AS FILED WITH THES ECURITIES AND EXCHANGE COMMISSION ON AUGUST 16, 2000
REGISTRATION NO.333-39144
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
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. [ ]
<PAGE>
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 August 15, 2000, the closing price of our common stock was $4 7/16 per
share.
This investment involves risk. See "Risk Factors" beginning on page 1. 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 August 16, 2000.
<PAGE>
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
<PAGE>
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. 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.
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.
<PAGE>
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.
AN INABILITY TO UTILIZE OUR NET OPERATING LOSS ("NOL") TO OFFSET OUR TAX
LIABILITY WOULD REQUIRE THAT WE USE CASH TO PAY TAXES AND DIMINISH OUR
RESOURCES. 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.
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. Our Certificate of Incorporation
contains stock transfer restrictions which were designed to help us preserve the
NOL by avoiding an ownership change. 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.
<PAGE>
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).
<PAGE>
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.
<TABLE>
<CAPTION>
HIGH LOW CLOSE
<S> <C> <C> <C>
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........... 5 1/2 4 1/4 4 7/8
</TABLE>
On August 15, 2000, the reported last sales price of the common stock was
$4 7/16 per share.
<PAGE>
DESCRIPTION OF COMMON STOCK
We are authorized to issue 110,000,000 shares of capital stock. The number
of shares of common stock authorized to be issued 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 to a common stock holder. The affirmative
vote of a majority of the outstanding shares of the common stock holders is
necessary to approve any consolidation or merger with or into another
corporation pursuant to which, shares of common stock would be converted into or
exchanged for any securities or other consideration.
DIVIDENDS
Subject to the rights and preferences of any outstanding preferred stock,
dividends on common stock are payable out of our funds when, as and if declared
by our board of directors. However, no dividend may be paid or set aside for
payment and no distribution may be made on common stock unless (i) all accrued
and unpaid dividends with respect to the preferred stock and any of the stock
ranking on a parity with the stock as to dividends or upon liquidation at the
time the dividends are payable have been paid or funds have been set apart for
payment of the dividends and (ii) sufficient funds have been set apart for the
payment of the dividends for the current dividend period with respect to the
preferred stock and any of the stock ranking on a parity with the stock as to
dividends or upon liquidation.
RIGHTS IN LIQUIDATION
In the event we are liquidated, dissolved or wound up, whether voluntarily
or involuntarily, our net assets would be distributed ratably among our common
stockholders after payment or provision for payment of the full preferential
amounts to which the holders of any series of our preferred stock issued and
outstanding are entitled.
PREEMPTIVE RIGHTS
Shares of our common stock do not entitle a stockholder to any preemptive
rights enabling a stockholder to subscribe for or receive shares of stock of any
class or any other securities convertible into any of our stock.
TRANSFER RESTRICTIONS
Our common stock is subject to the following transfer restrictions:
No holder whether record or beneficial, direct or indirect, of 5% or more
of common stock, (including without limitation any holder who proposes to make
an acquisition of common stock, which after the acquisition will result in the
holder owning 5% or more of common stock) (a "5% stockholder") may purchase,
acquire or otherwise receive additional shares of common stock (herein referred
to as an "acquisition") or sell, transfer, assign, pledge, encumber or dispose
of any shares of common stock (herein referred to as a "transfer"), prior to a
determination by us and our tax counsel that such 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 of
superseding or additional law relating to preservation of the NOL (collectively,
an "Ownership Change" under the "tax law"). This 5% limitation may have the
effect of preserving effective control of the Company by our principal
stockholders and preserving our board's and management's tenure.
In order to ensure compliance with such restrictions, and in order to
establish a procedure for processing requests to effect either an acquisition or
a transfer by any one or more 5% stockholder(s) on a fair and equitable basis,
the following provisions apply to all 5% stockholders:
Delivery of Shares and Escrow Receipts. All shares of common stock which
are issuable to 5% stockholders or which subsequently are received by a 5%
stockholder in an acquisition are issued in the name of "Danielson Holding
Corporation, as Escrow Agent" and are held by us in escrow (the "escrowed
stock"). In lieu of certificates reflecting their ownership of common stock, the
5% stockholders receive an escrow receipt evidencing their beneficial ownership
of common stock and record ownership of the escrowed stock. Escrow receipts are
non-transferable. The 5% stockholders retain full voting and dividend rights for
all escrowed stock.
