<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 6, 1995
REGISTRATION NO. 33-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
GEICO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
DELAWARE 52-1135801
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
ONE GEICO PLAZA
WASHINGTON, D.C. 20076-0001
(301) 986-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
CHARLES R. DAVIES
VICE PRESIDENT AND GENERAL COUNSEL
GEICO CORPORATION
ONE GEICO PLAZA
WASHINGTON, D.C. 20076-0001
(301) 986-2652
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------
COPIES TO:
SAMUEL C. BUTLER
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the Registration Statement becomes effective.
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]
---------------
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT* OFFERING PRICE* FEE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes.............. $100,000,000 100% $100,000,000 $34,483
</TABLE>
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- -------------------------------------------------------------------------------
*Estimated solely for purposes of calculating the registration fee.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This Registration Statement contains a Prospectus relating to the offering
(the "Offering") of $100,000,000 aggregate principal amount of % Notes Due
2005 (the "Notes") of GEICO Corporation, together with separate Prospectus
pages relating to certain market-making transactions in the Notes. The complete
Prospectus for the Offering follows immediately after this Explanatory Note.
Following such Prospectus are certain pages of the Prospectus for the market-
making transactions, which include an alternate cover page, an alternate inside
front cover page, a "Plan of Distribution" section which replaces the
"Underwriting" and "Legal Matters" sections and an alternate back cover page.
The market-making Prospectus will not contain a "Capitalization" or "Use of
Proceeds" section. All other pages of the Prospectus for the Offering are to be
used in the Prospectus for the market-making transactions (with certain
pagination differences).
In order to register under Rule 415 those Notes which will be offered and
sold in market-making transactions, the appropriate box on the cover page of
the Registration Statement has been checked and the undertakings required by
Item 512(a) of Regulation S-K have been included in Item 17 of Part II.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED APRIL 6, 1995
PROSPECTUS
$100,000,000
GEICO CORPORATION
% NOTES DUE 2005
The % Notes Due 2005 (the "Notes") will mature on , 2005. Interest on
the Notes is payable semiannually on and , commencing , 199 .
The Notes will not be entitled to any sinking fund. GEICO Corporation (the
"Company") currently has no intention to list the Notes on any securities
exchange, and there can be no assurance given as to the liquidity of the
trading market for the Notes.
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.
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<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING COMPANY (1)
PUBLIC (1) DISCOUNT (2)
<S> <C> <C> <C>
Per Note................................. % % %
Total.................................... $ $ $
</TABLE>
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(1) Plus accrued interest, if any, from , 1995.
(2) Before deducting expenses payable by the Company estimated to be $235,000.
The Notes are offered subject to receipt and acceptance by the Underwriter, to
prior sale and to the Underwriter's right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Notes will be made at the office of Salomon Brothers Inc,
Seven World Trade Center, New York, New York, or through the facilities of The
Depository Trust Company, on or about , 1995.
SALOMON BROTHERS INC
- ----------------------------------------------------------------
The date of this Prospectus is , 1995.
-----------------------
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA HAS NEITHER
APPROVED NOR DISAPPROVED OF THE OFFERING IN QUESTION, NOR HAS THE COMMISSIONER
ACTED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS.
----------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), pursuant to Sections 13
and 15(d) thereof and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy statements and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's Regional Offices at the Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, and at 7 World Trade
Center, 13th Floor, 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. Such reports, proxy
statements and other information can also be inspected at the offices of the
New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York
10005, and the Pacific Stock Exchange Incorporated ("PSE"), 115 Sansome Street,
2nd Floor, San Francisco, California 94104. The Company's Common Stock is
listed on both the NYSE and the PSE.
The Company has filed with the Commission a registration statement on Form S-
3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Act"), with respect to the Notes. As permitted by the rules and
regulations of the Commission, this Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information, reference is made to the
Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company heretofore filed by it with the
Commission are hereby incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (the "1994 Form 10-K"); and
(b) The Company's Form SE dated March 30, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the Offering of the Notes are incorporated herein by
reference and such documents shall be deemed to be a part hereof from the date
of filing of such documents. Any statements contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
2
<PAGE>
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon request of any such person, a copy of any or all
of the foregoing documents incorporated herein by reference (other than the
exhibits to such documents unless such exhibits are specifically incorporated
by reference herein). Requests for such copies should be directed to Rosalind
A. Phillips, Secretary, GEICO Corporation, One GEICO Plaza, Washington, D.C.
20076-0001 (Telephone: (301) 986-2077).
GEICO CORPORATION
GEICO Corporation (the "Company"), which was organized as a Delaware
corporation in 1978, is the parent corporation of various subsidiaries which
are in the business of providing insurance and financial services. In 1979, the
Company became the parent of Government Employees Insurance Company ("GEICO"),
its principal subsidiary. The Company's principal business is personal lines
property and casualty insurance. Private passenger automobile insurance
accounted for approximately 93% of the Company's total premiums earned in the
fiscal year ended December 31, 1994. Based on earned premiums in 1993, GEICO
and the other direct and indirect subsidiaries of the Company (as a group) are
the sixth largest overall provider of private passenger automobile insurance in
the United States. The Company's principal executive offices are located at One
GEICO Plaza, Washington, D.C. 20076-0001 (Telephone: (301) 986-3000). Unless
indicated otherwise, the term the "Company" as used herein refers to GEICO
Corporation and its consolidated subsidiaries.
PROPERTY AND CASUALTY INSURANCE
GEICO was founded in 1936 to provide private passenger automobile insurance
to government employees and military personnel. In 1958 GEICO began to insure
all eligible preferred-risk drivers. In 1987, GEICO returned to marketing new
automobile policies to preferred-risk government employees and military
personnel only, while a subsidiary, GEICO General Insurance Company ("GEICO
General"), began writing private passenger automobile insurance for new
preferred-risk applicants not associated with the government or military. GEICO
and GEICO General, which serve the preferred-risk market, accounted for
approximately 92% of the Company's total premiums earned in the fiscal year
ended December 31, 1994. GEICO also writes homeowners, personal umbrella
liability, boat owners and fire insurance. GEICO Indemnity Company ("GEICO
Indemnity"), also a subsidiary of the Company, writes standard-risk private
passenger automobile and motorcycle insurance. GEICO Casualty Company ("GEICO
Casualty"), a subsidiary of GEICO Indemnity, writes nonstandard-risk private
passenger automobile insurance.
As of April 3, 1995, GEICO, GEICO General, GEICO Indemnity and GEICO Casualty
have an A.M. Best rating of A++ (Superior) and a Standard & Poor's claims-
paying ability rating of AAA (Superior).
REINSURANCE
Resolute Reinsurance Company, a subsidiary of Resolute Group, Inc.
("Resolute"), which is in turn a subsidiary of the Company, wrote property and
casualty reinsurance in the domestic and international
3
<PAGE>
markets until late 1987 when it suspended writing new and renewal reinsurance.
Resolute is in the process of running off its claim obligations. Resolute
Reinsurance Company is not currently rated.
LIFE INSURANCE AND ANNUITIES
Criterion Life Insurance Company was formed by GEICO in 1991 to offer
structured settlement single premium annuities to claimants of its
property/casualty company affiliates. On December 31, 1991 it assumed all the
structured settlement annuity business in force from Garden State Life
Insurance Company which was also wholly-owned by GEICO until it was sold in
June 1992. Criterion Life also has an A.M. Best rating at A++ (Superior).
OTHER INSURANCE-RELATED SUBSIDIARIES
Other active subsidiaries of the Company and GEICO involved in the sale of
insurance and insurance-related products include: The Top Five Club, Inc.,
which offers travel-related benefits to military personnel in the top five
enlisted pay grades; International Insurance Underwriters, Inc., which provides
various insurance services to military personnel as they are transferred
overseas or back to the United States; GEICO Financial Services, GmbH, which
sells automobile policies to American military personnel through offices in
Germany and through agents in England, Germany, Italy, Portugal and Turkey;
Insurance Counselors, Inc. and Insurance Counselors of Texas, Inc., formed
primarily to facilitate the marketing of insurance products; and Safe Driver
Motor Club, Inc., which offers motor club services to customers of subsidiaries
of the Company and sponsors of motor clubs.
FINANCE
The Company offers additional financial services through its subsidiary,
Government Employees Financial Corporation ("GEFCO"), which, directly or
through one or more of its own subsidiaries, is in the business of consumer and
business lending and loan servicing. The Company is in the process of winding
down GEFCO and has signed an agreement to sell approximately $40 million of
GEFCO's remaining loans receivable and other assets.
BUSINESS SEGMENTS
The Company's dominant business segment, pursuant to Statement of Financial
Accounting Standards No. 14, is property and casualty insurance, reflecting a
reduction in the Company's reinsurance, life insurance and annuities, and
finance business in recent years.
REGULATION
Each of the Company's insurance company subsidiaries is subject to regulation
and supervision of its insurance businesses in each of the jurisdictions in
which it does business. In general, such regulation is for the protection of
policyholders rather than shareholders. Legislation has been introduced in
recent sessions of Congress proposing modification or repeal of the McCarran-
Ferguson Act which reaffirms the proposition that it is the responsibility of
state governments to regulate the insurance industry and provides a limited
exemption to the "business of insurance" from federal anti-trust laws. Whether
any changes to the current statute will be made and the effect of such changes,
if any, cannot be determined. The Congress and certain state legislatures are
also considering the effects of the use of sex, age, marital status, rating
territories and other traditional rating criteria as a basis for rating
classification; certain of such criteria no longer can be used in some states,
and have been and are being challenged in the courts of other states.
