AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 27, 2000
REGISTRATION NO. 333-39144
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DANIELSON HOLDING CORPORATION
(Exact Name of Registrant as Specified in Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
95-6021257
(I.R.S. Employer Identification Number)
767 THIRD AVENUE, 5TH FLOOR
NEW YORK, NY 10017-2023
(212) 888-0347
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
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DAVID M. BARSE
PRESIDENT AND CHIEF OPERATING OFFICER
DANIELSON HOLDING CORPORATION
767 THIRD AVENUE, 5TH FLOOR
NEW YORK, NY 10017-2023
(212) 888-0347
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service) Copy
To:
VINCENT J. PISANO, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR TIMES SQUARE
NEW YORK, NY 10036-6522
(212) 735-3000
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Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement, as
market conditions permit.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box. [_]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
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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 THAT SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
PROSPECTUS
70 Million Shares of Common Stock Issuable Upon Exercise of Warrants
We are offering up to 70 million shares of common stock issuable by
us upon exercise of non-transferable warrants to be issued to our
stockholders. We have not yet determined the terms of the warrants or the
date of their issuance to our stockholders. The warrants will be
represented by our common stock certificates and will not be separately
tradeable. The exercise price for each series of warrants and other terms
will be included in a prospectus supplement. This prospectus may not be
used to consummate any sales of common stock unless accompanied by a
prospectus supplement.
Our common stock is traded on the American Stock Exchange under the
symbol "DHC". On November 24, 2000, the closing price of our common stock
was $3 7/8 per share.
This investment involves risk. See "Risk Factors" beginning on page1.
You should read this prospectus carefully before you invest.
IN ORDER TO AVOID AN "OWNERSHIP CHANGE" FOR FEDERAL TAX PURPOSES,
OUR CERTIFICATE OF INCORPORATION PROHIBITS ANY PERSON FROM BECOMING A
BENEFICIAL OWNER OF 5% OR MORE OF OUR OUTSTANDING COMMON STOCK, EXCEPT
UNDER LIMITED CIRCUMSTANCES. CONSEQUENTLY, THERE ARE LIMITATIONS ON THE
EXERCISE OF WARRANTS DESCRIBED IN THIS PROSPECTUS.
The Securities and Exchange Commission and state securities
regulators have not approved or disapproved these securities, or determined
if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this prospectus is November 27, 2000.
TABLE OF CONTENTS
PAGE
Risk Factors............................................................1
Danielson Holding Corporation...........................................3
Where You Can Find More Information.....................................3
Forward-Looking Statements..............................................3
Use of Proceeds.........................................................3
Price Range of Common Stock.............................................4
Description of Common Stock.............................................5
Description of Warrants.................................................6
Plan of Distribution....................................................6
Legal Matters...........................................................6
Experts.................................................................6
RISK FACTORS
Before purchasing the shares offered by this prospectus, you should
carefully consider the risks described below, in addition to the other
information presented in this prospectus or incorporated by reference into
this prospectus. Some or all of the following risks could cause us to lose
business or market share which would decrease our revenue and adversely
affect our results of operations. If these events were to occur, the
trading price of our common stock could decline and you may lose all or
part of your investment.
RISKS RELATED TO OUR BUSINESS
ALTHOUGH WE CURRENTLY RELY ON CASH AND SHORT TERM INVESTMENTS TO MEET
OUR LIQUIDITY NEEDS, WE MAY EXPERIENCE LIQUIDITY CONSTRAINTS IN THE FUTURE
WHICH COULD RESTRAIN OUR GROWTH OR REDUCE PROFITABILITY. Historically, we
have not experienced major liquidity constraints, but, as discussed below,
revenues are affected by numerous factors and a decrease in those revenues
can create cash flow issues. In such event, we may rely on dividends and
tax sharing payments from our subsidiaries. These dividends and tax sharing
payments may not be available because, among other things:
o In some cases, our subsidiaries must first receive regulatory
approval before paying us dividends.
o There are business and regulatory considerations that affect
our subsidiaries, including the impact of dividends on surplus
which could affect a subsidiary's insurance ratings, its
competitive position, the amount of premiums that it can write
and its risk-based capital requirements.
o There may be a prolonged material decline in an insurance
subsidiary's profits or materially adverse insurance regulatory
developments.