<PAGE>
Duration of our Holding the Escrowed Stock. As escrow agent, we hold all
shares of escrowed stock until termination of the stock escrow (the "stock
escrow"). If a 5% stockholder desires to transfer escrowed stock to a non-5%
stockholder, we will hold all shares of escrowed stock until receipt by us of 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. All requests by 5% stockholders to consummate
either an acquisition or a transfer of escrowed stock will be treated in the
order in which such requests were received, i.e., on a "first to request, first
to receive" basis. All such 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 our tax counsel is
unable to conclude that a requested acquisition or transfer can be made without
an Ownership Change under the tax law, then: (i) the requesting party will be so
advised in writing by us; and (ii) any subsequent request by other 5 %
stockholders to effect a transaction of a type that we had previously denied
will be approved only after all previously denied requests (in the order denied)
are given an opportunity to consummate the previously desired transaction. In
addition, we may approve any requested transaction in any order of receipt if,
in our business judgment, such transaction is in our best interests.
Termination of the Stock Escrow. The stock escrow will terminate upon the
first to occur of the following: (i) pursuant to an amendment to the tax law, we
conclude that the restrictions are no longer necessary in order to avoid a loss
of the NOL; (ii) the NOL is no longer available to us; and (iii) 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, thereafter, 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 any and all 5% stockholders
arising from our actions as escrow agent, except only for intentional
misconduct. In performing our duties we are and will be entitled to rely,
without any inquiry, upon the written advice of our tax counsel and other
experts engaged by us. In the event that we require further advice or comfort
regarding action to be taken by us as escrow agent, we may deposit the escrowed
stock at issue with a court of competent jurisdiction and make further transfers
thereof in a manner consistent with the rulings of the court.
DESCRIPTION OF WARRANTS
GENERAL
The warrants will be issued to all of our stockholders, will not be
separately transferable from the common stock in respect of which they are
issued and will have such terms, including exercise price and exercise period
and number of shares issuable upon exercise of warrants, as shall be determined
by us immediately prior to our issuance of a press release announcing the terms
of the warrants. Once warrants are issued, they will be issued in several
series, which will attach to all shares of common stock then outstanding or
subsequently issued.
EXERCISE PRICE AND TERMS
No warrant of any series will be exercisable until we give notice that any
warrant may be exercised (the "Trigger Date"). 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.
The warrants will not be separately certificated and will be represented by
the certificates for our common stock. 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. Because of this, 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. No new common stock will be issued between the
Trigger Date and the expiration date of any series of warrants.
<PAGE>
ADJUSTMENT OF SHARES ISSUABLE UPON EXERCISE OF WARRANTS
We are not required to issue fractional shares of common stock upon
exercise of warrants. Instead of issuing fractional shares, we will pay a cash
adjustment equal to the product of (i) the fraction of the common stock and (ii)
the difference of the current market price of a share of common stock over the
exercise price.
MODIFICATION OF THE WARRANT
From time to time, the terms of the warrants may be supplemented or amended
by us and the warrant agent, without the approval of any of the holders of the
warrants with respect to a series of warrants as to which the Trigger Date has
not yet occurred. With respect to a series of warrants where the Trigger Date
has occurred, the terms of the warrants may be supplemented or amended by us and
the warrant agent only to cure any ambiguity or correct or supplement any
provision which may be defective or inconsistent with any other provision; or to
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 all stockholders provide us with
information to allow us to determine if, as a result of the warrants' exercises,
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 so that the stockholder's share of the Company would be less
than 5%. In addition, we may limit the exercise of warrants by pre-existing 5%
stockholders and shall give reasonable notice to such holders of such
limitations.
We will give notice to the warrant agent of common stock to be issued upon
exercise of the warrants. At such time, the exercise price for such warrants
shall be delivered to us 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 the 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 held in escrow.
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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 August 16 , 2000.
DANIELSON HOLDING CORPORATION
By:
/s/ Martin J. Whitman
---------------------
Martin J. Whitman
CHIEF EXECUTIVE OFFICER
NAME TITLE DATE
Chief Executive Officer
/s/ Martin J. Whitman and Director August 16, 2000
---------------------
(Martin J. Whitman)
Chairman of the Board and
/s/ Samuel Zell Director August 16, 2000
---------------------
(Samuel Zell)
President and Chief
/s/ David M. Barse Operating Officer and
----------------------- Director August 16, 2000
(David M. Barse
/s/ Michael T. Carney Chief Financial Officer August 16, 2000
---------------------
(Michael T. Carney)
/s/ Joseph F. Porrino Director August 16, 2000
--------------------
(Joseph F. Porrino)
/s/ Frank B. Ryan Director August 16, 2000
---------------
(Frank B. Ryan)
/s/ Eugene M. Isenberg Director August 16, 2000
--------------------
(Eugene M. Isenberg)
/s/ Wallace O. Sellers Director August 16, 2000
----------------------
(Wallace O. Sellers)
/s/ Stanley J. Gartska Director August 16, 2000
---------------
(Stanley J. Gartska)
/s/ William Pate Director August 16, 2000
---------------
(William Pate)
/s/ Richard Krenz Director August 16, 2000
---------------
(Richard Krenz)
By: /s/ David M. Barse
-------------------
Attorney-in-fact
<PAGE>
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.