Clinton administration proposals to integrate the medical benefits portion of
both workers compensation and automobile insurance into a general health care
insurance system were not enacted during 1994 and, in fact, met with a certain
amount of public resistance. The Company believes these recommendations were
without merit but, at this time, cannot predict with certainty whether similar
proposals will be forthcoming from the newly seated Congress. Additionally,
some individual states are considering various health care reform proposals and
the Company cannot predict the outcome of such initiatives at this time.
4
<PAGE>
RECENT DEVELOPMENTS
The Company announced on April 4, 1995 that Aetna Life & Casualty Company
will offer coverage to homeowners insurance customers of GEICO as GEICO phases
out its homeowners business over the next three years. The agreement will be
ongoing, does not represent a one-time business sale by the Company and will
have no significant impact on the Company's earnings in 1995. In 1994
homeowners' insurance policies constituted approximately 6% of the Company's
premiums earned.
5
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected financial information for the Company
and its consolidated subsidiaries. The data in the following table should be
read in conjunction with the Company's consolidated financial statements and
related notes thereto contained in the 1994 Form 10-K, which is incorporated by
reference in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Premiums................ $2,476,276 $2,283,488 $2,084,502 $1,888,368 $1,692,518
Net investment income... 201,790 201,851 201,526 191,226 177,087
Realized gains on
investments............ 12,898 120,584 98,535 29,331 19,587
Interest on loans
receivable............. 10,347 11,519 16,528 20,019 23,606
Equity in earnings of
unconsolidated
affiliates............. -- 3,306 2,292 4,139 3,303
Other revenue........... 14,698 17,552 16,619 13,944 18,776
---------- ---------- ---------- ---------- ----------
Total revenue........... 2,716,009 2,638,300 2,420,002 2,147,027 1,934,877
Total benefits and
expenses............... 2,507,194 2,351,873 2,247,229 1,950,647 1,726,436
---------- ---------- ---------- ---------- ----------
Net income before
cumulative effect of
changes in accounting
principles............. 208,815 286,427 172,773 196,380 208,441
Cumulative effect of
changes in accounting
principles............. (1,051) (12,749) -- -- --
---------- ---------- ---------- ---------- ----------
Net income.............. $ 207,764 $ 273,678 $ 172,773 $ 196,380 $ 208,441
========== ========== ========== ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING............ 69,992 71,417 72,387 72,855 76,397
PER SHARE RESULTS
Net income(1)........... $ 2.97 $ 3.83 $ 2.39 $ 2.70 $ 2.73
Common Stock dividends.. $ 1.00 $ .680 $ .600 $ .456 $ .400
FINANCIAL CONDITION
Assets.................. $4,998,105 $4,831,440 $4,525,091 $4,242,193 $3,719,019
Short-term debt......... $ 91,848 $ 83,093 $ 96,608 $ 105,990 $ 68,895
Long-term debt.......... $ 299,530 $ 334,992 $ 190,399 $ 193,091 $ 211,904
Shareholders' equity.... $1,445,941 $1,534,579 $1,292,511 $1,184,261 $ 970,008
Common shares
outstanding............ 68,291 70,834 71,184 71,047 74,253
Book value per share.... $ 21.17 $ 21.66 $ 18.16 $ 16.67 $ 13.06
SIGNIFICANT STATUTORY
INDICATORS
PROPERTY AND CASUALTY
OPERATIONS (2)
Surplus for protection
of policyholders....... $1,039,930 $ 916,943 $ 968,286 $1,104,564 $ 811,628
Ratio of twelve months
written premiums to
surplus................ 2.4:1 2.2:1 2.2:1 1.7:1 2.1:1
Loss ratio.............. 82.1% 81.9% 84.8% 79.0% 80.8%
Expense ratio (3)....... 14.3% 17.2% 15.3% 15.9% 15.2%
Underwriting ratio...... 96.4% 99.1% 100.1% 94.9% 96.0%
Underwriting ratio after
policyholder dividends. 96.4% 99.1% 100.1% 96.4% 96.4%
Adjusted ratios (4)
Expense ratio.......... 15.6%
Underwriting ratio..... 97.5%
</TABLE>
- --------
(1) The cumulative effect of changes in accounting reduced net income by $.01
in 1994 and $.18 in 1993.
(2) Property and Casualty includes GEICO, GEICO General, GEICO Indemnity, GEICO
Casualty and Resolute.
(3) Expense ratios are calculated using underwriting expenses less net service
charges, as related to premiums written.
(4) Adjusted ratios in 1993 are calculated to eliminate the effect of the
change in accounting for advance premiums.
6
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries as of December 31, 1994, and as adjusted for the
issuance of, and the application of the net proceeds to the Company from, the
sale of the Notes offered hereby. See "Use of Proceeds."
<TABLE>
<CAPTION>
AS
ACTUAL ADJUSTED
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Short-term bank loans
GEFCO (1)........................................... $ 51,000 $ 51,000
Company (2)......................................... 30,000 --
Current portion of long-term debt..................... 10,848 10,848
---------- ----------
Total short-term debt............................. 91,848 61,848
---------- ----------
Long-term debt, net of current portion:
Bank loans of Employee Stock Ownership Plan (1)(3).... 39,902 39,902
7.35% Debentures...................................... 149,485 149,485
9.15% Debentures...................................... 99,643 99,643
Mortgage note......................................... 10,500 10,500
Notes offered hereby.................................. -- 100,000
---------- ----------
Total long-term debt.............................. 299,530 399,530
---------- ----------
Shareholders' equity:
Common Stock.......................................... 71,565 71,565
Paid-in surplus....................................... 169,084 169,084
Unrealized appreciation of investments................ 91,167 91,167
Retained earnings..................................... 1,330,022 1,330,022
Treasury Stock, at cost (4)........................... (167,115) (167,115)
Unearned Employee Stock Ownership Plan shares (3)..... (48,782) (48,782)
---------- ----------
Total shareholders' equity........................ 1,445,941 1,445,941
---------- ----------
Total capitalization.............................. $1,837,319 $1,907,319
========== ==========
</TABLE>
- --------
(1) Guaranteed by the Company.
(2) Short-term bank loans of the Company totaled $79.0 million at March 31,
1995.
(3) On March 31, 1995 the Employee Stock Ownership Plan borrowed an additional
$15.0 million and used the funds to purchase $15.0 million of GEICO
Corporation shares for the Employee Stock Ownership Plan.
(4) Subsequent to December 31, 1994 and as of March 31, 1995, the Company had
purchased a net additional 333,354 shares of Treasury Stock for $16.0
million.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of the
Company for the years and periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1994 1993 1992 1991 1990
---- ----- ---- ---- ----
<S> <C> <C> <C> <C>
8.66 15.41 7.44 7.45 6.95
</TABLE>
For purposes of computing the foregoing ratios, earnings consist of net
income before taxes less undistributed earnings of less than 50%-owned
affiliates plus an adjustment to include 100% of pretax losses of
unconsolidated subsidiaries plus fixed charges (excluding capitalized
interest). Fixed charges consist of interest (whether capitalized or expensed),
amortization of debt discount and debt issuance expense, and a portion of rent
representative of interest ( 1/3 of rent expense).
7
<PAGE>
USE OF PROCEEDS
The aggregate net proceeds to the Company from the sale of the Notes are
estimated to be approximately $ . The Company intends to use a portion of the
net proceeds to repay a 6.4% $30 million bank note due June 22, 1995, which was
outstanding at December 31, 1994, and to repay short-term borrowings subsequent
to December 31, 1994 under its existing line of credit consisting of a 6.36%
$15 million borrowing due April 11, 1995 and a weighted average 6.37% $15
million borrowing due June 22, 1995. The Company has used this short-term debt
in part to fund the purchase of the Company's Common Stock under the Company's
current authorization to buy shares from time to time depending on market
conditions. The remaining portion of the net proceeds would be available for
investment in marketable securities and for other general corporate purposes,
which may include purchases of the Company's Common Stock. Although, except as
set forth in the preceding sentence, the Company has not identified the future
uses of the net proceeds from the sale of the Notes, potential applications
include, among other things, capital contributions to the insurance
subsidiaries of the Company, which may be made in the event of large
catastrophe losses due, in part, to the unavailability of reinsurance at what
the Company considers a reasonable cost, and the repayment or repurchase of
outstanding debt of the Company.
Pending the foregoing applications, the net proceeds from the sale of the
Notes will be invested in marketable securities.
DESCRIPTION OF NOTES
GENERAL
The Notes are to be issued under an Indenture dated as of , 1995 (the
"Indenture"), between the Company and United States Trust Company of New York,
as trustee (the "Trustee"). A copy of the form of the Indenture has been filed
as an exhibit to the Registration Statement of which this Prospectus is a part.
The following summary of certain provisions of the Indenture does not purport
to be complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Indenture and the Notes, including the
definitions therein of terms not defined in this Prospectus. Wherever
particular provisions of the Indenture or terms defined therein are referred
to, such provisions or definitions are incorporated by reference as a part of
the statements made.
The Notes will be unsecured obligations of the Company limited to
$100,000,000 aggregate principal amount and will be pari passu with all other
unsecured senior indebtedness of the Company. The Notes will be issued in fully
registered form, without coupons, in denominations of $1,000 or integral
multiples thereof and will bear interest from , 1995, at a rate of %
per annum. The Notes will mature on , 2005.