OUR BUSINESS PLAN IS TO CONTINUE TO GROW BUT OUR LIMITED FINANCIAL
RESOURCES AND THE CONSTRAINTS ON OUR ABILITY TO ISSUE ADDITIONAL STOCK MAY
IMPEDE OUR GROWTH. Although we have sought to grow through entering into
strategic partnerships or making acquisitions, we have limited financial
resources. Our limited financial resources and constraints on our ability
to issue additional stock or otherwise raise capital to finance
transactions may prevent us from successfully consummating any future
transactions. Due to our limited financial resources and constraints on our
ability to raise capital, we have been unable to participate in larger
transactions in the past, and believe that our financial constraints will
continue to govern the types of transactions we are able to entertain and
consummate.
OUR INSURANCE BUSINESS IS AFFECTED BY MANY FACTORS OUTSIDE OF OUR
CONTROL SUCH AS WEATHER CONDITIONS AND ECONOMIC ACTIVITY THAT COULD REDUCE
DEMAND FOR OUR PRODUCTS OR CAUSE INCREASES IN CLAIMS. Our business is
concentrated primarily in the Western United States. If this area
experiences an economic downturn, there could be fewer car sales, less
demand for automobile insurance and lower policy amounts in addition to
increased workers' compensation claims. Severe adverse weather conditions
could also adversely affect our business. These factors, together with
competitive pricing, could result in increases in our loss ratios and
fluctuations in our underwriting results and net income.
WE ARE SUBJECT TO INSURANCE LAWS AND REGULATIONS WHICH COULD RESTRICT
OUR OPERATIONS AND REDUCE OUR FINANCIAL FLEXIBILITY. The states in which we
transact business have passed insurance laws and regulations. The agencies
established pursuant to these state laws have broad administrative and
supervisory powers which can impact our insurance business including:
o the granting and revocation of licenses to transact insurance
business
o regulation of trade practices
o establishment of guaranty associations
o licensing of agents
o approval of policy forms
o premium rate filing requirements
o reserve requirements
o the form and content of required regulatory financial
statements
o periodic examinations of insurers' records
o capital and surplus requirements and the maximum concentrations
of certain classes of investments
These laws, in general, also require approval of the particular
insurance regulators prior to certain actions by the insurance companies,
including the payment of dividends in excess of statutory limitations and
certain transactions and continuing service arrangements with affiliates.
The laws of most states provide for the filing of premium rate schedules
and other information with the insurance commissioner of a particular
state, either directly or through rating organizations. The insurance
commissioner of each state generally has powers to disapprove such filings
or make changes to the rates if they are found to be excessive, inadequate
or unfairly discriminatory. The determination of rates is based on various
factors, including loss and loss adjustment expense experience. The failure
to obtain, or delay in obtaining, the required approvals could result in a
decline in revenues of our insurance subsidiaries. We are also required by
insurance regulators to maintain certain minimum amounts of capital.
WE FACE INTENSE COMPETITION IN THE INSURANCE BUSINESS THAT COULD
IMPAIR OUR ABILITY TO GROW AND ACHIEVE PROFITABILITY. We compete both with
large national writers and with smaller regional companies in each state in
which we operate. Some of these competitors are larger and have greater
financial resources than us. Some of these competitors in the workers'
compensation line of business have, from time to time, decreased their
prices significantly to gain market share. Our ability to grow depends on
our ability to expand in the states in which we already do business and to
expand into other states where our competitors operate.
IF CURRENTLY ESTABLISHED PROVISIONS FOR UNPAID LOSSES AND LOSS
ADJUSTMENT EXPENSES ("'LAE") PROVE INADEQUATE IN LIGHT OF SUBSEQUENT ACTUAL
EXPERIENCE, IT WILL BE NECESSARY TO INCREASE PROVISIONS FOR UNPAID LOSSES.
We are required to estimate liability for losses and LAE. Our insurance
subsidiaries establish provisions to cover their estimated liability for
losses and LAE with respect to both reported and unreported claims as of
the end of each accounting period. By their nature, these provisions for
unpaid losses and LAE do not represent an exact calculation of liabilities.
