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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1994
REGISTRATION NO. 33-50399
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE CONTINENTAL CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 13-2610607
(State or other jurisdiction (I.R.S. Employer
of Identification No.)
incorporation or
organization)
180 MAIDEN LANE
NEW YORK, NEW YORK 10038
(212) 440-3000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
WILLIAM F. GLEASON, JR.
SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
THE CONTINENTAL CORPORATION
180 MAIDEN LANE
NEW YORK, NEW YORK 10038
(212) 440-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
EDWARD A. PERELL, ESQ. ALAN APPELBAUM, ESQ.
DEBEVOISE & PLIMPTON CLEARY, GOTTLIEB, STEEN & HAMILTON
875 THIRD AVENUE ONE LIBERTY PLAZA
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10006
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time as determined by market conditions, after the effective date of
this registration statement.
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, please check the following box. /X/
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 THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
Pursuant to Rule 429 under the Securities Act of 1933, the combined
prospectus contained herein also relates to the Registrant's Registration
Statement on Form S-3, Registration No. 33-43824.
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PROSPECTUS
THE CONTINENTAL CORPORATION
$150,000,000 DEBT SECURITIES
The Continental Corporation (the "Corporation") may from time to time
offer its debt securities, consisting of debentures, notes and/or other
evidences of indebtedness representing unsecured obligations of the
Corporation (the "Debt Securities") in amounts, at prices and on terms to be
determined at the time of offering. The Debt Securities offered pursuant to
this Prospectus may be issued in one or more series and will be limited to
U.S. $150,000,000 aggregate principal amount (or (i) its equivalent (based on
the applicable exchange rate at the time of issue), if Debt Securities are
issued with principal amounts denominated in one or more foreign currencies or
currency units as shall be designated by the Corporation, or (ii) such greater
amount, if Debt Securities are issued at an original issue discount, as shall
result in aggregate proceeds of U.S. $150,000,000 to the Corporation). Certain
specific terms of the particular Debt Securities in respect of which this
Prospectus is being delivered (the "Offered Securities") are set forth in the
accompanying Prospectus Supplement (the "Prospectus Supplement"), including,
where applicable, the specific designation, the aggregate principal amount,
the denomination, the maturity, the premium, if any, the rate (which
or variable), time and method of calculating payment of interest, if any, the
place or places where principal of, premium, if any, and interest, if any, on
the Offered Securities will be payable, the currency in which principal of,
premium, if any, and interest, if any, on the Offered Securities will be
payable, any terms of redemption at the option of the Corporation or the
holder, any sinking fund provisions, the initial public offering price and
other special terms in connection with the offering and sale of the Offered
Securities, and the net proceeds to the Corporation from such offering. The
Debt Securities may be denominated in United States dollars or, at the option
of the Corporation if so specified in the applicable Prospectus Supplement, in
one or more foreign currencies or currency units. The Debt Securities may be
issued in registered form or bearer form, or both. If so specified in the
applicable Prospectus Supplement, Debt Securities of a series may be issued in
whole or in part in the form of one or more temporary or permanent global
securities.
THESE SECURITIES 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. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Corporation may sell the Debt Securities to or through underwriters,
through dealers or agents or directly to purchasers. See "Plan of
Distribution". The accompanying Prospectus Supplement sets forth the names of
any underwriters, dealers or agents involved in the sale of the Offered
Securities in respect of which this Prospectus is being delivered and any
applicable fee, commission or discount arrangements with them.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF DEBT
SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
The date of this Prospectus is May 13, 1994.
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AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements, and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities of the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549; and at the Commission's regional offices at 500
West Madison Street, 14th Floor, Chicago, Illinois 60661 and 7 World Trade
Center, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, such reports, proxy
statements and other information concerning the Corporation can also be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
This Prospectus constitutes a part of two registration statements on Form
S-3 (together with all amendments and exhibits, the "Registration Statements")
filed by the Corporation with the Commission under the Securities Act of 1933,
as amended (the "Securities Act"). This Prospectus does not contain all the
information set forth in the Registration Statements, certain portions of
which have been omitted as permitted by the rules and regulations of the
Commission. For further information with respect to the Corporation and the
Debt Securities, reference is made to the Registration Statements. The
Registration Statements may be inspected by anyone without charge at the
principal office of the Commission in Washington, D.C. and copies of all or
part of them may be obtained from the Commission upon payment of the prescribed
fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Corporation's Annual Report on Form 10-K for the year ended December
31, 1993 and Quarterly Report on Form 10-Q for the quarter ended March 31,
1994 have been filed with the Commission and are incorporated herein by
reference.
Each document or report subsequently filed by the Corporation pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof
and prior to the termination of the offering of the Debt Securities shall be
deemed to be incorporated by reference into this Prospectus and to be a part
of this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated
or deemed to be incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of the Registration Statements and this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of the Registration Statements or this
Prospectus.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference, other than
certain exhibits to such documents. Written requests should be directed to:
The Continental Corporation, 180 Maiden Lane, New York, New York 10038,
Attention: Corporate Communications/Investor Relations Department (telephone:
(212) 440-3000).
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THE CORPORATION
The Corporation, a New York corporation incorporated in 1968, is an
insurance holding company. Its best known subsidiary, The Continental
Insurance Company, was organized in 1853. The principal business of the
Corporation is the ownership of a group of property and casualty insurance
companies. The Corporation's other principal subsidiaries and affiliates
provide investment management, claims adjusting, and risk management
services. In 1993, the Corporation sold its premium financing operations;
in 1992, the Corporation instituted a plan to withdraw from the traditional
assumed reinsurance and marine reinsurance businesses and the indigenous
international and international marine insurance businesses. The results
of these operations are now reported as discontinued and previously
reported information has been restated accordingly.
The Corporation's principal executive offices are located at 180 Maiden
Lane, New York, New York 10038, and its telephone number is (212) 440-3000.
Unless the context otherwise requires, "Corporation", as used in this
Prospectus, includes The Continental Corporation and its consolidated
subsidiaries.
The Corporation's ability to pay principal and interest on the Debt
Securities is affected by the ability of its insurance company subsidiaries,
its principal sources of cash flow, to declare and distribute dividends, to
make loans and advances to it and to make payments under tax sharing
agreements, all of which may be limited by regulatory restrictions. Insurance
company subsidiaries of the Corporation are subject to various state statutory
and regulatory restrictions, applicable generally to each insurance company
in its state of incorporation, that limit the amount of dividends, loans,
advances and other distributions that those subsidiaries may pay to the
Corporation. The restrictions are generally based on certain levels of surplus,
investment income and operating income, as determined under statutory insurance
accounting practices. Some restrictions require that dividends, loans, advances
and other distributions in excess of stated levels be approved by state
regulatory authorities. During 1993, the Corporation's insurance subsidiaries
paid it $120 million in dividends; during first quarter 1994, the Corporation's
insurance subsidiaries paid it $31 million in dividends. Several states in
which these subsidiaries are domiciled have enacted more stringent dividend
restrictions based on percentages of surplus and net income from operations.