Interest on the Notes will be payable semiannually in arrears on and
of each year, commencing , 1995, to holders of record of the Notes
at the close of business on the or immediately preceding such
or . Interest on the Notes will be computed on the basis of a 360-
day year of twelve 30-day months.
Principal and interest are payable at the office of the Paying Agent, but, at
the option of the Company, interest may be paid by check mailed to the
registered holders at their registered addresses. The Notes are transferable
and exchangeable at the office of the Registrar. The Company has initially
appointed the Trustee as the Paying Agent and the Registrar. The Trustee's
current address is 114 West 47th Street (15th Floor), New York, N.Y. 10036.
The Company does not intend to apply for listing of the Notes on any
securities exchange.
The Company has no sinking fund obligations with respect to the Notes.
The Company primarily conducts its operations through its subsidiaries. The
rights of the Company and its creditors, including the holders of the Notes
offered hereby, to participate in the assets of any subsidiary upon the
latter's liquidation or reorganization will be subject to the prior claims of
the subsidiary's creditors except to the extent that the Company may itself be
a creditor with recognized claims against the subsidiary. As of December 31,
1994, the Company's subsidiaries had total aggregate assets (excluding equity
investments made by such subsidiaries in other such subsidiaries) of
approximately $4,393,500,000 and total aggregate liabilities of approximately
$3,149,200,000.
8
<PAGE>
CERTAIN COVENANTS
Consolidation, Merger and Sale of Assets. The Company shall not consolidate
with or merge with or into, or convey, transfer or lease all or substantially
all its assets as an entirety to, another person, unless (i) the resulting,
surviving or transferee person (if not the Company) is a person organized and
existing under the laws of the United States of America, any State thereof or
the District of Columbia, and such person (if not the Company) expressly
assumes by supplemental indenture all the obligations of the Company under the
Notes and the Indenture; (ii) immediately after giving effect to such
transaction, no Default has occurred and is continuing; and (iii) the Company
delivers to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such supplemental
indenture comply with the Indenture. Upon any such consolidation, merger or
transfer, the resulting, surviving or transferee person shall succeed to, and
may exercise every right and power of, the Company under the Indenture.
(Section 4.01.) The term "substantially all the assets" of the Company is not
defined in the Indenture, but under New York law such term is generally
interpreted to mean assets substantially in excess of 50% of the total assets
of the Company and its consolidated subsidiaries.
Limitations on Disposition of Stock of Restricted Subsidiaries. The Indenture
provides that the Company will not, and will not permit any Subsidiary to,
sell, transfer or otherwise dispose of any shares of capital stock of any
Restricted Subsidiary (or of any Subsidiary having direct or indirect control
of any Restricted Subsidiary) except for, subject to the covenant relating to
consolidations, mergers and sales and conveyances of assets described in the
immediately preceding paragraph, (i) a sale, transfer or other disposition of
any capital stock of any Restricted Subsidiary (or of any Subsidiary having
direct or indirect control of any Restricted Subsidiary) to a wholly owned
Subsidiary of the Company; (ii) a sale, transfer or other disposition of the
entire capital stock of any Restricted Subsidiary (or of any Subsidiary having
direct or indirect control of any Restricted Subsidiary) held by the Company
and its Subsidiaries for at least fair value (as determined by the Board of
Directors of the Company acting in good faith); or (iii) a sale, transfer or
other disposition of any capital stock of any Restricted Subsidiary (or of any
Subsidiary having direct or indirect control of any Restricted Subsidiary) for
at least fair value (as determined by the Board of Directors of the Company
acting in good faith) if, after giving effect thereto, the Company and its
Subsidiaries would own at least 80% of the issued and outstanding voting stock
of such Restricted Subsidiary (or Subsidiary). (Section 3.04.)
The Company is not required pursuant to the Indenture to redeem or otherwise
repurchase the Notes, in whole or in part, with the proceeds of any sale,
transfer or other disposition of any shares of capital stock of any Restricted
Subsidiary (or of any Subsidiary having direct or indirect control of any
Restricted Subsidiary). Furthermore, the Indenture does not provide for any
restrictions on the Company's use of any such proceeds.
Limitations upon Liens. The Indenture provides that the Company will not, nor
will it permit any Restricted Subsidiary to, incur, issue, assume or guarantee
any indebtedness for borrowed money (all such indebtedness for borrowed money
issued, assumed or guaranteed being "Debt") if such Debt is secured by a Lien
upon any property or assets, whether now owned or hereafter acquired, of the
Company or any Restricted Subsidiary or upon any shares of stock of a
Restricted Subsidiary without in any such case effectively providing that the
Notes (together with, if the Company shall so determine, any other Debt (or any
bonds, debentures, notes, or other similar evidences of indebtedness, whether
or not for borrowed money) of the Company or such Restricted Subsidiary then
existing or thereafter created which is not subordinated to the Notes) shall be
secured equally and ratably with or prior to such Debt, so long as such Debt
shall be so secured, except that the foregoing restriction shall not apply to
(i) Liens on property of, or on any shares of stock of, any corporation
existing at the time such corporation becomes a Restricted Subsidiary;
(ii) Liens on property or shares of stock existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary;
(iii) Liens on property or shares of stock hereafter acquired (or, in the
case of property, constructed (including construction of improvements or
additions to improvements on existing
9
<PAGE>
property)) by the Company or any Restricted Subsidiary and created prior
to, at the time of, or within one year after such acquisition (or, in the
case of property, the completion of such construction (including
construction of improvements or additions to improvements on existing
property) or commencement of commercial operation of such property,
whichever is later) to secure or provide for the payment of all or any part
of the purchase price (or, in the case of property (including construction
of improvements or additions to improvements on existing property), the
construction price) thereof;
(iv) Liens in favor of the Company or any Restricted Subsidiary;
(v) Liens in favor of the United States of America, any State thereof or
the District of Columbia, or any political subdivision, agency, department
or other instrumentality thereof, to secure progress, advance or other
payments pursuant to any contract or provision of any statute;
(vi) Liens on property of a person existing at the time such person is
merged into or consolidated with the Company or a Restricted Subsidiary;
and
(vii) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Lien referred to
in the foregoing clauses (i) to (vi), inclusive; provided, however, that
(x) such extension, renewal or replacement Lien shall be limited to all or
a part of the same property or shares of stock that secured the Lien
extended, renewed or replaced (plus improvements (including additions to
improvements) on such property) and (y) the Debt secured by such Lien at
such time is not increased (except, with respect to a Lien on property, to
the extent that additional Debt was incurred to provide for the payment of
all or any part of the construction price of improvements or additions to
improvements on such property).
Notwithstanding the above, the Company and one or more Restricted Subsidiaries
may, without securing the Notes, issue, assume or guarantee secured Debt which
would otherwise be subject to the foregoing restrictions, provided that after
giving effect thereto the aggregate amount of such Debt secured pursuant to
such exception (not including secured Debt permitted under the foregoing
exceptions) at such time does not exceed 10% of Consolidated Tangible Net
Worth. (Section 3.03.)
Based on the Company's December 31, 1994 balance sheet included in the 1994
Form 10-K, as of the date of this Prospectus the amount of Debt which the
Company and its Restricted Subsidiaries would be permitted to secure pursuant
to the exception set forth in the last sentence of the preceding paragraph
would be approximately $144,433,000.
The following definitions apply to the covenants described above:
"Consolidated Tangible Net Worth" means, at any date, the total assets
appearing on the most recently prepared consolidated balance sheet of the
Company and its Subsidiaries as at the end of a fiscal quarter of the
Company, prepared in accordance with generally accepted accounting
principles consistently applied, less (a) the total liabilities appearing
on such balance sheet, and (b) intangible assets. "Intangible assets" means
the value (net of any applicable reserves), as shown on or reflected in
such balance sheet, of: (i) all trade names, trademarks, licenses, patents,
copyrights and goodwill; (ii) organizational and development costs (other
than deferred policy acquisition costs); and (iii) unamortized debt
discount and expense, less unamortized premium.
"Lien" means any mortgage, pledge, security interest, conditional sale or
other title retention agreement or other similar lien.
"Restricted Subsidiary" means any Subsidiary which is incorporated under
the laws of the United States of America, any State thereof or the District
of Columbia, and which is a regulated insurance company principally engaged
in one or more of the property, casualty and life insurance businesses;
provided, however, that no Subsidiary shall be a Restricted Subsidiary if
the total assets of such Subsidiary are less than 10% of the total assets
of the Company and its consolidated Subsidiaries (including such
Subsidiary) in each case as set forth on the most recently
10
<PAGE>
prepared balance sheets of such Subsidiary and the Company and its
consolidated Subsidiaries, respectively, as at the end of a fiscal quarter
of the Company or such Subsidiary, as applicable, and computed in
accordance with generally accepted accounting principles.
"Subsidiary" means a corporation of which a majority of the capital stock
having voting power under ordinary circumstances to elect a majority of the
board of directors is owned by (i) the Company, (ii) the Company and one or
more Subsidiaries or (iii) one or more Subsidiaries. (Section 1.01.)
Based on the Company's December 31, 1994 balance sheet included in the 1994
Form 10-K, as of the date of this Prospectus GEICO is the Company's only
Restricted Subsidiary. As of December 31, 1994, GEICO held approximately 76% of
the Company's consolidated total assets, and GEICO's net income for the year
ended December 31, 1994 represented approximately 96% of the Company's
consolidated net income during such period.