Rather, they are estimates involving management's projections as to the
ultimate settlement and administration of claims. These expectations are,
in turn, based on, among other things:
o facts and circumstances known at the time
o predictions of future events
o estimates of future trends in the severity and frequency of
claims
o judicial theories of liability
o inflation
Our insurance subsidiaries regularly review their respective reserve
techniques and reserve positions and believe that adequate provision has
been made for their respective unpaid losses and LAE. We cannot ensure that
currently established provisions for unpaid loses and LAE will prove
adequate in light of subsequent actual experience. Future earnings could be
adversely impacted should future loss development require increases in
provisions for unpaid losses and LAE previously established for prior
periods.
WE CAN NOT BE CERTAIN THAT THE NET OPERATING LOSS ("NOL") WILL
CONTINUE TO BE AVAILABLE TO OFFSET OUR TAX LIABILITY. We currently have an
NOL of approximately $1.1 billion for federal income tax purposes. The NOL
will expire in various amounts beginning on December 31, 2000 through
December 31, 2019, if it is not used. We believe, based in part upon the
views of our tax advisors, that our NOL calculations are reasonable and
that it is reasonable to conclude that some or all of our NOL would be
available to offset our future federal taxable income, if any. The Internal
Revenue Service ("IRS") has not examined our tax returns for the years in
which the losses giving rise to the NOL were reported or has otherwise
challenged our use of the NOL carryforwards. The IRS may attempt to
challenge the amount or availability of the NOL in the event of a future
tax audit. If the IRS disallows all or a portion of the NOL, the
disallowance, if sustained by the courts, could have an adverse impact on
our financial condition. In addition, if we were to undergo an "ownership
change" as such term is used in Section 382 of the Internal Revenue Code,
the use of our NOL would be severely limited. We will be treated as having
had an "ownership change" if there is a more than 50% increase in stock
ownership during a 3-year "testing period" by 5% stockholders. For this
purpose, stock ownership is measured by value, and does not include
so-called "straight preferred" stock.
Our Certificate of Incorporation contains stock transfer restrictions
which were designed to help us preserve the NOL by avoiding an ownership
change. The transfer restrictions were implemented in 1990, and we expect
that they will remain in-force as long as the NOL is available to us. We
cannot be certain, however, that these restrictions will prevent an
ownership change.
RISKS RELATED TO THIS OFFERING
IF THE EXERCISE OF YOUR WARRANTS WOULD RESULT IN THE RISK OF YOUR
BECOMING A 5% STOCKHOLDER, WE HAVE THE RIGHT TO LIMIT THE EXERCISE OF THESE
WARRANTS. Our common stock is subject to transfer restrictions which
forbids any stockholder from becoming a 5% stockholder. If the exercise of
your warrants would result in a risk of your becoming a 5% stockholder,
your exercise may be automatically reduced so that your common stock
ownership would be less than 5%. We may also limit the exercise of warrants
by holders who possess 5% of our outstanding common stock.
IF A STOCKHOLDER EXERCISES A WARRANT, THEY WILL NOT BE ABLE TO SELL
OR TRANSFER THEIR COMMON STOCK UNTIL IT IS RETURNED TO THEM AFTER THE
EXPIRATION DATE. In order to exercise warrants, stockholders will be
required to deliver to the warrant agent the common stock certificates
representing the warrants to be exercised. The warrant agent will hold this
common stock in escrow for the stockholders. Following the expiration date,
the Warrant Agent will return the common stock held in escrow to the
stockholders.
PROVISIONS IN OUR CERTIFICATE OF INCORPORATION THAT LIMIT OWNERSHIP
AND TRANSFERABILITY OF OUR STOCK MAY ENTRENCH CURRENT MANAGEMENT AND THE
CURRENT STOCKHOLDERS. We are required to issue, in our name, as escrow
agent, certificates representing shares of common stock that are
beneficially owned by holders of 5% or more of our stock. In addition, when
we receive the written request from a 5% stockholder to transfer their
shares, we may refuse such request upon the advice of our tax counsel that
such transfer would create an unreasonable risk of an "ownership change".
In no circumstances may anyone acquire 5% or more of our stock without our
consent.
THE MARKET FOR OUR SHARES HAS BEEN HISTORICALLY ILLIQUID WHICH MAY
AFFECT YOUR ABILITY TO SELL YOUR SHARES. The volume of trading in our stock
has historically been low. Having a market for shares without substantial
liquidity can adversely affect the price of the stock at a time an investor
might want to sell his shares.
