. C-8
ARTICLE IX Lost, Stolen or Destroyed Certificates............................. C-8
ARTICLE X Record Date........................................................ C-8
ARTICLE XI Registered Stockholders............................................ C-8
ARTICLE XII Fiscal Year........................................................ C-9
ARTICLE XIII Notices............................................................ C-9
ARTICLE XIV Amendments......................................................... C-9
ARTICLE XV Indemnification and Insurance...................................... C-9
</TABLE>
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") 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 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.
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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 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
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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.
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.
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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 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.
Whenever any Director has been absent from any meeting of the Board 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
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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.
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 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.
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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 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
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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.
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
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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.
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.
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ARTICLE XII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the
Board.
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 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
C-9
<PAGE>
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 or 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, 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.
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-10
<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 Restated 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 prior to the Reorganization (included as Appendix B
to the Prospectus/Proxy Statement)
3.2 Restated By-laws of the Registrant to be in effect immediately prior
to 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 LLP, 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
II-1
<PAGE>
10.1 Form of Indemnity Agreement*
23.1 Consent of Irell & Manella LLP (included in Exhibit 5.1)
23.2 Consent of Munger, Tolles & Olson (included in Exhibit 8.1)
23.3 Consent of Morris, Nichols, Arsht & Tunnell
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
- --------
* Previously filed
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 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:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof), which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
II-2
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
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 AMENDMENT TO 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 3RD DAY OF APRIL, 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
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT TO THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED ON APRIL 3, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C> <C>
/s/ Charles E. Rickershauser, Jr. Director, Chairman of the
____________________________________ Board and Chief Executive
Charles E. Rickershauser, Jr. Officer (principal executive officer)
* Vice President--Finance and
____________________________________ Chief Financial Officer
Lawrence A. Guske (principal financial officer)
* Vice President, Controller
____________________________________ and Secretary (Controller
Johanna Unger and principal accounting officer)
* Director
____________________________________
J.P. Guerin
* Director
____________________________________
Robert M. Fomon
* Director
____________________________________
Gordon C. Luce
* Director
____________________________________
Donald W. Killian, Jr.
</TABLE>
* Executed by Charles E. Rickershauser, Jr. as Attorney-in-Fact for the named
individuals pursuant to a Power of Attorney, as filed with the Securities
and Exchange Commission with the initial filing of this registration
statement on February 9, 1996.
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
2.1 Restated 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 prior to the Reorganization
(included as Appendix B to the Prospectus/Proxy
Statement)
3.2 Restated By-laws of the Registrant to be in effect
immediately prior to 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 LLP, 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 LLP (included in Exhibit
5.1)
23.2 Consent of Munger, Tolles & Olson (included in Exhibit
8.1)
23.3 Consent of Morris, Nichols, Arsht & Tunnell
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>
- --------
* Previously filed
<PAGE>
EXHIBIT 5.1
OPINION OF IRELL & MANELLA LLP
<PAGE>
[LETTERHEAD OF IRELL & MANELLA LLP]
(213) 229-0594
April 3, 1996
PS Group Holdings, Inc.
4370 La Jolla Village Drive
Suite 1050
San Diego, CA 92122
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933 (the
"Act") of 6,068,313 shares of Common Stock, par value $1.00 per share (the
"Securities"), of PS Group Holdings, Inc., a Delaware corporation (the
"Company"), we, as counsel to the Company, have examined such corporate records,
certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion, and we
have considered the proceedings which we, as counsel to the Company, contemplate
will be taken in connection with the issuance of the Securities pursuant to the
Restated Agreement and Plan of Reorganization dated as of January 31, 1996 (the
"Agreement"), by and among the Company, PS Group, Inc. a Delaware corporation
("PSG"), and PSG Merger Subsidiary, Inc., a Delaware corporation ("Merger Sub").
The Agreement provides (among other things) for the merger (the "Merger") of
Merger Sub with and into PSG and the issuance of the Securities in exchange for
all shares of the Common Stock, par value $1.00 per share, of PSG outstanding at
the effective time of the Merger (the "Exchanged Shares"). We have relied as to
certain matters on information obtained from public officers, officers of the
Company and PSG and other sources believed by us to be responsible.
Upon the basis of the aforementioned examination, we advise you that, in our
opinion, when the registration statement relating to the Securities,
Registration Number 333-00821 (the "Registration Statement"), has become
effective under the Act, the Merger has become effective in accordance with the
General Corporation Law of the State of Delaware and the terms and conditions of
the Merger Agreement, the
<PAGE>
PS Group Holdings, Inc.