AMENDMENT AND WAIVER
Subject to certain exceptions, the Indenture may be amended with the written
consent of the holders of at least a majority in principal amount of the Notes
then outstanding, and any past default or compliance with any provision may be
waived with the consent of the holders of at least a majority in principal
amount of the Notes then outstanding. However, without the consent of each
holder of an outstanding Note affected thereby, no amendment may, among other
things, (i) reduce the amount of Notes whose holders must consent to an
amendment; (ii) reduce the rate of or extend the time for payment of interest
on any Note; (iii) reduce the principal of or extend the fixed maturity of any
Note; (iv) change the currency for payment of principal of or premium or
interest on any Note; (v) impair the right to institute suit for the
enforcement of any payment on or with respect to any Note; or (vi) waive
certain payment defaults with respect to the Notes. (Section 8.02.) Without the
consent of any holder of the Notes, the Company and the Trustee may amend the
Indenture (A) to cure any ambiguity, omission, defect or inconsistency, (B) to
provide for the assumption by a successor corporation of the obligations of the
Company under the Indenture, (C) to provide for uncertificated Notes in
addition to or in place of certificated Notes so long as such uncertificated
Notes are in registered form for the purposes of the Internal Revenue Code, (D)
to add guarantees of the Notes, (E) to add to the covenants of the Company for
the benefit of the holders of the Notes or to surrender any right or power
conferred upon the Company, (F) to comply with any requirement of the
Commission in connection with the qualification of the Indenture under the
Trust Indenture Act of 1939, as amended, and (G) to make any change that does
not adversely affect the rights of any holder of the Notes. (Section 8.01.)
TRANSFER
The Notes will be issued in registered form and will be transferable only
upon the surrender to the Registrar of the Notes being transferred for
registration of transfer. (Section 2.06.)
EVENTS OF DEFAULT
An Event of Default as defined in the Indenture includes the occurrence of
any of the following: (i) a default in the payment of principal of any Note
when due at its stated maturity, upon declaration or otherwise; (ii) a default
in the payment of interest on any Note when due, and such default continues for
30 days; (iii) a failure by the Company for 15 days after notice to comply with
its obligations under the covenants described above under "Certain Covenants--
Consolidation, Merger and Sale of Assets" and "Certain Covenants--Limitations
on Disposition of Stock of Restricted Subsidiaries"; (iv) a failure by the
Company for 60 days after notice to comply with its other agreements contained
in the Indenture; (v) the principal amount of any indebtedness of the Company
or any Restricted Subsidiary
11
<PAGE>
for borrowed money is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of an event of
default, the total amount of such indebtedness for borrowed money unpaid or
accelerated exceeds $25,000,000 and such default continues for 15 days after
notice; or (vi) certain events of bankruptcy, insolvency or reorganization of
the Company or a Restricted Subsidiary. (Section 5.01.)
If an Event of Default occurs and is continuing with respect to the
Indenture, the Trustee or the holders of 25% in principal amount of the
outstanding Notes may declare the principal of and accrued interest on all the
Notes to be due and payable. Upon such a declaration, such principal and
interest will be due and payable immediately. Under certain circumstances, the
holders of a majority in principal amount of the outstanding Notes may rescind
any such acceleration with respect to such Notes and its consequences. (Section
5.02.)
Prior to taking any action under the Indenture, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action. Subject to such
provisions for indemnification and certain limitations contained in the
Indenture, the holders of a majority in principal amount of the Notes at the
time outstanding have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee. (Section 5.05.)
No holder of any Note may pursue any remedy with respect to the Indenture or
the Notes, unless (i) such holder shall have given to the Trustee written
notice of a continuing Event of Default with respect to the Notes; (ii) the
holders of at least 25% in principal amount of the outstanding Notes shall have
made written request to the Trustee to pursue the remedy, and shall have
offered the Trustee reasonable security or indemnity against any loss,
liability or expense; (iii) within 60 days following the receipt of such
request and offer of security and indemnity, the Trustee shall not have
received from the holders of a majority in principal amount of the outstanding
Notes a direction inconsistent with such request; and (iv) the Trustee shall
have failed to comply with such request within such 60-day period. (Section
5.06.) Notwithstanding any other provision of the Indenture, the right of a
holder of a Note to receive payment of the principal of and interest on such
Note on or after the respective due dates expressed in such Note, or to bring
suit for the enforcement of any such payment, shall not be impaired or affected
without the consent of such holder. (Section 5.07.)
The Company will deliver to the Trustee within 120 days after the end of each
fiscal year of the Company an Officers' Certificate stating whether such
Officers have knowledge of any Default which may have occurred during such
fiscal year. The Officers' Certificate shall describe such Default, its status
and what action the Company is taking or proposes to take with respect thereto.
(Section 3.05.)
SATISFACTION AND DISCHARGE OF THE INDENTURE
The Indenture provides that when (i) the Company delivers to the Trustee all
outstanding Notes for cancellation or (ii) all outstanding Notes have become
due and payable and the Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity all outstanding Notes, including interest
thereon, and if in either case the Company pays all other sums payable under
the Indenture by the Company, then the Indenture shall cease to be of further
effect, except for certain obligations, including those respecting the
obligations to register the transfer or exchange of the Notes, to replace
mutilated, destroyed, lost or stolen Notes and to maintain a Registrar and
Paying Agent in respect of the Notes. The Trustee shall acknowledge
satisfaction and discharge of the Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company. (Section 7.01.)
DEFEASANCE
The Indenture provides that the Company at any time may terminate its
obligations under the Indenture and the Notes ("defeasance"), except for
certain obligations, including those respecting
12
<PAGE>
the defeasance trust and obligations to register the transfer or exchange of
the Notes, to replace mutilated, destroyed, lost or stolen Notes and to
maintain a Registrar and Paying Agent in respect of the Notes. (Section 7.01.)
If the Company exercises its defeasance option, payment of the Notes may not
be accelerated because of an Event of Default with respect thereto. (Section
7.01.)
In order to exercise its defeasance option, the Company must (i) irrevocably
deposit in trust with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Notes to maturity; (ii) deliver to the
Trustee a certificate from a nationally recognized firm of independent
accountants expressing their opinion that the payments of principal and
interest when due and without reinvestment on the deposited U.S. Government
Obligations plus any deposited money without investment will provide cash at
such times and in such amounts as will be sufficient to pay principal and
interest when due on all the Notes to maturity; (iii) deliver to the Trustee an
Opinion of Counsel to the effect that the trust resulting from the deposit does
not constitute, or is qualified as, a regulated investment company under the
Investment Company Act of 1940; (iv) comply with certain other conditions; and
(v) deliver to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent to the defeasance and discharge of
the Notes have been complied with. (Section 7.02.)
GOVERNING LAW
The Indenture provides that it will be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby. (Section 9.09.)
CONCERNING THE TRUSTEE
United States Trust Company of New York will act as Trustee for the Notes
issued under the Indenture.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to Salomon Brothers Inc (the "Underwriter"), and
the Underwriter has agreed to purchase from the Company, all the Notes. The
Underwriting Agreement provides that, subject to the terms and conditions set
forth therein, the Underwriter will be obligated to purchase all the Notes
offered hereby if any Notes are purchased.
The Underwriter has advised the Company that the Underwriter proposes
initially to offer the Notes to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such price
less a concession not in excess of . % of the principal amount of the Notes.
The Underwriter may allow and such dealers may reallow to certain other dealers
a concession not in excess of . % of such principal amount. After the initial
public offering, the public offering price and such concessions may be changed.
The Underwriting Agreement provides that the Company will indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act of 1933, or contribute to payments the Underwriter may be
required to make in respect thereof.
The Underwriter has advised the Company that it intends to make a market in
the Notes, but it is not obligated to do so and may discontinue making a market
at any time without notice. The Company currently has no intention to list the
Notes on any securities exchange, and there can be no assurance given as to the
liquidity of the trading market for the Notes.
13
<PAGE>
Warren E. Buffett, a Director and Chairman of the Executive Committee of the
Underwriter, is the Chairman of the Board and Chief Executive Officer of
Berkshire Hathaway Inc. ("Berkshire"). Berkshire and its subsidiaries own
6,633,600 shares of Common Stock and all the outstanding shares of Series A
Cumulative Convertible Preferred Stock (the "Preferred Stock") of Salomon Inc,
the parent of the Underwriter. The Preferred Stock is entitled to 18,421,053
votes and, together with the Common Stock, constitutes approximately 24% of the
votes entitled to be cast by the outstanding voting securities of Salomon Inc.
The Preferred Stock is convertible into 18,421,053, or approximately 17%, of
the outstanding shares of Common Stock of Salomon Inc. According to the most
recent information available to the Company, Berkshire, through several of its
subsidiaries, owns 34,250,000 shares, or approximately 50.2%, of the Company's
outstanding Common Stock. According to the most recent information available to
the Company, Mr. Buffett, his wife and a trust of which Mr. Buffett is a
trustee, but in which he has no economic interest, own approximately 43.8% of
the outstanding shares of Berkshire. In addition, Louis A. Simpson, Director
and President and Chief Executive Officer--Capital Operations of the Company,
is a Director of Salomon Inc. Mr. Simpson and members of his family own 950,119
shares, or approximately 1.4%, of the Company's outstanding Common Stock. Mr.
Simpson also owns 25,000 shares of the Common Stock of Salomon Inc. As a result
of the foregoing, the Underwriter may be deemed to be an affiliate of the
Company. However, both the Underwriter and the Company disclaim such affiliate
status. The Underwriter is nevertheless offering the Notes in compliance with
the applicable provisions of Schedule E of the By-Laws of the National
Association of Securities Dealers, Inc. The Underwriter has informed the
Company that neither it nor the dealers will confirm sales to discretionary
accounts without the prior specific written approval of the customer.
LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for the Company
by Charles R. Davies, Esq., Vice President and General Counsel of the Company.
Certain legal matters will be passed upon for the Underwriter by Cravath,
Swaine & Moore, New York, New York. Mr. Davies owns 8,929 shares of Common
Stock of the Company. Samuel C. Butler is a director, and the Chairman of the
Executive Committee and Human Resources Committee of the Board of Directors, of
the Company and is a partner in the law firm of Cravath, Swaine & Moore. Mr.
Butler, a member of his family, trusts for the benefit of members of his family
and trusts of which he is a trustee own 55,000 shares of Common Stock of the
Company.
EXPERTS
The consolidated financial statements of GEICO Corporation at December 31,
1994 and 1993, and for each of the three years in the period ended December 31,
1994, incorporated in this Prospectus by reference to the Annual Report on Form
10-K of the Company for the year ended December 31, 1994, have been audited by
Coopers & Lybrand L.L.P., independent accountants, as set forth in their
report, which includes an explanatory paragraph regarding the adoption of
certain new accounting standards in 1994 and 1993, incorporated in this
Prospectus by reference to the Annual Report on Form 10-K of the Company for
the year ended December 31, 1994, and have been so incorporated in reliance
upon the authority of such firm as experts in accounting and auditing.
14
<PAGE>
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITER. THIS PROSPECTUS
SHALL NOT CONSTITUTE AN OFFER OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS
AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
GEICO Corporation.......................................................... 3
Selected Financial Data.................................................... 6
Capitalization............................................................. 7
Ratio of Earnings to Fixed Charges......................................... 7
Use of Proceeds............................................................ 8
Description of Notes....................................................... 8
Underwriting............................................................... 13
Legal Matters.............................................................. 14
Experts.................................................................... 14
</TABLE>
$100,000,000
GEICO CORPORATION
% NOTES DUE 2005
- -----------------------------------
SALOMON BROTHERS INC
- -------------------------------------------
PROSPECTUS
DATED , 1995
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
[ALTERNATE PAGE]
SUBJECT TO COMPLETION, DATED APRIL 6, 1995
PROSPECTUS
$100,000,000
GEICO CORPORATION
% NOTES DUE 2005
The % Notes Due 2005 (the "Notes") will mature on , 2005. Interest on
the Notes is payable semiannually on and , commencing , 199 .
The Notes will not be entitled to any sinking fund. GEICO Corporation (the
"Company") currently has no intention to list the Notes on any securities
exchange, and there can be no assurance given as to the liquidity of the
trading market for the Notes.
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.
This Prospectus is to be used by Salomon Brothers Inc ("Salomon") in connection
with offers and sales of the Notes in market-making transactions in the over-
the-counter market, in private transactions or otherwise at negotiated prices
related to prevailing market prices at the time of sale. Salomon may act as
principal or agent in such transactions.
SALOMON BROTHERS INC
- ----------------------------------------------------------------
The date of this Prospectus is , 1995.
-----------------------
<PAGE>
[ALTERNATE PAGE]
THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA HAS NEITHER
APPROVED NOR DISAPPROVED OF THE OFFERING IN QUESTION, NOR HAS THE COMMISSIONER
ACTED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS.
----------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), pursuant to Sections 13
and 15(d) thereof and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy statements and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's Regional Offices at the Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, and at 7 World Trade
Center, 13th Floor, 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. Such reports, proxy
statements and other information can also be inspected at the offices of the
New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York
10005, and the Pacific Stock Exchange Incorporated ("PSE"), 115 Sansome Street,
2nd Floor, San Francisco, California 94104. The Company's Common Stock is
listed on both the NYSE and the PSE.
The Company has filed with the Commission a registration statement on Form S-
3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Act"), with respect to the Notes. As permitted by the rules and
regulations of the Commission, this Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information, reference is made to the
Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company heretofore filed by it with the
Commission are hereby incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (the "1994 Form 10-K"); and
(b) The Company's Form SE dated March 30, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the Offering of the Notes are incorporated herein by
reference and such documents shall be deemed to be a part hereof from the date
of filing of such documents. Any statements contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
2
<PAGE>
[ALTERNATE PAGE]
PLAN OF DISTRIBUTION
This Prospectus is to be used by Salomon in connection with offers and sales
of the Notes in market-making transactions in the over-the-counter market, in
private transactions or otherwise at negotiated prices related to prevailing
market prices at the time of sale. Salomon may act as principal or agent in
such transactions.
Warren E. Buffett, a Director and Chairman of the Executive Committee of the
Underwriter, is the Chairman of the Board and Chief Executive Officer of
Berkshire Hathaway Inc. ("Berkshire"). Berkshire and its subsidiaries own
6,633,600 shares of Common Stock and all the outstanding shares of Series A
Cumulative Convertible Preferred Stock (the "Preferred Stock") of Salomon Inc,
the parent of the Underwriter. The Preferred Stock is entitled to 18,421,053
votes, and, together with the Common Stock, constitutes approximately 24% of
the votes entitled to be cast by the outstanding voting securities of Salomon
Inc. The Preferred Stock is convertible into 18,421,053, or approximately 17%
of the outstanding shares of Common Stock of Salomon Inc. According to the most
recent information available to the Company, Berkshire, through several of its
subsidiaries, owns 34,250,000 shares, or approximately 50.2%, of the Company's
outstanding Common Stock. According to the most recent information available to
the Company, Mr. Buffett, his wife and a trust of which Mr. Buffett is a
trustee, but in which he has no economic interest, own approximately 43.8% of
the outstanding shares of Berkshire. In addition, Louis A. Simpson, Director
and President and Chief Executive Officer--Capital Operations of the Company,
is a Director of Salomon Inc. Mr. Simpson and members of his family own 950,119
shares, or approximately 1.4%, of the Company's outstanding Common Stock. Mr.
Simpson also owns 25,000 shares of the Common Stock of Salomon Inc. As a result
of the foregoing, the Underwriter may be deemed to be an affiliate of the
Company. However, both the Underwriter and the Company disclaim such affiliate
status. The Underwriter is nevertheless offering the Notes in compliance with
the applicable provisions of Schedule E of the National Association of
Securities Dealers, Inc. By-Laws. The Underwriter has informed the Company that
neither they nor the dealers will confirm sales to discretionary accounts
without the prior specific written approval of the customer.
Salomon acted as the underwriter in connection with the original offering of
the Notes and received an underwriting discount in the aggregate amount of
$ .
3
<PAGE>
[ALTERNATE PAGE]
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR BY SALOMON. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY
TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information......................................................
Incorporation of Certain Documents by Reference............................
GEICO Corporation..........................................................
Selected Financial Data....................................................
Ratio of Earnings to Fixed Charges.........................................
Description of Notes.......................................................
Plan of Distribution.......................................................
Experts....................................................................
</TABLE>
$100,000,000
GEICO CORPORATION
% NOTES DUE 2005
- ----------------------------------
SALOMON BROTHERS INC
- ------------------------------------------------
PROSPECTUS
DATED , 1995
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $ 34,483
National Association of Securities Dealers, Inc. filing fee..... 10,500
Trustee's fees and expenses..................................... 25,000*
Printing and engraving expenses................................. 15,200*
Rating Agency fees.............................................. 90,000*
Accountants' fees and expenses.................................. 35,000*
Blue Sky fees and expenses...................................... 5,000*
Miscellaneous................................................... 20,000*
--------
Total....................................................... $235,000*
========
</TABLE>
- --------
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection (a) of Section 145 of the General Corporation Law of the State of
Delaware provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Subsection (b) of Section 145 provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 145 further provides that to the extent a director, officer, employee
or agent of a corporation has been successful in the defense of any action,
suit or proceeding referred to in subsections (a) and (b) of Section 145 or in
the defense of any claim, issue or matter therein, he shall
II-1
<PAGE>
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith; that indemnification
provided for by Section 145 shall not be deemed exclusive of any other rights
to which the indemnified party may be entitled; and empowers a corporation to
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liability asserted against him or incurred
by him in any such capacity or arising out of his status as such whether or not
the corporation would have the power to indemnify him against such liabilities
under Section 145.
Article Xl of the Company's Bylaws provides that the Company shall, to the
fullest extent permitted by applicable law as then in effect, indemnify any
person (an "Indemnitee") who is or was a director or officer of the Company and
who is or was involved in any manner (including, without limitation, as a party
or witness) or is threatened to be made so involved in any threatened, pending
or completed investigation, claim, action, suit or proceeding, whether civil,
criminal, administrative or investigative (including, without limitation, any
action, suit or proceeding by or in the right of the Company to procure a
judgment in its favor) (a "Proceeding") by reason of the fact that such person
is or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
(including, without limitation, any employee benefit plan) against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
Proceeding (except with respect to a Proceeding that was commenced by such
director or officer (with certain exceptions)). The Bylaws further provide that
such indemnification shall be a contract right and shall include the right to
receive payment in advance of any expenses incurred by an Indemnitee in
connection with such Proceeding, consistent with the provisions of applicable
law as then in effect.
The Company maintains directors' and officers' liability insurance against
certain liabilities in the amount of $15,000,000.