These restrictions will, under certain circumstances, significantly reduce the
maximum amount of dividends and other distributions payable to the Corporation
by its insurance subsidiaries, without approval by state regulatory
authorities. No assurance can be given that more stringent restrictions will
not be adopted from time to time by such states or other states in which the
Corporation's insurance subsidiaries are domiciled, which restrictions could
have the effect, under certain circumstances, of significantly reducing
dividends payable to the Corporation by such subsidiaries without approval by
state regulatory authorities. To the extent that its insurance subsidiaries
do not generate amounts available for distribution sufficient to meet the
Corporation's cash requirements without regulatory approval, Continental would
seek approval for additional distributions. Under the restrictions currently
in effect, the maximum amount available for payment of dividends to the
Corporation by its insurance subsidiaries during the year ending December 31,
1994 without regulatory approval is estimated to be $207 million in addition
to the $31 million paid during first quarter 1994. The Corporation anticipates
that dividends from its insurance subsidiaries, together with cash from other
sources, will enable it to meet its obligations for interest and principal
payments on debt, corporate expenses, declared shareholder dividends and taxes
in 1994.
In the event of the insolvency, liquidation, reorganization, dissolution
or other winding up of a subsidiary of the Corporation, all creditors of such
subsidiary, including holders of property and casualty insurance policies,
would be entitled to payment in full out of the assets of such subsidiary
before the Corporation, as shareholder, and thus would be paid before the
creditors of the Corporation (including the holders of the Debt Securities)
would be entitled to receive any payment from the assets of such subsidiary.
USE OF PROCEEDS
The Corporation intends to use the net proceeds from the sale of the Debt
Securities to reduce short-term borrowings. To the extent the net proceeds are
not immediately used for the foregoing purposes, the Corporation intends in
the interim to invest such proceeds in U.S. Government or U.S. Government
guaranteed instruments held in a separate portfolio.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Corporation's ratio of earnings to
fixed charges for the periods indicated:
YEAR ENDED DECEMBER 31 QUARTER ENDED
MARCH 31
1989 1990 1991 1992 1993 1994
Ratio of Earnings
to Fixed Charges* 2.30 2.34 1.64 1.89 2.28 (2.07)
* Earnings available for fixed charges consist of income from continuing
operations before income taxes, plus fixed charges, reduced by the
Corporation's recorded equity in undistributed earnings of its less than 50%
owned persons. Fixed charges consist of interest on indebtedness, including
interest on capitalized leases, interest on savings deposits incurred by the
Corporation's wholly-owned commercial bank, interest on borrowings of its
premium finance companies, amortization of debt expense and premium and the
portion of rentals representing interest. In 1993, the Corporation sold its
premium financing operations; in 1992, the Corporation instituted a plan to
withdraw from the traditional assumed reinsurance and marine reinsurance
businesses and the indigenous international and international marine
insurance businesses. Accordingly, the results of these operations are now
treated as discontinued, and prior year ratios have been adjusted to reflect
this treatment.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby are to be issued in one or more series
under an Indenture, dated as of March 15, 1992 (the "Indenture"), between the
Corporation and The Bank of New York, as Trustee (the "Trustee"). The Debt
Securities offered pursuant to this Prospectus will be limited to U.S.
$150,000,000 aggregate principal amount (or (i) its equivalent (based on the
applicable exchange rate at the time of issue), if Debt Securities are issued
with principal amounts denominated in one or more foreign currencies or
currency units as shall be designated by the Corporation, or (ii) such greater
amount, if Debt Securities are issued at an original issue discount, as shall
result in aggregate proceeds of U.S. $150,000,000 to the Corporation). The
statements herein relating to the Debt Securities and the Indenture are
summaries and are subject to the detailed provisions of the Indenture. A copy
of the form of Indenture is filed as an exhibit to the Registration Statements
of which this Prospectus is a part. The following summaries of certain
provisions of the Indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Indenture, including the definitions therein of certain terms capitalized in
this Prospectus. Whenever particular Sections or defined terms of the
Indenture are referred to herein or in a Prospectus Supplement, such Sections
or defined terms are incorporated herein or therein by reference.
GENERAL
The Debt Securities will be unsecured obligations of the Corporation. The
Debt Securities will not be subordinated to any other unsecured indebtedness
of the Corporation. The Indenture does not limit the aggregate amount of Debt
Securities which may be issued thereunder, nor does it limit the incurrence or
issuance of other secured or unsecured debt of the Corporation. Any such
unsecured debt may rank equally with or be subordinated to the Debt
Securities.
Reference is made to the Prospectus Supplement which accompanies this
Prospectus for a description of the specific series of Debt Securities being
offered thereby, including (1) the specific designation of such Debt
Securities; (2) any limit upon the aggregate principal amount of such Debt
Securities; (3) the date or dates on which the principal of and premium, if
any, on such Debt Securities will mature or the method of determining such
date or dates; (4) the rate or rates (which may be fixed or variable) at which
such Debt Securities will bear interest, if any, or the method of calculating
such rate or rates; (5) the date or dates from which interest, if any, will
accrue or the method by which such date or dates will be determined;
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(6) the date or dates on which interest, if any, will be payable and the
record date or dates therefor; (7) the place or places where principal of,
premium, if any, and interest, if any, on such Debt Securities will be payable;
(8) the period or periods within which, the price or prices at which, the
currency or currencies (including currency unit or units) in which, and the
terms and conditions upon which, such Debt Securities may be redeemed, in
whole or in part, at the option of the Corporation; (9) the obligation, if
any, of the Corporation to redeem or purchase such Debt Securities pursuant to
any sinking fund or analogous provisions or upon the happening of a specified
event and the period or periods within which, the price or prices at which and
the other terms and conditions upon which, such Debt Securities shall be
redeemed or purchased, in whole or in part, pursuant to such obligations;
(10) the denominations in which such Debt Securities are authorized to be
issued; (11) the currency or currency unit for which Debt Securities may be
purchased or in which Debt Securities may be denominated and/or the currency
or currencies (including currency unit or units) in which principal of,
premium, if any, and interest, if any, on such Debt Securities will be
payable and whether the Corporation or the holders of any such Debt Securities
may elect to receive payments in respect of such Debt Securities in a currency
or currency unit other than that in which such Debt Securities are stated to
be payable; (12) if other than the principal amount thereof, the portion of
the principal amount of such Debt Securities which will be payable upon
declaration of the acceleration of the maturity thereof or the method by
which such portion shall be determined; (13) the person to whom any interest
on any such Debt Security shall be payable if other than the person in whose
name such Debt Security is registered on the applicable record date; (14) any
addition to, or modification or deletion of, any Event of Default or any
covenant of the Corporation specified in the Indenture with respect to such
Debt Securities; (15) the application, if any, of such means of defeasance or
covenant defeasance as may be specified for such Debt Securities; (16) whether
such Debt Securities are to be issued in whole or in part in the form of one
or more temporary or permanent global securities and, if so, the identity of
the depository for such global security or securities; and (17) any other
special terms pertaining to such Debt Securities. Unless otherwise specified
in the applicable Prospectus Supplement, the Debt Securities will not be
listed on any securities exchange. (Section 3.1 of the Indenture.)