April 3, 1996
Page 2
certificates representing the Securities have been duly signed by the Company
and countersigned by the transfer agent and registrar of the Company in
accordance with the terms of the Agreement and the By-laws of the Company, and
the Securities has been issued and delivered as contemplated by the Merger
Agreement and the Registration Statement in exchange for the Exchanged Shares,
the Securities will be validly issued, fully paid and non-assessable.
The foregoing opinion is limited to the Federal laws of the United States
and the General Corporation Law of the State of Delaware, and we are expressing
no opinion as to the effect of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to us under the caption "LEGAL MATTERS"
in the Prospectus/Proxy Statement included in the Registration Statement. In
giving such consent, we do not thereby admit that we are in the category of
person whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ IRELL & MANELLA LLP
IRELL & MANELLA LLP
<PAGE>
EXHIBIT 8.1
OPINION OF MUNGER, TOLLES & OLSON
<PAGE>
[LETTERHEAD OF MUNGER, TOLLES & OLSON]
April 3, 1996
PS Group, Inc. and PS Group Holdings, Inc.
4370 La Jolla Village Drive
Suite 1050
San Diego, California 92122
Re: PS Group, Inc. Holding Company Reorganization
---------------------------------------------
Ladies and Gentlemen:
We have acted as tax counsel to PS Group, Inc., a Delaware corporation
("Company"), and PS Group Holdings, Inc., a Delaware corporation ("Holdings"),
in connection with the holding company reorganization transaction contemplated
by the Restated Agreement and Plan of Reorganization (the "Reorganization
Agreement") dated as of January 31, 1996, by and among Company, Holdings and PSG
Merger Subsidiary, Inc., a Delaware Corporation ("Merger Sub"). Holdings is a
direct, wholly-owned, subsidiary of Company, and Merger Sub is a direct, wholly-
owned, subsidiary of Holdings. Holdings and Merger Sub were newly-formed for the
purpose of consummating the transaction contemplated by the Reorganization
Agreement.
Pursuant to the Reorganization Agreement, Merger Sub will merge with and
into Company, with Company being the surviving corporation (the
"Reorganization"). In connection with the Reorganization, (i) each share of
common stock of Company ("Company Common Stock") will be converted into the
right to receive one share of common stock of Holdings ("Holdings Common
Stock"), (ii) each share of common stock of Merger Sub ("Merger Sub Common
Stock") held by Holdings will be converted into one share of Company Common
Stock, and (iii) shares of Holdings Common Stock held by Company will be
cancelled. As a result of the Reorganization, Company will become a direct,
wholly-owned,
<PAGE>
[LETTERHEAD OF MUNGER, TOLLES & OLSON]
PS Group, Inc., PS Group Holdings, Inc.
April 3, 1996
Page 2
subsidiary of Holdings, and the stockholders of Company will become stockholders
of Holdings. We note that no fractional shares of Holdings Common Stock will be
issued in the Reorganization, and assume for this opinion that no cash will be
issued to the holders of Company Common Stock in the Reorganization.
The terms of the Reorganization are described in the Proxy
Statement/Prospectus (the "Prospectus") forming a part of Amendment No. 1 to
Registration Statement on Form S-4 (No. 333-00821) as filed by the Company with
the Securities and Exchange Commission on April 3, 1996.
You have requested our opinion regarding the material federal income
tax consequences of the Reorganization that are generally applicable to the
holders of Company Common Stock, the Company, Holdings and Merger Sub.
In connection with our opinion, we have examined and relied upon the
accuracy and completeness of the information set forth in the Reorganization
Agreement, the Prospectus, certain transfer restrictions proposed to be included
in Holdings' Restated Certificate of Incorporation (the "Transfer Restrictions")
and such other documents as we have deemed necessary or appropriate. In our
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified or photostatic copies
thereof, and the authenticity of the originals of such latter documents. We are
further assuming that the Reorganization qualifies as a statutory merger under
the laws of the State of Delaware. As to any facts material to this opinion that
we did not independently establish or verify, we have relied upon statements and
representations of officers and other representatives of the Company and
Holdings, as set forth in certificates (the "Certificates"). Our opinion is
conditioned on, among other things, the initial and continuing accuracy of the
information, statements, and representations set forth in the documents referred
to above, including the Certificates, and on the assumption that the
Reorganization will occur in a manner and form consistent with the descriptions
set forth in such documents, including the Certificates.
This opinion does not address 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,
stockholders who received Company Common Stock as compensation or upon the
exercise of options received as compensation, or foreign
<PAGE>
[LETTERHEAD OF MUNGER, TOLLER & OLSON]
PS Group, Inc., PS Group Holdings, Inc.