Reference is made to Section 8 of the Form of Underwriting Agreement filed as
Exhibit 1 to this Registration Statement.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
1 Form of Underwriting Agreement
4(a) Form of Indenture between the Company and United States Trust Company of
New York, as Trustee
4(b) Form of Notes (included in Exhibit 4(a))
5 Opinion of Charles R. Davies, Esq., as to validity of Notes
12 Statement of Computation of Ratio of Earnings to Fixed Charges
23(a) Consent of Charles R. Davies, Esq. (included in Exhibit 5)
23(b) Consent of Coopers & Lybrand L.L.P., independent public accountants
24 Power of Attorney (included on signature page of this Registration
Statement)
25 Statement of Eligibility of Trustee
28 Information from reports furnished to state insurance regulatory
authorities (incorporated by reference to Exhibit 29 (filed pursuant to a
Form SE dated March 30, 1995, filed on March 30, 1995) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994
(File No. 1-8012))
</TABLE>
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
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.
The undersigned registrant hereby undertakes:
(1) That, for the 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.
(2) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(3) That, 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.
(4) 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;
(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 the undertakings set forth in paragraphs (a) and
(b) above 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 registrant pursuant to either Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement.
(5) 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.
(6) 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.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
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 REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED IN THE COUNTY OF MONTGOMERY, STATE OF MARYLAND, ON THE 6TH DAY OF
APRIL, 1995.
GEICO Corporation
/s/ Olza M. Nicely
By __________________________________
Olza M. Nicely
President and Chief Executive
Officer-- Insurance Operations
/s/ Louis A. Simpson
By __________________________________
Louis A. Simpson
President and Chief Executive
Officer-- Capital Operations
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS CHARLES R. DAVIES, OLZA M. NICELY, LOUIS A.
SIMPSON AND ROSALIND A. PHILLIPS, AND EACH OF THEM, HIS OR HER TRUE AND LAWFUL
ATTORNEYS-IN-FACT AND AGENTS, WITH FULL POWER OF SUBSTITUTION AND
RESUBSTITUTION, FOR HIM OR HER AND IN HIS OR HER NAME, PLACE AND STEAD, IN ANY
AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS, INCLUDING ANY POST-EFFECTIVE
AMENDMENTS, TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME, WITH ALL
EXHIBITS THERETO, AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE
SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND
AGENTS FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING
REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE PREMISES, AS FULLY TO ALL
INTENTS AND PURPOSES AS HE OR SHE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING
AND CONFIRMING ALL THAT SAID ATTORNEYS-IN-FACT AND AGENTS, OR THEIR
SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ Olza M. Nicely President and Chief
- ------------------------------------ Executive Officer-- April 6, 1995
OLZA M. NICELY Insurance Operations and
Director
/s/ Louis A. Simpson President and Chief
- ------------------------------------ Executive Officer--Capital April 6, 1995
LOUIS A. SIMPSON Operations and Director
/s/ W. Alvon Sparks, Jr. Executive Vice President and
- ------------------------------------ Chief Financial Officer April 6, 1995
W. ALVON SPARKS, JR. (Principal Financial
Officer) and Director
/s/ Thomas M. Wells Group Vice President and
- ------------------------------------ Controller (Principal April 6, 1995
THOMAS M. WELLS Accounting Officer)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ John H. Bretherick, Jr.
- ------------------------------------
JOHN H. BRETHERICK, JR. Director April 6, 1995
/s/ Norma E. Brown
- ------------------------------------
NORMA E. BROWN Director April 6, 1995
/s/ Samuel C. Butler
- ------------------------------------
SAMUEL C. BUTLER Director April 6, 1995
- ------------------------------------
JAMES E. CHEEK Director April , 1995
/s/ A. James Clark
- ------------------------------------
A. JAMES CLARK Director April 6, 1995
/s/ Delano E. Lewis
- ------------------------------------
DELANO E. LEWIS Director April 6, 1995
/s/ Coleman Raphael
- ------------------------------------
COLEMAN RAPHAEL Director April 6, 1995
- ------------------------------------
WILLIAM J. RUANE Director April , 1995
- ------------------------------------
W. REID THOMPSON Director April , 1995
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1 Form of Underwriting Agreement
4(a) Form of Indenture between the Company and United States Trust Company of
New York, as Trustee
4(b) Form of Notes (included in Exhibit 4(a))
5 Opinion of Charles R. Davies, Esq., as to validity of Notes
12 Statement of Computation of Ratio of Earnings to Fixed Charges
23(a) Consent of Charles R. Davies, Esq. (included in Exhibit 5)
23(b) Consent of Coopers & Lybrand L.L.P., independent public accountants
24 Power of Attorney (included on signature page of this Registration
Statement)
25 Statement of Eligibility of Trustee
28 Information from reports furnished to state insurance regulatory
authorities (incorporated by reference to Exhibit 29 (filed pursuant to a
Form SE dated
March 30, 1995, filed on March 30, 1995) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994 (File No. 1-8012))
</TABLE>
<PAGE>
EXHIBIT 1
GEICO Corporation
$100,000,000
_____% Notes Due 2005
Underwriting Agreement
New York, New York
___________, 1995
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
GEICO Corporation, a Delaware corporation (the "Company"), proposes to
sell to you (the "Underwriter"), $100,000,000 principal amount of its ______%
Notes Due 2005 (the "Securities"), to be issued under an indenture (the
"Indenture") to be dated as of _________, 1995, between the Company and United
States Trust Company of New York, as trustee (the "Trustee").
1. Representations and Warranties. The Company represents and
-------------------------------
warrants to, and agrees with, the Underwriter as set forth below in this Section
1. Certain terms used in this Section 1 are defined in paragraph (c) hereof.
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "Act") and has filed with the Securities and
Exchange Commission (the "Commission") a registration statement (file
number 33-_________) on such Form, including a related preliminary
prospectus, for the registration under the Act of the offering and sale of
the Securities. The Company may have filed one or more amendments thereto,
including the related preliminary prospectus, each of which has previously
been furnished to the Underwriter. The Company will next file with the
Commission one of the following: (i) prior to effectiveness of such
registration statement, a further amendment to such registration statement,
including the form of final prospectus or (ii) a final prospectus in
accordance with Rules 430A and 424(b)(1) or (4). In the case of clause
(ii), the Company has included in such
<PAGE>
2
registration statement, as amended at the Effective Date, all information
(other than Rule 430A Information) required by the Act and the rules
thereunder to be included in the Prospectus with respect to the Securities
and the offering thereof. As filed, such amendment and form of final
prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, with
respect to the Securities and the offering thereof and, except to the
extent the Underwriter shall agree in writing to a modification, shall be
in all substantive respects in the form furnished to the Underwriter prior
to the Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and other
changes (beyond that contained in the latest Preliminary Prospectus) as the
Company has advised the Underwriter, prior to the Execution Time, will be
included or made therein.
(b) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date, the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act, the Securities Exchange Act of 1934 (the "Exchange
Act") and the Trust Indenture Act of 1939 (the "Trust Indenture Act") and
the respective rules thereunder; on the Effective Date, the Registration
Statement did not or will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; on the
Effective Date and on the Closing Date the Indenture did or will comply in
all material respects with the requirements of the Trust Indenture Act and
the rules thereunder; and, on the Effective Date, the Prospectus, if not
filed pursuant to Rule 424(b), did not or will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
-------- -------
Company makes no representations or warranties as to (i) that part of the
Registration Statement which
<PAGE>
3
shall constitute the Statement of Eligibility and Qualification (Form T-1)
under the Trust Indenture Act of the Trustee or (ii) the information
contained in or omitted from the Registration Statement or the Prospectus
(or any supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Underwriter specifically for inclusion in the Registration Statement or the
Prospectus (or any supplement thereto).
(c) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term "the Effective Date" shall mean each date
that the Registration Statement and any post-effective amendment or
amendments thereto became or become effective. "Execution Time" shall mean
the date and time that this Agreement is executed and delivered by the
parties hereto. "Preliminary Prospectus" shall mean any preliminary
prospectus referred to in paragraph (a) above and any preliminary
prospectus included in the Registration Statement at the Effective Date
that omits Rule 430A Information. "Prospectus" shall mean the prospectus
relating to the Securities that is first filed pursuant to Rule 424(b)
after the Execution Time or, if no filing pursuant to Rule 424(b) is
required, shall mean the form of final prospectus relating to the
Securities included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement referred to
in paragraph (a) above, including incorporated documents, exhibits and
financial statements, as amended at the Execution Time (or, if not
effective at the Execution Time, in the form in which it shall become
effective) and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended. Such term shall include
any Rule 430A Information deemed to be included therein at the Effective
Date as provided by Rule 430A. "Rule 424", "Rule 430A" and "Regulation S-
K" refer to such rules or regulation under the Act. "Rule 430A
Information" means information with respect to the Securities and the
offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A. Any reference herein to
the Registration Statement, a Preliminary Prospectus or the Prospectus
shall be deemed to refer to and
<PAGE>
4
include the documents incorporated by reference therein pursuant to Item 12
of Form S-3 which were filed under the Exchange Act on or before the
Effective Date of the Registration Statement or the issue date of such
Preliminary Prospectus or the Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Effective Date of the
Registration Statement, or the issue date of any Preliminary Prospectus or
the Prospectus, as the case may be, deemed to be incorporated therein by
reference.
2. Purchase and Sale. Subject to the terms and conditions and in
------------------
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to the Underwriter, and the Underwriter agrees to purchase from
the Company, at a purchase price of _________% of the principal amount thereof,
plus accrued interest on the Securities from __________, 1995, to the Closing
Date, $100,000,000 principal amount of the Securities.