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities will be issued in fully registered form without coupons. Where Debt
Securities of any series are issued in bearer form, the special restrictions
and considerations, including special offering restrictions and special
Federal income tax considerations, applicable to any such Debt Securities and
to payment on and transfer and exchange of such Debt Securities will be
described in the applicable Prospectus Supplement. Bearer Debt Securities will
be transferable by delivery. (Section 3.5 of the Indenture.)
Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time
of issuance is below market rates. Certain Federal income tax consequences and
special considerations applicable to any such Debt Securities will be
described in the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is payable in one or
more foreign currencies or currency units or if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, the restrictions,
elections, certain Federal income tax considerations, specific terms and other
information with respect to such issue of Debt Securities and such foreign
currency or currency units will be set forth in the applicable Prospectus
Supplement.
The general provisions of the Indenture do not afford holders of the Debt
Securities protection in the event of a highly leveraged or other transaction
involving the Corporation that may adversely affect holders of the Debt
Securities.
PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
Unless otherwise provided in the applicable Prospectus Supplement,
payments in respect of the Debt Securities will be made in the designated
currency at the office or agency of the Corporation maintained for that
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purpose as the Corporation may designate from time to time, except that, at
the option of the Corporation, interest payments, if any, on Debt Securities
in registered form may be made (i) by checks mailed to the holders of Debt
Securities entitled thereto at their registered addresses or (ii) by wire
transfer to an account maintained by the person entitled thereto as specified
in the Register. (Sections 3.7(a) and 9.2 of the Indenture.) Unless otherwise
indicated in an applicable Prospectus Supplement, payment of any installment
of interest on Debt Securities in registered form will be made to the person
in whose name such Debt Security is registered at the close of business on
the regular record date for such interest. (Section 3.7(a) of the Indenture.)
Payment in respect of Debt Securities in bearer form will be made in the
currency and in the manner designated in the Prospectus Supplement, subject to
any applicable laws and regulations, at such paying agencies outside the
United States as the Corporation may appoint from time to time. The paying
agents outside the United States initially appointed by the Corporation for a
series of Debt Securities will be named in the Prospectus Supplement. The
Corporation may at any time designate additional paying agents or rescind the
designation of any paying agents, except that, if Debt Securities of a series
are issuable as Registered Securities, the Corporation will be required to
maintain at least one paying agent in each Place of Payment for such series
and, if Debt Securities of a series are issuable as Bearer Securities, the
Corporation will be required to maintain a paying agent in a Place of Payment
outside the United States where Debt Securities of such series and any coupons
appertaining thereto may be presented and surrendered for payment. (Section
9.2 of the Indenture.)
Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities in registered form will be transferable or exchangeable at the
agency of the Corporation maintained for such purpose as designated by the
Corporation from time to time. (Sections 3.5 and 9.2 of the Indenture.) Debt
Securities may be transferred or exchanged without service charge, other than
any tax or other governmental charge imposed in connection therewith. (Section
3.5 of the Indenture.)
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more fully registered global securities (a "Registered Global
Security") that will be deposited with a depository (the "Depository") or with
a nominee for the Depository identified in the applicable Prospectus
Supplement. In such a case, one or more Registered Global Securities will be
issued in a denomination or aggregate denominations equal to the portion of
the aggregate principal amount of outstanding Debt Securities of the series to
be represented by such Registered Global Security or Securities. Unless and
until it is exchanged in whole or in part for Debt Securities in definitive
certificated form, a Registered Global Security may not be registered for
transfer or exchange except as a whole by the Depository for such Registered
Global Security to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository or by such
Depository or any such nominee to a successor Depository for such series or a
nominee of such successor Depository and except in the circumstances described
in the applicable Prospectus Supplement. (Section 3.5 of the Indenture.)
The specific terms of the depository arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered
Global Security will be described in the applicable Prospectus Supplement. The
Corporation expects that the following provisions will apply to depository
arrangements.
Upon the issuance of any Registered Global Security, and the deposit of
such Registered Global Security with or on behalf of the Depository for such
Registered Global Security, the Depository will credit, on its book-entry
registration and transfer system, the respective principal amounts of the Debt
Securities represented by such Registered Global Security to the accounts of
institutions ("participants") that have accounts with the Depository or its
nominee. The accounts to be credited will be designated by the underwriters or
agents engaging in the distribution of such Debt Securities or by the
Corporation, if such Debt Securities are offered and sold directly by the
Corporation. Ownership of beneficial interests in a Registered Global Security
will be limited to participants or persons that may hold interests through
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participants. Ownership of beneficial interests by participants in such
Registered Global Security will be shown on, and the transfer of such
beneficial interests will be effected only through, records maintained by
the Depository for such Registered Global Security or by its nominee.
Ownership of beneficial interests in such Registered Global Security by
persons that hold through participants will be shown on, and the transfer
of such beneficial interests within such participants will be effected only
through, records maintained by such participants. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in certificated form. The foregoing limitations
and such laws may impair the ability to transfer beneficial interests in such
Registered Global Securities.
So long as the Depository for a Registered Global Security, or its
nominee, is the registered owner of such Registered Global Security, such
Depository or such nominee, as the case may be, will be considered the sole
owner or holder of the Debt Securities represented by such Registered Global
Security for all purposes under the Indenture. Unless otherwise specified in
the applicable Prospectus Supplement and except as specified below, owners of
beneficial interests in such Registered Global Security will not be entitled
to have Debt Securities of the series represented by such Registered Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in certificated form and
will not be considered the holders thereof for any purposes under the
Indenture. (Section 3.8 of the Indenture.) Accordingly, each person owning a
beneficial interest in such Registered Global Security must rely on the
procedures of the Depository and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder under the Indenture. The Depository may grant
proxies and otherwise authorize participants to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
which a holder is entitled to give or take under the Indenture. The
Corporation understands that, under existing industry practices, if the
Corporation requests any action of holders or any owner of a beneficial
interest in such Registered Global Security desires to give any notice or take
any action a holder is entitled to give or take under the Indenture, the
Depository would authorize the participants to give such notice or take such
action, and participants would authorize beneficial owners owning through such
participants to give such notice or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
Unless otherwise specified in the applicable Prospectus Supplement,
payments with respect to principal, premium, if any, and interest, if any, on
Debt Securities represented by a Registered Global Security registered in the
name of a Depository or its nominee will be made to such Depository or its
nominee, as the case may be, as the registered owner of such Registered Global
Security.