DANIELSON HOLDING CORPORATION
We are a holding company incorporated in Delaware. We offer a variety
of insurance products through our subsidiaries. Our largest subsidiary is
National American Insurance Company of California ("NAICC"). NAICC and its
subsidiaries write workers' compensation, non-standard private passenger
and commercial automobile insurance in the Western United States, primarily
California. We believe that through NAICC we can achieve underwriting
success through refinement of various risk profiles. This helps us divide
the non-standard market into more defined segments, which enables us to
price our products more precisely.
We are seeking to build stockholder value while maintaining a strong
capital structure. We are also seeking to grow by developing business
partnerships and making strategic acquisitions, including acquisitions that
will both complement our existing operations and enable us to earn an
attractive return on our investment.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read
and copy any document we file with the Commission at the Commission's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the Commission at 1-800-SEC-0330 for further information on the
public reference room. Our Commission filings are also available to the
public at the Commission's web site at http://www.sec.gov.
The common shares are traded on the American Stock Exchange. Material
filed by us can be inspected at the offices of the American Stock Exchange
at 86 Trinity Place, New York, NY 10006.
The Commission allows us to "incorporate by reference" the
information we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
information that we file later with the Commission will automatically
update and supersede this information. We incorporate by reference the
documents listed below and any future filings we will make with the
Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act prior to the termination of the offerings described in this
prospectus:
1. Annual Report on Form 10-K for the fiscal year ended December
31, 1999 (SEC file number 001-06732 and filing date of March
30, 2000);
2. Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2000 (SEC file number 001-6732 and filing date of May
15, 2000);
3. Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2000 (SEC file number 001-6732 and filing date of
August 14, 2000);
4. Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2000 (SEC file number 001-6732 and filing date of
November 14, 2000).
You may request a copy of this filing, at no cost, by writing or
telephoning as follows: Danielson Holding Corporation, 767 Third Avenue,
New York, New York, 10017 (212) 888-0347.
This prospectus is part of a registration statement on Form S-3 we
filed with the SEC under the Securities Act. You should rely only on the
information or representations provided in this prospectus. We have
authorized no one to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain forward-looking statements. These forward-looking
statements are based on our current expectations, estimates and projections
about our industry, management's beliefs and certain assumptions made by
us. Words such as "anticipates," "expects," "intends," "plans," "believes,"
"seeks," "estimates" and variations of these words or similar expressions
are intended to identify forward- looking statements. These statements are
not guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict. Therefore, our
actual results could differ materially from those expressed or forecasted
in any forward-looking statements as a result of a variety of factors,
including those set forth in "Risk Factors" above and elsewhere in, or
incorporated by reference into, this prospectus. We have no intention to
update any forward- looking statements except and to the extent required by
law.
USE OF PROCEEDS
The net proceeds to be received from the exercise of the warrants
will be used to fund acquisitions and for general corporate purposes,
including working capital.
PRICE RANGE OF COMMON STOCK
Our common stock is traded on the American Stock Exchange under the
symbol "DHC." The following table sets forth, for the periods indicated,
the range of high and low bid prices for our common stock as reported on
the American Stock Exchange.
High Low Close
1997:
First Quarter........................ $ 14 $ 4 7/8 $ 6 7/8
Second Quarter....................... 8 1/2 6 3/8 7 7/8
Third Quarter........................ 9 8 9
Fourth Quarter....................... 9 5/8 6 3/4 7 1/4
1998:
First Quarter........................ 8 1/8 7 3/16 7 1/2
Second Quarter....................... 8 7 7 3/8
Third Quarter........................ 7 1/2 3 5/8 4 3/8
Fourth Quarter....................... 4 3/8 3 3 9/16
1999:
First Quarter........................ 4 5/8 2 7/8 2 7/8
Second Quarter....................... 5 3/4 2 7/8 5 3/8
Third Quarter........................ 7 1/2 5 1/4 5 5/8
Fourth Quarter....................... 6 1/8 4 5/8 5 3/4
2000:
First Quarter........................ 7 3/8 4 3/4 6 3/8
Second Quarter....................... 6 1/4 4 1/4 4 7/8
Third Quarter........................ 5 3 7/8 4 1/8
On November 24, 2000, the reported last sales price of the common
stock was $3 7/8 per share.