3. Delivery and Payment. Delivery of and payment for the Securities
---------------------
shall be made at 10:00 AM, New York City time, on _______, 1995, or such later
date (not later than _________, 1995) as the Underwriter shall designate, which
date and time may be postponed by agreement between the Underwriter and the
Company (such date and time of delivery and payment for the Securities being
herein called the "Closing Date"). Delivery of the Securities shall be made to
the Underwriter for the account of the Underwriter against payment by the
Underwriter of the purchase price thereof to or upon the order of the Company by
certified or official bank check or checks drawn on or by a New York Clearing
House bank and payable in next day funds. Delivery of the Securities shall be
made at such location as the Underwriter shall reasonably designate at least one
business day in advance of the Closing Date and payment for the Securities shall
be made at the office of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth
Avenue, New York, New York. Certificates for the Securities shall be registered
in such names and in such denominations as the Underwriter may request not less
than three full business days in advance of the Closing Date.
<PAGE>
5
The Company agrees to have the Securities available for inspection,
checking and packaging by the Underwriter in New York, New York, not later than
1:00 PM on the business day prior to the Closing Date.
4. Offering by Underwriter. It is understood that the Underwriter
------------------------
proposes to offer the Securities for sale to the public as set forth in the
Prospectus.
5. Agreements. The Company agrees with the Underwriter that:
-----------
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities, the Company will not file any amendment of the Registration
Statement or supplement to the Prospectus unless the Company has furnished
the Underwriter a copy for its review prior to filing and will not file any
such proposed amendment or supplement to which the Underwriter reasonably
objects. Subject to the foregoing sentence, if the Registration Statement
has become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will cause
the Prospectus, properly completed, and any supplement thereto to be filed
with the Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence satisfactory to
the Underwriter of such timely filing. The Company will promptly advise
the Underwriter (i) when the Registration Statement, if not effective at
the Execution Time, and any amendment thereto, shall have become effective,
(ii) when the Prospectus, and any supplement thereto, shall have been filed
(if required) with the Commission pursuant to Rule 424(b), (iii) when,
prior to termination of the offering of the Securities, any amendment to
the Registration Statement shall have been filed or become effective, (iv)
of any request by the Commission for any amendment of the Registration
Statement or supplement to the Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (vi) of
the receipt by the Company of any notification with respect to the
<PAGE>
6
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of
any such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Prospectus to comply with the
Act or the Exchange Act or the respective rules thereunder, the Company
promptly will prepare and file with the Commission, subject to the second
sentence of paragraph (a) of this Section 5, an amendment or supplement
which will correct such statement or omission or effect such compliance.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Underwriter an earnings statement or
statements of the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Underwriter and counsel for the
Underwriter, without charge, signed copies of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus by
the Underwriter or dealer may be required by the Act, as many copies of
each Preliminary Prospectus and the Prospectus and any supplement thereto
as the Underwriter may reasonably request. The Company will pay the
expenses of printing or other production of all documents relating to the
offering.
(e) The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions as the Underwriter may
designate, will maintain such qualifications in effect so long as required
for the distribution of the Securities and
<PAGE>
7
will arrange for the determination of the legality of the Securities for
purchase by institutional investors.
(f) The Company will not, on or prior to the Closing Date, without
prior written consent of the Underwriter, offer, sell or contract to sell,
or otherwise dispose of, directly or indirectly, or announce the offering
of, any debt securities issued or guaranteed by the Company (other than the
Securities).
6. Conditions to the Obligations of the Underwriter. The obligations
-------------------------------------------------
of the Underwriter to purchase the Securities shall be subject to the accuracy
of the representations and warranties on the part of the Company contained
herein as of the Execution Time and the Closing Date, to the accuracy of the
statements of the Company made in any certificates pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Underwriter agrees in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 PM New York City time, on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (ii) 12:00 Noon on the business day
following the day on which the public offering price was determined, if
such determination occurred after 3:00 PM New York City time on such date;
if filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Prospectus, and any such supplement, will be
filed in the manner and within the time period required by Rule 424(b); and
no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Company shall have furnished to the Underwriter the opinion
of Charles R. Davies, Vice President and General Counsel of the Company,
dated the Closing Date, to the effect that:
(i) each of the Company, Government Employees Insurance Company
("GEICO Insurance"), GEICO General Insurance Company ("GEICO
General"), GEICO
<PAGE>
8
Indemnity Company ("GEICO Indemnity") and GEICO Casualty Company
("GEICO Casualty" and, together with GEICO Insurance, GEICO General
and GEICO Casualty, the "Subsidiaries") has been duly incorporated and
is validly existing as a corporation in good standing under the laws
of the jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification wherein it
owns or leases material properties or conducts material business;
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Prospectus, (A) all outstanding shares of capital stock of GEICO
Insurance and GEICO Indemnity are owned by the Company directly, (B)
all outstanding shares of capital stock of GEICO General are owned by
GEICO Insurance directly and (C) all outstanding shares of capital
stock of GEICO Casualty are owned by GEICO Indemnity directly, in each
case free and clear of any perfected security interest and any other
security interests, claims, liens or encumbrances;
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectus; and the Securities conform to the description
thereof contained in the Prospectus;
(iv) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act, and
constitutes a legal, valid and binding instrument of the Company; and
the Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriter pursuant to this
Agreement, will constitute legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture;
<PAGE>
9
(v) to the best knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Company or
any of its subsidiaries of a character required to be disclosed in the
Registration Statement which is not adequately disclosed in the
Prospectus, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit, which is not described or
filed as required;
(vi) the Registration Statement has become effective under the
Act; any required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); to the best knowledge
of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened and the Registration
Statement and the Prospectus (other than the financial statements and
other financial and statistical information contained therein as to
which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act, the
Exchange Act and the Trust Indenture Act and the respective rules
thereunder; and such counsel has no reason to believe that at the
Effective Date the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus includes any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
<PAGE>
10
(viii) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and distribution of
the Securities by the Underwriter and such other approvals (specified
in such opinion) as have been obtained;
(ix) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or constitute a default under any law or the
charter or by-laws of the Company or the terms of any indenture or
other agreement or instrument known to such counsel and to which the
Company or any of its subsidiaries is a party or bound or any
judgement, order or decree known to such counsel to be applicable to
the Company or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Company or any of its subsidiaries; and
(x) no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of Delaware or the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriter and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company
and public officials. References to the Prospectus in this paragraph (b)
include any supplements thereto at the Closing Date.
(c) The Underwriter shall have received from Cravath, Swaine & Moore,
counsel for the Underwriter, such opinion or opinions or letters, dated the
Closing
<PAGE>
11
Date, with respect to the issuance and sale of the Securities, the
Indenture, the Registration Statement, the Prospectus (together with any
supplement thereto) and other related matters as the Underwriter may
reasonably require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass
upon such matters.
(d) The Company shall have furnished to the Underwriter a certificate
of the Company, signed by either President and Chief Executive Officer and
the principal financial or accounting officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have
carefully examined the Registration Statement, the Prospectus, any
supplement to the Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto),
there has been no material adverse change in the condition (financial
or other), earnings, business or properties of the Company and its
subsidiaries, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
(e) At the Execution Time and at the Closing Date, Coopers & Lybrand
L.L.P. shall have furnished to the Underwriter a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in
<PAGE>
12
form and substance satisfactory to the Underwriter, confirming that they
are independent accountants within the meaning of the Act and the
respective applicable published rules and regulations thereunder and
stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated in the
Registration Statement and the Prospectus and reported on by them
comply in form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the
meetings of the stockholders, directors and Executive, Audit and
Finance committees of the Company and the Subsidiaries; and inquiries
of certain officials of the Company who have responsibility for
financial and accounting matters of the Company and its subsidiaries
as to transactions and events subsequent to December 31, 1994, nothing
came to their attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated in the Registration Statement and the Prospectus do
not comply in form in all material respects with applicable
accounting requirements and with the published rules and
regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on Form
10-Q under the Exchange Act; and said unaudited financial
statements are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent
with that of the audited financial statements included or
incorporated in the Registration Statement and the Prospectus; or
<PAGE>
13
(2) with respect to the period subsequent to December 31,
1994, there were, at a specified date not more than five business
days prior to the date of the letter, any increases in the debt
of the Company and its subsidiaries or any changes capital stock
of the Company or decreases in the shareholders' equity of the
Company as compared with the amounts shown on the December 31,
1994, consolidated balance sheet included or incorporated in the
Registration Statement and the Prospectus, (b) for the period
from January 1, 1995 to March 31, 1995, there was, as compared
with the immediately preceding quarter, any decrease in total
revenues in excess of five percent, or decrease in net income
before income taxes, net income or net income per share in excess
of twenty percent, of the Company and its subsidiaries on a
consolidated basis, or (c) for the period from January 1, 1995,
to such specified date there were any decreases, as compared with
the corresponding period in the preceding year in total revenue
or net income before income taxes or in total or per share
amounts of net income of the Company and its subsidiaries, except
in all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless
said explanation is not deemed necessary by the Underwriter;
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Prospectus and in Exhibit
12 to the Registration Statement, including the information set forth
under the captions "Selected Financial Data", "Capitalization", "Ratio
of Earnings to Fixed Charges" and "Use Of Proceeds" in the Prospectus,
the information included or incorporated in Items 1, 6, 7 and 11 of
the Company's Annual Report on Form 10-K, incorporated in the
Registration Statement and the Prospectus, agrees with the accounting
records of the Company and its subsidiaries, excluding any questions
of legal interpretation;
<PAGE>
14
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
(f) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in
the letter or letters referred to in paragraph (e) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the business or properties of the Company and its subsidiaries
the effect of which, in any case referred to in clause (i) or (ii) above,
is, in the judgment of the Underwriter, so material and adverse as to make
it impractical or inadvisable to proceed with the offering or delivery of
the Securities as contemplated by the Registration Statement (exclusive of
any amendment thereof) and the Prospectus (exclusive of any supplement
thereto).