The Corporation expects that the Depository for any Debt Securities
represented by a Registered Global Security, upon receipt of any payment of
principal, premium or interest, will immediately credit participants' accounts
with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Registered Global Security as shown
on the records of such Depository. The Corporation also expects that payments
by participants to owners of beneficial interests in such Registered Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers registered in "street names", and will be
the responsibility of such participants. None of the Corporation, the Trustee
or any agent of the Corporation or the Trustee shall have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial interests of a Registered Global Security, or for
maintaining, supervising or reviewing any records relating to such beneficial
interests. (Section 3.8 of the Indenture.)
Unless otherwise specified in the applicable Prospectus Supplement, if
the Depository for any Debt Securities represented by a Registered Global
Security is at any time unwilling or unable to continue as Depository and a
successor Depository is not appointed by the Corporation within 90 days, the
Corporation will issue such Debt Securities in definitive certificated form in
exchange for such Registered Global Security. In addition, the Corporation may
at any time and in its sole discretion determine not to have any of the
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Debt Securities of a series represented by one or more Registered Global
Securities and, in such event, will issue Debt Securities of such series in
definitive certificated form in exchange for all of the Registered Global
Security or Securities representing such Debt Securities. (Section 3.5 of
the Indenture.)
The Debt Securities of a series may also be issued in whole or in part in
the form of one or more bearer global securities (a "Bearer Global Security")
that will be deposited with a depository, or with a nominee for such
depository, identified in the applicable Prospectus Supplement. Any such
Bearer Global Securities may be issued in temporary or permanent form.
(Section 3.4 of the Indenture.) The specific terms and procedures, including
the specific terms of the depository arrangement, with respect to any portion
of a series of Debt Securities to be represented by one or more Bearer Global
Securities will be described in the applicable Prospectus Supplement.
CONSOLIDATION, MERGER OR SALE BY THE CORPORATION
The Corporation shall not consolidate with or merge into any other
corporation or sell its assets substantially as an entirety, unless (i) the
corporation formed by such consolidation or into which the Corporation is
merged or the corporation which acquires its assets is organized in the United
States and expressly assumes all of the obligations of the Corporation under
the Indenture, and (ii) immediately after giving effect to such transaction,
no Event of Default shall have happened and be continuing. Upon any such
consolidation, merger or sale, the successor corporation formed by such
consolidation, or into which the Corporation is merged or to which such sale
is made, shall succeed to, and be substituted for the Corporation under the
Indenture. (Section 7.1 of the Indenture.)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
The Indenture provides that, if an Event of Default specified therein
occurs with respect to the Debt Securities of any series and is continuing,
the Trustee for such series or the holders of 25% in aggregate principal
amount of all of the outstanding Debt Securities of that series, by written
notice to the Corporation (and to the Trustee for such series, if notice is
given by such holders of Debt Securities), may declare the principal of (or,
if the Debt Securities of that series are Original Issue Discount Securities,
such portion of the principal amount specified in the Prospectus Supplement)
and accrued interest on all the Debt Securities of that series to be due and
payable. (Section 5.2 of the Indenture.)
Events of Default with respect to Debt Securities of any series are
defined in the Indenture as being: (a) default for 30 days in payment of any
interest on any Debt Security of that series or any coupon appertaining
thereto or any additional amount payable with respect to Debt Securities of
such series as specified in the applicable Prospectus Supplement when due; (b)
default in payment of principal, or premium, if any, at maturity or on
redemption or otherwise, or in the making of a mandatory sinking fund payment
of any Debt Securities of that series when due; (c) default for 60 days after
notice to the Corporation by the Trustee for such series, or by the holders of
25% in aggregate principal amount of the Debt Securities of such series then
outstanding, in the performance of any other agreement in the Debt Securities
of that series, in the Indenture or in any supplemental indenture or board
resolution referred to therein under which the Debt Securities of that series
may have been issued; (d) default resulting in acceleration of other
indebtedness of the Corporation or any Restricted Subsidiary (as defined
below) for borrowed money where the aggregate principal amount so accelerated
exceeds $25 million and such acceleration is not rescinded or annulled within
30 days after the written notice thereof to the Corporation by the Trustee or
to the Corporation and the Trustee by the holders of 25% in aggregate
principal amount of the Debt Securities of such series then outstanding,
provided that such Event of Default will be cured or waived if the default
that resulted in the acceleration of such other indebtedness is cured or
waived; and (e) certain events of bankruptcy, insolvency or reorganization of
the Corporation or its Restricted Subsidiaries. (Section 5.1 of the
Indenture.) Events of Default with respect to a specified series of Debt
Securities may be added to the Indenture and, if so added, will be described
in the applicable Prospectus Supplement. (Sections 3.1 and 5.1(7) of the
Indenture.)
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The Indenture provides that the Trustee will, within 90 days after the
occurrence of a Default with respect to the Debt Securities of any series,
give to the holders of the Debt Securities of that series notice of all
Defaults known to it unless such Default shall have been cured or waived;
provided that except in the case of a Default in payment on the Debt
Securities of that series, the Trustee may withhold the notice if and so long
as a committee of its Responsible Officers (as defined therein) in good faith
determines that withholding such notice is in the interests of the holders of
the Debt Securities of that series. (Section 6.6 of the Indenture.) "Default"
means any event which is, or after notice or passage of time or both, would
be, an Event of Default. (Section 1.1 of the Indenture.)
The Indenture provides that the holders of a majority in aggregate
principal amount of the Debt Securities of each series affected (with each
such series voting as a class) may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee for such
series, or exercising any trust or power conferred on such Trustee. (Section
5.8 of the Indenture.)
The Indenture includes a covenant that the Corporation will file annually
with the Trustee a certificate as to the Corporation's compliance with all
conditions and covenants of the Indenture. (Section 9.7 of the Indenture.)
The holders of a majority in aggregate principal amount of any series of
Debt Securities by notice to the Trustee may waive, on behalf of the holders
of all Debt Securities of such series, any past Default or Event of Default
with respect to that series and its consequences except a Default or Event of
Default in the payment of the principal of, premium, if any, or interest, if
any, on any Debt Security. (Section 5.7 of the Indenture.)
LIMITATION ON ISSUANCE OR DISPOSITION OF STOCK OF RESTRICTED SUBSIDIARIES
The Corporation will not, nor will it permit any Restricted Subsidiary
to, issue, sell or otherwise dispose of any shares of capital stock (other
than nonvoting preferred stock) of any Restricted Subsidiary, except for (i)
directors' qualifying shares; (ii) sales or other dispositions to the
Corporation or one or more Restricted Subsidiaries; (iii) the disposition of
the entire capital stock of any Restricted Subsidiary for consideration which
is at least equal to the fair value of such capital stock as determined by the
Corporation's Board of Directors; (iv) any issuance, sale, assignment,
transfer or other disposition made in compliance with an order of a court or
regulatory authority of competent jurisdiction, other than an order issued at
the request of the Corporation or any Restricted Subsidiary; or (v) any
issuance, sale, assignment, transfer or other disposition for fair value as
determined by the Corporation's Board of Directors if, after giving effect
thereto, the Corporation and its Restricted Subsidiaries would own more than
50% of the issued and outstanding voting stock of such Restricted Subsidiary.