DESCRIPTION OF COMMON STOCK
We are authorized to issue 110,000,000 shares of capital stock. The
number of shares of common stock authorized is 100,000,000 with each share
having a par value of $.10.
VOTING RIGHTS
Each holder of an outstanding share of our common stock is entitled
to cast one vote for each share registered. Any consolidation or merger
pursuant to which shares of our common stock would be converted into or
exchanged for any securities or other consideration, would require the
affirmative vote of a majority of the outstanding shares of the common
stock holders.
DIVIDENDS
Subject to the rights and preferences of any outstanding preferred
stock, we will award dividends on common stock payable out of our funds if
and when our board of directors declares them. However, we will not pay any
dividend, set aside payment for dividends, or distribute on common stock
unless:
o we have paid or set apart all accrued and unpaid dividends for
the preferred stock and any stock ranking on its parity; and
o we have set apart sufficient funds for the payment of the
dividends for the current dividend period with respect to the
preferred stock and any of the stock ranking on its parity.
RIGHTS IN LIQUIDATION
Upon our liquidation, dissolution or winding up, all holders of our
common stock are entitled to share ratably in any assets available for
distribution to holders of our common stock, after payment of any
preferential amounts due to the holders of any series of our preferred
stock.
PREEMPTIVE RIGHTS
Shares of our common stock do not entitle a stockholder to any
preemptive rights to purchase additional shares of our common stock.
TRANSFER RESTRICTIONS
Our common stock is subject to the following transfer restrictions:
No holder of 5% or more of our common stock, including any holder who
proposes to acquire common stock which would result in that holder owning
5% or more of our common stock, may purchase or receive additional shares
of our common stock, or sell or transfer any of our shares of common stock,
without our determining that the transaction will not result in, or create
an unreasonable risk of, an "ownership change" within the meaning of
Section 382(g) of the Internal Revenue Code, or any similar provisions
relating to preservation of the NOL. This 5% limitation on ownership of
stock may preserve effective control of the Company by our principal
stockholders and preserve our board's and management's tenure.
In order to ensure compliance with this restriction, and to establish
a procedure for processing the requests of a 5% stockholder to acquire or
transfer common stock, the following provisions apply to all 5%
stockholders:
Delivery of Shares and Escrow Receipts. We will issue all shares of
common stock of a 5% stockholder in the name of "Danielson Holding
Corporation, as Escrow Agent" and we will hold them in escrow. In lieu of
certificates reflecting ownership of the escrowed common stock, we will
issue the 5% stockholders an escrow receipt reflecting their beneficial
ownership of common stock and recording ownership of the escrowed stock.
Escrow receipts are non-transferable. The 5% stockholders retain full
voting and dividend rights for all escrowed stock.
Duration of our Holding the Escrowed Stock. As escrow agent, we hold
all shares of escrowed stock until the termination of the escrow account.
If a 5% stockholder desires to transfer escrowed stock to a non-5%
stockholder, we will hold all shares of escrowed stock until we receive a
favorable opinion from our tax counsel that the transfer may be made
without resulting in an ownership change under the tax law.
Acquisitions and Transfers. We will treat all requests by 5%
stockholders to acquire or transfer escrowed stock on a "first to request,
first to receive" basis. All requests must be in writing and delivered to
us at our principal executive office, attention General Counsel, by
registered mail, return receipt requested, or by hand. In the event that we
are unable to conclude that a requested acquisition or transfer can be made
without an ownership change under the tax law, then:
o we will advise the requesting party in writing; and
o we will approve any subsequent request by other 5 %
stockholders of a type that we had previously denied only after
we give all previously denied requests (in the order denied)
the opportunity to complete the previously desired transaction.
In addition, we may approve any requested transaction in any
order of receipt if, in our business judgment, the transaction
is in our best interests.
Termination of the Stock Escrow Account. The stock escrow will
terminate upon the first to occur of the following:
o we conclude that the restrictions are no longer necessary in
order to avoid a loss of the NOL;
o the NOL is no longer available to us; or
o our board concludes, in its business judgment, that
preservation of the NOL no longer is in our interest.
Upon termination of the stock escrow, each 5% stockholder will receive a
notice that the stock escrow has been terminated and will receive a common
stock certificate evidencing ownership of the previously escrowed stock.