April 3, 1996
Page 3
taxpayers), or any aspect of state, local, or foreign tax laws. This opinion
applies only to stockholders who hold Company Common Stock as a capital asset at
the time of the Reorganization and will hold Holdings Common Stock as a capital
asset.
In rendering our opinion, we have considered the applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
promulgated thereunder, pertinent judicial authorities, interpretive rulings of
the Internal Revenue Service, and such other authorities as we have deemed
appropriate under the circumstances. All such authorities are subject to change,
and such changes could apply retroactively. There can be no assurance that the
Internal Revenue Service would not challenge the positions stated in this
opinion.
OPINION
-------
Based upon the foregoing, we are of the opinion that the Reorganization
will qualify as a reorganization under section 368(a) of the Code and/or that
the transfers by the holders of Company Common Stock of their shares of such
stock to Holdings in exchange for shares of Holdings Common Stock will
constitute a transfer described in section 351 of the Code. Accordingly, for
federal income tax purposes, holders of Company Common Stock will (i) recognize
no gain or loss upon the receipt of Holdings Common Stock in exchange for their
Company Common Stock, (ii) have an initial tax basis in the Holdings Common
Stock received that is the same as their adjusted tax basis in the Company
Common Stock exchanged in the Reorganization, and (iii) have a holding period
for their Holdings Common Stock received that includes their holding period for
their Company Common Stock exchanged in the Reorganization.
In addition, for federal income tax purposes, Company, Holdings and Merger
Sub will not recognize any taxable gain or loss as a result of the
Reorganization, and neither the Reorganization nor the adoption of the Transfer
Restrictions, by themselves, will impair the ability of Holdings, Company and
other members of their affiliated group which file a consolidated federal income
tax return to utilize the Company's federal net operating loss carryforwards,
federal investment tax credit carryforwards and other material federal tax
benefits.
<PAGE>
[LETTERHEAD OF MUNGER, TOLLES & OLSON]
PS Group, Inc., PS Group Holdings, Inc.
April 3, 1996
Page 4
Except as set forth herein, we express no other opinion as to the tax
consequences of the Reorganization or related transactions under federal, state,
local, or foreign laws. This opinion is being delivered solely in connection
with the Reorganization Agreement.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above and the reference to us under the
caption "LEGAL MATTERS" in the Prospectus. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ Munger, Tolles & Olson
--------------------------
Munger, Tolles & Olson
<PAGE>
EXHIBIT 23.1
CONSENT OF MORRIS, NICHOLS, ARSHT & TUNNELL
<PAGE>
[LETTERHEAD OF MORRIS, NICHOLS, ARSHT & TUNNELL]
April 3, 1996
PS Group Holdings, Inc.
4370 La Jolla Village Drive
Suite 1050
San Diego, CA 92122
Ladies and Gentlemen:
We hereby consent to being named in the section of the Prospectus/Proxy
Statement included in the Registration Statement of PS Group Holdings, Inc.
captioned "THE REORGANIZATION -- General" as the Delaware counsel that rendered
the advice described in the fifth paragraph thereof. In giving this consent, we
do not thereby admit that we come within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ MORRIS, NICHOLS, ARSHT & TUNNELL
MORRIS, NICHOLS, ARSHT & TUNNELL
<PAGE>
EXHIBIT 99.1
FORM OF PROXY SUBMITTED TO THE STOCKHOLDERS
OF THE COMPANY
<PAGE>
PROXY
PS GROUP, INC.
ANNUAL MEETING--TUESDAY, MAY 28, 1996
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 the Sheraton Grande
Hotel, 333 South Figueroa Street, Los Angeles, California, on Tuesday,
May 28, 1996, at 10:00 a.m. local time and all adjournments.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR ITEMS 1 AND 2 AND AGAINST ITEM 3.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
FOLD AND DETACH HERE
<PAGE>
Please mark your
votes as indicated [X]
in this example
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 DIRECTOR
Nominees
Charles E. Rickershauser, Jr. FOR WITHHELD
Donald W. Killian, Jr. [_] [_]
WITHHELD FOR: (Write that
nominee's name in the space
provided below.)
-----------------------------
ITEM 2. RESTATED
AGREEMENT AND PLAN FOR AGAINST ABSTAIN
OF REORGANIZATION [_] [_] [_]
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 3
ITEM 3. STOCKHOLDER
PROPOSAL
(To be voted upon if
properly presented at the FOR AGAINST ABSTAIN
meeting.) [_] [_] [_]
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.
I PLAN TO ATTEND THE MEETING [_]
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
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE U.S.A.