(Section 9.8 of the Indenture.)
LIMITATION ON LIENS ON STOCK OF RESTRICTED SUBSIDIARIES
The Corporation will not, nor will it permit any Restricted Subsidiary
to, issue, assume or guarantee any indebtedness for borrowed money
(hereinafter referred to as "Debt") secured by a mortgage, security interest,
pledge, lien or other encumbrance upon any shares of capital stock of any
Restricted Subsidiary, other than Debt owing to the Corporation or a
Restricted Subsidiary, without effectively providing that all outstanding Debt
Securities (together with, if the Corporation shall so elect, any other
indebtedness of the Corporation ranking equally with the Debt Securities and
then existing or thereafter created) shall be secured equally and ratably with
such Debt. (Section 9.9 of the Indenture.)
For purposes of the Indenture, "Restricted Subsidiary" shall mean each of
the Corporation's currently owned insurance and reinsurance subsidiaries
incorporated under the laws of any state of the United States, except The
South Place Syndicate, Inc., The Maiden Lane Syndicate, Inc. and First
Insurance Company of Hawaii, Ltd. and its subsidiaries. The Restricted
Subsidiaries accounted for approximately 86.7% of the Corporation's
consolidated revenues for the year ended December 31, 1993 and approximately
81.5% of its consolidated assets at December 31, 1993.
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MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Corporation and the
Trustee to enter into one or more supplemental indentures without the consent
of the holders of any of the Debt Securities in order (i) to evidence the
succession of another corporation to the Corporation and the assumption of the
covenants of the Corporation by a successor to the Corporation; (ii) to add to
the covenants of the Corporation or surrender any right or power of the
Corporation; (iii) to add additional Events of Default with respect to any
series of Debt Securities; (iv) to add or change any provisions to such extent
as necessary to permit or facilitate the issuance of Debt Securities in bearer
form; (v) to change or eliminate any provision affecting Debt Securities not
yet issued; (vi) to secure the Debt Securities; (vii) to establish the form or
terms of Debt Securities; (viii) to evidence and provide for successor
Trustees; (ix) if allowed without penalty under applicable laws and
regulations, to permit payment in respect of Debt Securities in bearer form in
the United States; (x) to correct any defect or supplement any inconsistent
provisions or to make any other provisions with respect to matters or
questions arising under the Indenture, provided that such action does not
adversely affect the interests of any holder of Debt Securities of any series;
or (xi) to cure any ambiguity or correct any mistake. (Section 8.1 of the
Indenture.)
The Indenture also contains provisions permitting the Corporation and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the outstanding Debt Securities affected by such supplemental
indenture (with the Debt Securities of each series voting as a class), to
execute supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of the Indenture or any supplemental
indenture or modifying the rights of the holders of Debt Securities of such
series, except that no such supplemental indenture may, without the consent of
the holder of each Debt Security so affected, (i) change the time for payment
of principal or premium, if any, or interest on any Debt Security; (ii) reduce
the principal of, or any installment of principal of, or premium, if any, or
interest on any Security, or change the manner in which the amount of any of
the foregoing is determined; (iii) reduce the amount of premium, if any,
payable upon the redemption of any Debt Security; (iv) reduce the amount of
principal payable upon acceleration of the maturity of any Original Issue
Discount Security; (v) change the currency or currency unit in which any Debt
Security or any premium or interest thereon is payable; (vi) impair the right
to institute suit for the enforcement of any payment on or with respect to any
Debt Security; (vii) reduce the percentage in principal amount of the
outstanding Debt Securities affected thereby the consent of whose holders is
required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults; (viii) change the obligation of the Corporation to maintain an
office or agency in the places and for the purposes specified in the
Indenture; or (ix) modify the provisions relating to waiver of certain
defaults or any of the foregoing provisions. (Section 8.2 of the Indenture.)
DEFEASANCE AND COVENANT DEFEASANCE
If indicated in the Prospectus Supplement, the Corporation may elect
either (i) to defease and be discharged from any and all obligations with
respect to the Debt Securities of or within any series (except as otherwise
provided in the Indenture) ("defeasance") or (ii) to be released from its
obligations with respect to certain covenants applicable to the Debt
Securities of or within any series ("covenant defeasance"), upon the deposit
with the Trustee (or other qualifying trustee), in trust for such purpose, of
money and/or Government Obligations which through the payment of principal and
interest in accordance with their terms will provide money in an amount
sufficient, without reinvestment, to pay the principal of and any premium or
interest on such Debt Securities to Maturity or redemption, as the case may
be, and any mandatory sinking fund or analogous payments thereon. As a
condition to defeasance or covenant defeasance, the Corporation must deliver
to the Trustee an Opinion of Counsel to the effect that the Holders of such
Debt Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to Federal income tax on the same amounts and in the same manner and
at the same times as would have been the case if such defeasance or
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PAGE 11
covenant defeasance had not occurred. Such Opinion of Counsel, in the case of
defeasance under clause (i) above, must refer to and be based upon a ruling
of the Internal Revenue Service or a change in applicable Federal income tax
law occurring after the date of the Indenture. (Article 4 of the Indenture.)
If indicated in the Prospectus Supplement, in addition to obligations of the
United States or an agency or instrumentality thereof, Government Obligations
may include obligations of the government or an agency or instrumentality of
the government issuing the currency or currency unit in which Debt Securities
of such series are payable. (Section 3.1 of the Indenture.)
The Corporation may exercise its defeasance option with respect to such
Debt Securities notwithstanding its prior exercise of its covenant defeasance
option. If the Corporation exercises its defeasance option, payment of such
Debt Securities may not be accelerated because of a Default or an Event of
Default. If the Corporation exercises its covenant defeasance option, payment
of such Debt Securities may not be accelerated by reason of a Default or an
Event of Default with respect to the covenants to which such covenant
defeasance is applicable. However, if such acceleration were to occur by
reason of another Event of Default, the realizable value at the acceleration
date of the money and Government Obligations in the defeasance trust could be
less than the principal and interest then due on such Debt Securities, in that
the required deposit in the defeasance trust is based upon scheduled cash flow
rather than market value, which will vary depending upon interest rates and
other factors.
THE TRUSTEE
The Bank of New York is the Trustee under the Indenture. The Corporation
may also maintain banking and other commercial relationships with the Trustee
and its affiliates in the ordinary course of business.
PLAN OF DISTRIBUTION
The Corporation may sell any of the Debt Securities being offered hereby
in any one or more of the following ways from time to time: (i) through
agents; (ii) to or through underwriters; (iii) through dealers; and (iv)
directly by the Corporation to purchasers.