Release of the Company. Our certificate of incorporation provides
that we are held harmless and released from any liability to 5%
stockholders arising from our actions as escrow agent, except for
liabilities arising from our intentional misconduct. In performing our
duties we are entitled to rely upon the written advice of our tax counsel
and our other experts. In the event that we require further advice
regarding our role as escrow agent, we may deposit the escrowed stock at
issue with a court of competent jurisdiction and make further transfers in
a manner consistent with the rulings of the court.
DESCRIPTION OF WARRANTS
GENERAL
We will issue warrants to all of our stockholders, and the warrants
issued will not be separately transferable from the common stock. The
warrants will have such terms, including exercise price and exercise period
and number of shares issuable upon exercise of warrants, as we determine
immediately prior to our issuance of a press release announcing the terms
of the warrants. Once warrants are issued, we will issue them in several
series, which will attach to all shares of common stock then outstanding or
subsequently issued.
EXERCISE PRICE AND TERMS
Until we give notice that warrants of a particular series may be
exercised (the "Trigger Date"), no warrant of that series will be
exercisable. We will file a prospectus supplement which will provide the
exercise price and the expiration date of the warrant and the number of
shares of our common stock issuable upon exercise of each warrant. The
expiration date will be no less than 14 business days after a Trigger Date.
We will make a determination as to the exercise price for each series
of warrants immediately prior to the Trigger Date for that series. At this
time, we anticipate that the exercise price will be at some discount from
the then current market price for the securities. In making the
determination of the size of this discount, we will consider the stock's
trading price immediately before the trigger date, the stock's recent and
past historical price, and the level of discount necessary to create the
desired level of participation. In addition, we will consider the purposes
to which the proceeds of the offering are anticipated to go. In fact, we
reserve the right to set any appropriate exercise price given our needs and
the purposes of the offering. Both those needs and the purposes will be
discussed further in the prospectus supplement that will be filed with the
exercise price and the expiration date of the warrant. Also, it should be
noted that the exercise price for each series of warrants will be
separately determined and may include different initial prices and discount
levels.
The warrants will not be separately certificated and will be
represented by the certificates for our common stock. In order to exercise
warrants, we will require stockholders to deliver to the warrant agent the
common stock certificates representing the warrants to be exercised. The
warrant agent will hold this common stock in escrow for the stockholders.
Following the expiration date, the warrant agent will return the common
stock held in escrow to the stockholders. Because of this, if a stockholder
exercises a warrant, the stockholder will not be able to sell or transfer
their common stock until the warrant agent returns their common stock after
the expiration date. We will not issue any new common stock between the
Trigger Date and the expiration date of any series of warrants.
ADJUSTMENT OF SHARES ISSUABLE UPON EXERCISE OF WARRANTS
We are not required to issue fractional shares of common stock upon
exercise of the warrants. Instead of issuing fractional shares, we will pay
a cash amount equal to the product of (A) the fraction of a share of common
stock multiplied by (B) the difference between the current market price of
a share of common stock and the exercise price.
MODIFICATION OF THE WARRANT
We may amend the terms of a series of warrants prior to the Trigger
Date for those series of warrants, without the approval of any of the
warrant holders. With respect to a series of warrants where the Trigger
Date has occurred, we may amend the terms of those warrants only to cure an
ambiguity or correct or supplement a provision which may be defective or
inconsistent with other provisions. We may also add provisions relating to
questions or matters which arise, additions which we and the warrant agent
deem necessary or desirable and which will not adversely affect the
interests of the warrant holders.
TRANSFER RESTRICTIONS
The warrant agent will hold the exercise price for all warrants that
have been exercised in a separate escrow account. We will inform the
warrant agent and will issue a press release indicating the number of
warrants exercised and the number of shares of common stock outstanding
after giving effect to the exercises. We will also request that
stockholders provide us with information to allow us to determine if, as a
result of the exercise of warrants, there would be a risk that any
stockholder would become a 5% stockholder in our company. If any person
would be at risk of becoming a 5% stockholder as a result of his exercise
of warrants, we may in our sole discretion reduce the number of warrants
exercised by that person so that the stockholder does not become a 5%
stockholder. In addition, we may limit the exercise of warrants by 5%
stockholders and we will give reasonable notice to those holders of such
limitations.
We will notify the warrant agent of the number of shares of common
stock to be issued upon exercise of the warrants. Then, the warrant agent
will deliver to us the exercise price for the exercised warrants and we
will issue and deliver without delay certificates for the number of full
shares issuable upon the exercise of the warrants, together with any cash
for fractional shares.