The distribution of the Debt Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
Offers to purchase Debt Securities may be solicited by agents designated
by the Corporation from time to time. Any such agent involved in the offer or
sale of the Debt Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Corporation to such agent
will be set forth, in the applicable Prospectus Supplement. Unless otherwise
indicated in such Prospectus Supplement, any such agent will be acting on a
reasonable best efforts basis for the period of its appointment. Any such
agent may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the Debt Securities so offered and sold.
If Debt Securities are sold by means of an underwritten offering, the
Corporation will execute an underwriting agreement with an underwriter or
underwriters at the time an agreement for such sale is reached, and the names
of the specific managing underwriter or underwriters, as well as any other
underwriters, and the terms of the transaction, including commissions,
discounts and any other compensation of the underwriters and dealers, if any,
will be set forth in the Prospectus Supplement which will be used by the
underwriters to make resales of the Debt Securities in respect of which this
Prospectus is delivered to the public. If underwriters are utilized in the
sale of the Debt Securities in respect of which this Prospectus is delivered,
the Debt Securities will be acquired by the underwriters for their own account
and may be resold from time to time in one or more transactions, including
negotiated transactions, at fixed public offering prices or at varying prices
determined by the underwriter at the time of sale. Debt Securities may be
offered to the public either through underwriting syndicates represented by
managing underwriters or directly by the managing underwriters. If any
underwriter or underwriters are utilized in the sale of the Debt Securities,
unless otherwise indicated in the Prospectus Supplement, the underwriting
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agreement will provide that the obligations of the underwriters are subject
to certain conditions precedent and that the underwriters with respect to a
sale of Debt Securities will be obligated to purchase all such Debt
Securities if any are purchased.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Corporation will sell such Debt
Securities to the dealer as principal. The dealer may then resell such Debt
Securities to the public at varying prices to be determined by such dealer at
the time of resale. Any such dealer may be deemed to be an underwriter, as
such term is defined in the Securities Act, of the Debt Securities so offered
and sold. The name of the dealer and the terms of the transaction will be set
forth in the Prospectus Supplement relating thereto.
Offers to purchase Debt Securities may be solicited directly by the
Corporation and the sale thereof may be made by the Corporation directly to
institutional investors or others, who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The
terms of any such sales will be described in the Prospectus Supplement
relating thereto.
Agents, underwriters and dealers may be entitled under relevant
agreements to indemnification or contribution by the Corporation against
certain liabilities, including liabilities under the Securites Act.
Agents, underwriters and dealers may be customers of, engage in
transactions with, or perform services for, the Corporation and its
subsidiaries in the ordinary course of business.
Debt Securities may also be offered and sold, if so indicated in the
Prospectus Supplement, in connection with a remarketing upon their purchase,
in accordance with a redemption or repayment pursuant to their terms, or
otherwise, by one or more firms ("remarketing firms"), acting as principals
for their own accounts or as agents for the Corporation. Any remarketing firm
will be identified and the terms of its agreement, if any, with the
Corporation and its compensation will be described in the Prospectus
Supplement. Remarketing firms may be deemed to be underwriters, as such term
is defined in the Securities Act, in connection with the Debt Securities
remarketed thereby. Remarketing firms may be entitled under agreements which
may be entered into with the Corporation to indemnification or contribution by
the Corporation against certain civil liabilities, including liabilities under
the Securities Act, and may be customers of, engage in transactions with or
perform services for the Corporation in the ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the Corporation
may authorize agents, underwriters or dealers to solicit offers by certain
institutions to purchase Debt Securities from the Corporation at the public
offering prices set forth in the applicable Prospectus Supplement pursuant to
delayed delivery contracts ("Contracts") providing for payment and delivery on
a specified date or dates. A commission indicated in the applicable Prospectus
Supplement will be paid to underwriters, dealers and agents soliciting
purchases of Debt Securities pursuant to Contracts accepted by the
Corporation.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement,
certain legal matters in connection with the Debt Securities offered hereby
will be passed upon for the Corporation by Debevoise & Plimpton, 875 Third
Avenue, New York, New York 10022 and for any underwriters or agents by Cleary,
Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York 10006.
EXPERTS
The consolidated financial statements and related schedules of the
Corporation as of December 31, 1993 and 1992, and for each of the years in the
three year period ended December 31, 1993, incorporated by reference in or
included in the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1993, have been incorporated herein by reference in reliance upon
the reports of KPMG Peat Marwick, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The reports of KPMG Peat Marwick refer to The Continental Corporation and
subsidiaries' change in methods of accounting for multiple-year retrospectively
rated reinsurance contracts and for the adoption of the provisions of the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits," No.
113, "Accounting and Reporting for Reinsurance of Short-Duration and Long-
Duration Contracts," and No. 115, "Accounting For Certain Investments in Debt
and Equity Securities," in 1993. The Continental Corporation and subsidiaries
adopted the provisions of the Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," and No. 109, "Accounting for
Income Taxes," in 1992.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Securities and Exchange Commission filing fee $31,250
Rating agency fees* 90,000
Fees and expenses of Trustee* 12,000
Blue Sky and legal investment fees and expenses* 25,000
Printing and engraving expenses* 50,000
Accountant's fees and expenses* 25,000
Legal fees and expenses* 75,000
Miscellaneous expenses* 15,000
Total $323,250
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
A. Reference is made to Sections 721 through 726 of the Business
Corporation Law of the State of New York as to indemnification by the
Corporation of its directors and officers.
B. Section 12 of Article III of the Corporation's By Laws provides as
follows with respect to the indemnification of the Corporation's directors and
officers:
Section 12. Indemnification of Directors and Officers.
(a) the Corporation shall indemnify any person made, or
threatened to be made, a party to an action or proceeding (other than
one by or in the right of the Corporation to procure a judgment in its
favor), whether civil or criminal, including an action by or in the
right of any other corporation of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise, which any director or officer of the
Corporation served in any capacity at the request of the Corporation,
by reason of the fact that he, his testator or intestate, is or was a
director or officer of the Corporation or is or was serving such
employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and expenses (including
attorneys' fees) incurred in connection with any such action or
proceeding, or any appeal therein, provided that no indemnification
may be made to or on behalf of such person if (i) his acts were
committed in bad faith or were the result of his active and deliberate
dishonesty and were material to such action or proceeding or (ii) he
personally gained in fact a financial profit or other advantage to
which he was not legally entitled.
(b) the Corporation shall indemnify any person made, or
threatened to be made, a party of an action by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact
that he, his testator or intestate, is or was a director or officer of
the Corporation, or that he, his testator or intestate is or was a
director or officer of the Corporation and is or was serving at the
request of the Corporation any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against
amounts paid in settlement and expenses (including attorneys' fees)
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incurred in connection with such action, or any appeal therein,
provided that no indemnification may be made to or on behalf of such
person if (i) his acts were committed in bad faith or were the result
of his active and deliberate dishonesty and were material to such
action or (ii) he personally gained in fact a financial profit or
other advantage to which he was not legally entitled.
(c) The termination of any civil or criminal action or proceeding
by judgment, settlement, conviction or upon a plea of nolo contendere,
or its equivalent shall not in itself create a presumption that any
such person has not met the standard of conduct set forth herein.
(d) For the purpose of this Section 12: (i) a person shall be
deemed to be serving a corporation at the request of the Corporation
if such corporation is a Subsidiary; (ii) a person shall be deemed to
be serving an employee benefit plan at the request of the Corporation
if such plan's members are employees of the Corporation or one or more
of its Subsidiaries or both and if the performance by such person of
his duties to the Corporation also imposes duties on, or otherwise
involves services by, such person to the plan or participants or
beneficiaries of the plan; (iii) a person shall be deemed to be
serving any other corporation or employee benefit plan or any
partnership, joint venture, trust or other enterprise at the request
of the Corporation only if specifically approved by the Corporation
pursuant to procedures adopted by the Corporation for such purpose;
(iv) excise taxes assessed on a person with respect to an employee
benefit plan pursuant to applicable law shall be considered fines;
(v) "Subsidiary" shall mean any corporation incorporated in the United
States, a majority of the outstanding voting shares of which shall be
owned by the Corporation or by one or more Subsidiaries or by the
Corporation and one or more Subsidiaries; and (vi) references herein
to one gender shall be deemed to include the other.
(e) A person who has been successful, on the merits or otherwise,
in the defense of a civil or criminal action or proceeding of the
character described in paragraph (a) or (b) of this Section 12 shall
be entitled to indemnification as authorized therein. Any
indemnification in any other case, unless ordered by a court, shall be
made by the Corporation only if authorized in the specific case:
(i) by the Board of Directors acting by a quorum consisting of
directors who are not parties to the action or proceeding giving
rise to the indemnity claim upon a finding that the director or
officer has met the standard of conduct set forth in paragraphs (a)
and (b) of this Section 12; or
(ii) if a quorum under the foregoing clause (i) is not
obtainable or, even if obtainable, a quorum of disinterested
directors so directs:
(A) by the Board of Directors upon the opinion in writing
of independent legal counsel (i.e., a reputable lawyer or law
firm not under regular retainer from the Corporation or any
subsidiary corporation) that indemnification is proper in the
circumstances because the standard of conduct set forth in
paragraphs (a) and (b) of this Section 12 has been met by such
director or officer, or
(B) by the shareholders of the Corporation upon a finding
that the director or officer has met such standard of conduct.
(f) Expenses incurred by a director or officer in defending a
civil or criminal action or proceeding shall be paid by the
Corporation in advance of the final disposition of such action or
proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount in case he is ultimately
found, in accordance with this Section, not to be entitled to
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indemnification or, where indemnity is granted, to the extent the
expenses so paid exceed the indemnification to which he is entitled.
(g) Any indemnification of a director or officer of the
Corporation under this Section or advancement of expense shall be made
promptly, and in any event within 60 days, upon the written request of
the director or officer. The right to indemnification or advancement
of expenses granted by this Section shall be enforceable by the
director or officer in any court of competent jurisdiction if the
Corporation denies such request, in whole or in part, or if no
disposition thereof is made within 60 days. Such person's expenses
incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to any such
action (other than an action brought to enforce a claim for the
advancement of expenses under paragraph (f) of this Section where the
required undertaking has been received by the Corporation) that the
claimant has not met the standard of conduct set forth in paragraphs
(a) and (b) of this Section 12, but the burden of providing such
defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, its independent legal
counsel, and its shareholders) to have made a determination that
indemnification of the claimant is proper in the circumstances, nor
the fact that there has been an actual determination by the
Corporation (including its Board of Directors, its independent legal
counsel, and its shareholders) that indemnification of the claimant is
not proper in the circumstances, shall be a defense to the action or
create a presumption that the claimant is not entitled to
indemnification.
(h) The foregoing indemnification provisions shall be deemed to
be a contract between the Corporation and each director and officer
who serves in such capacity at any time while these provisions as well
as the relevant provisions of the New York Business Corporation Law
are in effect, and any repeal or modification thereof shall not affect
any right or obligation then existing with respect to any state of
facts then or previously existing or any action or proceeding
previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a contract right may not be
modified retroactively without the consent of such director or
officer. If this Section or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director or officer of
the Corporation against judgments, fines, amounts paid in settlement
and expenses (including attorneys' fees) incurred in connection with
any actual or threatened action or proceeding, whether civil or
criminal, including any actual or threatened action by or in the right
of the Corporation, or any appeal therein, to the full extent
permitted by any applicable portion of this Section that shall not
have been invalidated and to the full extent permitted by applicable
law. The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which those indemnified may be
entitled under any by law, agreement, vote of shareholders or
directors or otherwise, both as to action in his official capacity and
as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators
of such a person. The corporation is hereby authorized to provide
further indemnification if it deems it advisable, by resolution of
shareholders or directors, by amendment of these by laws or by
agreement.
C. The directors and officers of the Corporation are covered by insurance
policies maintained by the Corporation at its expense insuring the directors
and officers against certain liabilities which might be incurred by them in
such capacities including liabilities arising under the Securities Act of
1933.
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D. On May 26, 1988, the shareholders approved an amendment to the
Corporation's Certificate of Incorporation relating to liability of the
directors of the Corporation by adding the following new Article 8:
"8. No director of the Corporation shall be liable to the
Corporation or its shareholders for damages for any breach of duty in
such capacity, provided that nothing contained in this Article shall
limit the liability of a director (a) if a judgment or other final
adjudication adverse to the director establishes that the director's acts
or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that the director personally gained in fact a
financial profit or other advantage to which the director was not legally
entitled or that the director's acts violated Section 719 of the New York
Business Corporation Law, or (b) for any act or omission prior to the
adoption of this Article 8."
Reference is made to Section 719 of the Business Corporation Law of the
State of New York referred to in such new Article 8, as to liability of the
Corporation's directors for certain actions.
E. The underwriters or agents on whose behalf the agreement listed as
Exhibit 1 to this Registration Statement will be executed will agree therein
to indemnify the Corporation's directors, officers and controlling persons
against certain liabilities which might arise under the Securities Act of 1933
from information furnished to the Corporation by or on behalf of such
underwriters for use in the Registration Statement.
ITEM 16. EXHIBITS.
EXHIBIT
NO. DESCRIPTION
1 -Form of Underwriting Agreement.*
4.1 -Indenture, dated as of March 15, 1992 between the Corporation and The
Bank of New York, Trustee. (Filed as Exhibit No. 1 to the Corporation's
Report on Form 8-K filed with the Commission on April 15, 1992 and
incorporated herein by reference).