If our board of directors determines that the exercise of the
warrants would cause an unreasonable risk of an ownership change or an
unintentional result on the ownership change percentage, the board may
terminate the warrants and refund the entire exercise price.
PLAN OF DISTRIBUTION
The common stock covered by this prospectus will be issued upon
exercise of the warrants described above.
LEGAL MATTERS
Certain legal matters in connection with the sale of the shares of
common stock upon exercise of the warrants will be passed upon by Skadden,
Arps, Slate, Meagher & Flom LLP.
EXPERTS
KPMG LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the
year ended December 31, 1999, as set forth in their reports, which are
incorporated by reference in this prospectus and elsewhere in the
registration statement. Our financial statements are incorporated by
reference in reliance on KPMG LLP's reports, given on their authority as
experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following sets forth the expenses in connection with the issuance
and distribution of the securities being registered, other than
underwriting discounts and commissions. All such expenses shall be borne by
us. All amounts set forth below are estimates, other than the SEC
registration fee.
SEC Registration Fee..................................$ 91,845.60
Printing Expenses.....................................$ 0
Accounting Fees.......................................$ 0
Legal Fees and Expenses...............................$125,000.00
Miscellaneous Fees....................................$ 0
TOTAL.................................................$ 216,845.60
Item 15. Indemnification of Directors and Officers.
Section 145(a) of the General Corporation Law of the State of
Delaware ("Delaware Corporation Law") provides, in general, that a
corporation shall have the power to indemnify any person who was or is a
part 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), because the person is or was a director or officer of the
corporation. Such indemnity may be against expenses (including attorneys'
fees), judgment, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such action, suit or
proceeding, if the 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 if, with respect to any criminal action or proceeding, the
person did not have reasonable cause to believe the person's conduct was
unlawful.
Section 145(b) of the Delaware Corporation Law provides, in general,
that a corporation shall have the power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to
procure a judgment in its favor because the person is or was a director or
officer of the corporation, against any expenses (including attorneys'
fees) actually and reasonably incurred by the person in connection with the
defense or settlement of such action or suit if the 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.
Section 145(g) of the Delaware Corporation Law provides, in general,
that a corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director or officer of the
corporation against any liability asserted against the person in any such
capacity, or arising out of the person's status as such, whether or not the
corporation would have the power to indemnify the person against such
liability under the provisions of the law.
Item 16. Exhibits.
Exhibit No. Description
4 Form of Warrant Agreement.+
5 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding legality of the warrants.*
23 Consent of KPMG LLP.
24 Power of Attorney (included on signature page of
Registration Statement).+
--------------------
* To be filed by amendment.
+ Previously filed.
Item 17. Undertakings.
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:
a. To include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933.
b. To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
c. To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1) (a) and (1) (b) do not apply
if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this amendment to its registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, State of New York, on November 27, 2000.
DANIELSON HOLDING CORPORATION
By: *
----------------------------
Martin J. Whitman
Chief Executive Officer
Name Title Date
---- ----- ----
* Chief Executive Officer and November 27, 2000
---------------------- Director
(Martin J. Whitman)
* Chairman of the Board and November 27, 2000
---------------------- Director
(Samuel Zell)
* President and Chief November 27, 2000
----------------------- Operating Officer
(David M. Barse)
* Chief Financial Officer November 27, 2000
-----------------------
(Michael T. Carney)
* Director November 27, 2000
-----------------------
(Joseph F. Porrino)
* Director November 27, 2000
-----------------------
(Frank B. Ryan)
* Director November 27, 2000
-----------------------
(Eugene M. Isenberg)
* Director November 27, 2000
-----------------------
(Wallace O. Sellers)
* Director November 27, 2000
-----------------------
(Stanley J. Gartska)
* Director November 27, 2000
-----------------------
(William Pate)
*By: /s/ David M. Barse
-------------------
Attorney-in-fact
EXHIBIT INDEX
Exhibit No. Description
4 Form of Warrant Agreement.+
5 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding legality of the warrants.*
23 Consent of KPMG LLP.
24 Power of Attorney (included on signature page of
Registration Statement).+
--------------
* To be filed by amendment.
+ Previously filed.