4.2 -Supplemental Indenture No. 1, dated as of April 1, 1992
between the Corporation and The Bank of New York, Trustee
(Filed as Exhibit No. 2 to the Corporation's Report on Form 8-K
filed with the Commission on April 15, 1992 and incorporated
herein by reference).
4.3 -Supplemental Indenture No. 2, dated as of August 15, 1992
between the Corporation and The Bank of New York, Trustee
(Filed as Exhibit No. 1 to the Corporation's Report on Form 8-K
filed with the Commission on August 27, 1992 and
incorporated herein by reference).
4.4 -Supplemental Indenture No. 3, dated as of March 1, 1993
between the Corporation and The Bank of New York, Trustee
(Filed as Exhibit No. 1 to the Corporation's Report on Form 8-K
filed with the Commission on February 24, 1993 and
incorporated herein by reference).
5 -Opinion of Debevoise & Plimpton.+
12 -Computation of Ratio of Earnings to Fixed Charges.
23.1 -Consent of KPMG Peat Marwick.
23.2 -Consent of Debevoise & Plimpton (included in Exhibit 5).+
24 -Powers of Attorney.+
25 -Statement of Eligibility of Trustee.+
28 -Statutory Loss Development of Property/Casualty and Reinsurance and
Surplus Lines Subsidiaries (Filed as Exhibit No. 28 to the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1993, and
incorporated by reference herein).
* The form of Underwriting Agreement, and the form or forms of Debt
Securities, with respect to each particular offering of Debt Securities
hereunder will be filed as an exhibit to a report on Form 8-K and
incorporated herein by reference.
+ Previously filed.
II-4
PAGE 5
ITEM 17. UNDERTAKINGS.
(a) Rule 415 Offering.
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; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Corporation pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
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 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Rule 430A Offering.
The undersigned hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of a registration statement in reliance upon Rule 430A and contained
in the form of prospectus filed by the Corporation pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of the registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-5
PAGE 6
(d) Acceleration of Effectiveness.
Insofar as indemnifications for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons,
if any, 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
Corporation of expenses incurred or paid by a director, officer or controlling
person to the Corporation 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.
II-6
PAGE 7
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
CONTINENTAL CORPORATION CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE
THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY
CAUSED THIS AMENDMENT NO. 1 TO THE 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 MAY 13, 1994.
THE CONTINENTAL CORPORATION
By: /s/JOHN P.MASCOTTE
(John P. Mascotte)
Chairman and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
SIGNATURES TITLE DATE
/s/JOHN P. MASCOTTE Chairman, Chief Executive Officer May 13, 1994
(John P. Mascotte) and Director
/s/J. HEATH FITZSIMMONS Senior Vice President and Chief May 13, 1994
(J. Heath Fitzsimmons) Financial Officer (Principal
Financial Officer)
/s/WILLIAM A. ROBBIE Vice President and Chief May 13, 1994
(William A. Robbie) Accounting Officer (Principal
Accounting Officer)
IVAN A. BURNS Director
ALEC FLAMM Director
IRVINE O. HOCKADAY, JR. Director
JOHN E. JACOB Director
JOHN F. MCGILLICUDDY Director
RICHARD DE J. OSBORNE Director By /s/William F. Gleason Jr.
(William F. Gleason, Jr.)
CHARLES A. PARKER Director Attorney-in-Fact
JOHN W. ROWE Director May 13, 1994
PATRICIA CARRY STEWART Director
FRANCIS T. VINCENT, JR. Director
MICHAEL WEINTRAUB Director
ANNE WEXLER Director
II-7
Exhibit 12
THE CONTINENTAL CORPORATION
STATEMENT RE COMPUTATION OF
RATIO OF EARNINGS TO FIXED CHARGES
(dollars in millions)
Year Ended December 31
1989 1990 1991 1992 1993
Income from continuing operations
before income taxes per
consolidated income statements $192.1 $196.5 $ 95.5 $130.7 $177.9
Add:
Portion of rents representative
of the interest factor 35.8 35.2 35.4 33.2 29.9
Interest on indebtedness 98.6 105.8 96.3 100.7 100.3
Amortization of debt
expense and premium 0.5 0.5 0.5 0.5 0.5
Less: Equity earnings from
minority affiliates in excess
of dividends received 16.8 6.6 11.3 10.7 10.7
Income as adjusted $310.2 $331.4 $216.4 $254.4 $297.9
Fixed Charges:
Rents: 108.6 106.6 107.4 100.5 90.7
Portion of rents representative of
interest factor (1) 35.8 35.2 35.4 33.2 29.9
Interest: (2) 92.6 99.9 90.5 94.9 94.6
Amortization of debt
expense and premium (3) 0.5 0.5 0.5 0.5 0.5
Capital Leases (4) 6.0 5.9 5.8 5.8 5.7
FIXED CHARGES (1)+(2)+(3)+(4) $134.9 $141.5 $132.2 $134.4 $130.7
RATIO OF EARNINGS TO FIXED CHARGES 2.30 2.34 1.64 1.89 2.28
Exhibit 12
THE CONTINENTAL CORPORATION
STATEMENT RE COMPUTATION OF
RATIO OF EARNINGS TO FIXED CHARGES
(dollars in millions)
Quarter Ended March 31
1993 1994
Income from continuing
operations before income
taxes per consolidated
income statement $18.9 $(89.9)
Add:
Portion of rents
representative of the
interest factor 7.5 7.1
Interest on indebtedness 27.0 21.8
Amortization of debt
expense and premium 0.1 0.1
Less: Equity earnings
from minority affiliates
in excess of dividends
received 2.7 (0.9)
Income as adjusted $ 50.9 $(60.0)
Fixed Charges:
Rents: 22.7 21.4
Portion of rents
representative of
interest factor (1) 7.5 7.1
Interest: (2) 25.6 20.4
Amortization of debt
expense and premium (3) 0.1 0.1
Capital Leases (4) 1.4 1.4
FIXED CHARGES (1)+(2)+(3)+(4) $ 34.6 $ 29.0
RATIO OF EARNINGS
TO FIXED CHARGES 1.47 (2.07)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
THE CONTINENTAL CORPORATION:
We consent to the use of our reports, incorporated herein by
reference, relating to the consolidated financial statements and
related schedules of The Continental Corporation incorporated by
reference in or included in the Corporation's Annual Report on Form
10-K for the year ended December 31, 1993, and to the reference to
our firm under the caption "Experts" in the Prospectus.
Our reports refer to The Continental Corporation and subsidiaries'
change in methods of accounting for multiple-year retrospectively rated
reinsurance contracts and for the adoption of the provisions of the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits,"
No. 113, "Accounting and Reporting for Reinsurance of Short-Duration
and Long-Duration Contracts," and No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," in 1993. The Continental
Corporation and subsidiaries adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," and No. 109, "Accounting for Income Taxes," in
1992.
KPMG Peat Marwick
NEW YORK, NEW YORK
May 13, 1994