(g) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act) or any notice given of any intended
or potential decrease in any such rating or of a possible change in any
such rating that does not indicate the direction of the possible change.
(h) Prior to the Closing Date, the Company shall have furnished to
the Underwriter such further information, certificates and documents as the
Underwriter may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriter and counsel for the Underwriter, this Agreement
and all obligations of the Underwriter hereunder may be canceled at, or at any
time prior to, the Closing Date by the Underwriter. Notice of such cancellation
shall be given to the Company in writing or by telephone or telegraph confirmed
in writing.
<PAGE>
15
7. Reimbursement of Underwriter's Expenses. If the sale of the
----------------------------------------
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriter set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 9 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by the Underwriter, the Company will reimburse the Underwriter upon
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by it in connection with
the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
---------------------------------
indemnify and hold harmless the Underwriter, the directors, officers, employees
and agents of the Underwriter and each person who controls the Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
-------- -------
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Underwriter specifically for inclusion
therein. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
<PAGE>
16
(b) The Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of either
the Act or the Exchange Act, to the same extent as the foregoing indemnity from
the Company to the Underwriter, but only with reference to written information
relating to the Underwriter furnished to the Company by or on behalf of the
Underwriter specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which the Underwriter may otherwise have. The Company acknowledges
that the statements set forth in the last paragraph of the cover page and under
the heading "Underwriting" (except for the fifth, sixth, seventh and eighth
sentences of the last paragraph under such heading) in any Preliminary
Prospectus and the Prospectus constitute the only information furnished in
writing by or on behalf of the Underwriter for inclusion in any Preliminary
Prospectus or the Prospectus, and the Underwriter confirms that such statements
are correct.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
-------- -------
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the
<PAGE>
17
reasonable fees, costs and expenses of such separate counsel if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriter agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively, "Losses") to which the Company and the
Underwriter may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company and by the Underwriter from the
offering of the Securities; provided, however, that in no case shall the
-------- -------
Underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by the Underwriter
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Underwriter shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and of the Underwriter in
<PAGE>
18
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to the total net proceeds from the offering
(before deducting expenses), and benefits received by the Underwriter shall be
deemed to be equal to the total underwriting discounts and commissions, in each
case as set forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company or the Underwriter. The Company
and the Underwriter agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 8, each person
who controls the Underwriter within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of the Underwriter
shall have the same rights to contribution as the Underwriter, and each person
who controls the Company within the meaning of either the Act or the Exchange
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
9. Termination. This Agreement shall be subject to termination in
------------
the absolute discretion of the Underwriter, by notice given to the Company prior
to delivery of and payment for the Securities, if prior to such time (i) trading
in the Company's Common Stock shall have been suspended by the Commission or the
New York Stock Exchange or trading in securities generally on the New York Stock
Exchange shall have been suspended or limited or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium shall have been declared
either by Federal or New York State authorities or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States of a national emergency or war or other calamity or crisis the effect of
which on financial markets is such as to make it, in the judgment of the
Underwriter, impracticable or inadvisable to proceed
<PAGE>
19
with the offering or delivery of the Securities as contemplated by the
Prospectus (exclusive of any supplement thereto).
10. Market Making. The Company will, until ________, 1995:
--------------
(a) (i) Amend the Registration Statement or supplement the
Prospectus when necessary to reflect any material changes in the information
provided therein; and (ii) amend the Registration Statement when required to do
so in order to comply with Section 10(a)(3) of the Act as described in Part II,
Item 17, of the Registration Statement (subject to the proviso set forth
therein); provided, however, that (A) prior to filing any post-effective
-------- -------
amendment to the Registration Statement or any supplement to the Prospectus, the
Company will furnish to each of Cravath, Swaine & Moore, acting as counsel to
the Underwriter, and the Underwriter copies of all such documents proposed to be
filed, which documents will be subject to the review of such Underwriter's
counsel and the Underwriter, (B) the Company will not file any post-effective
amendment to the Registration Statement or any supplement to the Prospectus to
which such Underwriter's counsel or the Underwriter shall object, and (C) the
Company will provide such Underwriter's counsel and the Underwriter with copies
of each amendment or supplement filed.
(b) Notify the Underwriter's counsel and the Underwriter and (if
requested by any such person) confirm such advice in writing, (i) when any
Prospectus supplement or amendment or post-effective amendment has been filed,
and, with respect to any post-effective amendment, when the same has become
effective; (ii) of any request by the Commission for any post-effective
amendment or supplement to the Registration Statement, any supplement or
amendment to the Prospectus or for additional information; (iii) the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Debentures for sale in any jurisdiction
or the initiation or threatening of any proceedings for such purpose; and (v) of
the happening of any event which makes any statement made in the Registration
Statement, the Prospectus or any amendment or supplement thereto untrue or which
requires the making of any changes in the Registration Statement, the Prospectus
or
<PAGE>
20
any amendment or supplement thereto, in order to make the statements therein not
misleading.
(c) Furnish to the Underwriter's counsel and the Underwriter, without
charge, (i) at least one conformed copy of any post-effective amendment to the
Registration Statement; and (ii) as many copies of any amendment or supplement
to the Prospectus as each such person may request.
(d) Consent to the use of the Prospectus or any amendment or
supplement thereto by the Underwriter in connection with the offering and sale
of the Debentures.
(e) Agree to indemnify the Underwriter, and, if applicable,
contribute to the Underwriter, in a manner similar to that specified in Section
8.
11. Representations and Indemnities to Survive. The respective
-------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriter set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
--------
effective only on receipt, and, if sent to the Underwriter, will be mailed,
delivered or telegraphed and confirmed to it at Seven World Trade Center, New
York, New York, 10048; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at One GEICO Plaza, Washington, D.C. 20076,
attention of the legal department.
13. Successors. This Agreement will inure to the benefit of and be
-----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
---------------
in accordance with the laws of the State of New York.
<PAGE>
21
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the Underwriter.
Very truly yours,
GEICO Corporation
By: .......................
Title: Executive Vice
President and
Chief Financial
Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
By:
............................
Title:
<PAGE>
EXHIBIT 4(a)
GEICO CORPORATION
%
------
Notes
Due
2005
------------
Dated as of ____________, 1995
------------
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
<S> <C> <C>
SECTION 1.01. Definitions........................................... 1
SECTION 1.02. Other Definitions..................................... 4
SECTION 1.03. Incorporation by Reference of Trust Indenture Act..... 4
SECTION 1.04. Rules of Construction................................. 5
ARTICLE 2
The Securities
--------------
SECTION 2.01. Form and Dating....................................... 5
SECTION 2.02. Execution and Authentication.......................... 5
SECTION 2.03. Registrar and Paying Agent............................ 6
SECTION 2.04. Paying Agent To Hold Money in Trust................... 7
SECTION 2.05. Securityholder Lists.................................. 7
SECTION 2.06. Transfer and Exchange................................. 7
SECTION 2.07. Replacement Securities................................ 8
SECTION 2.08. Outstanding Securities................................ 8
SECTION 2.09. Temporary Securities.................................. 9
SECTION 2.10. Cancelation........................................... 9
SECTION 2.11. Defaulted Interest.................................... 9
ARTICLE 3
Covenants
---------
SECTION 3.01. Payment of Securities................................. 10
SECTION 3.02. SEC Reports........................................... 10
SECTION 3.03. Limitation of Liens................................... 11
SECTION 3.04. Limitation on Disposition of Stock of Restricted
Subsidiaries......................................... 13
SECTION 3.05. Compliance Certificate................................ 13
SECTION 3.06. Further Instruments and Acts.......................... 14
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE 4
Successor Company
-----------------
<S> <C> <C>
SECTION 4.01. When Company May Merge or Transfer Assets............. 14
ARTICLE 5
Defaults and Remedies
---------------------
SECTION 5.01. Event of Default...................................... 15
SECTION 5.02. Acceleration.......................................... 17
SECTION 5.03. Other Remedies........................................ 17
SECTION 5.04. Waiver of Past Defaults............................... 17
SECTION 5.05. Control by Majority................................... 17
SECTION 5.06. Limitation on Suits................................... 18
SECTION 5.07. Rights of Holders To Receive Payment.................. 18
SECTION 5.08. Collection Suit by Trustee............................ 19
SECTION 5.09. Trustee May File Proofs of Claim, etc. ............... 19
SECTION 5.10. Priorities............................................ 19
SECTION 5.11. Undertaking for Costs................................. 20
SECTION 5.12. Waiver of Stay or Extension Laws...................... 20
ARTICLE 6
Trustee
-------
SECTION 6.01. Duties of Trustee..................................... 20
SECTION 6.02. Rights of Trustee..................................... 22
SECTION 6.03. Individual Rights of Trustee.......................... 22
SECTION 6.04. Trustee's Disclaimer.................................. 22
SECTION 6.05. Notice of Defaults.................................... 23
SECTION 6.06. Reports by Trustee to Holders......................... 23
SECTION 6.07. Compensation and Indemnity............................ 23
SECTION 6.08. Replacement of Trustee................................ 24
SECTION 6.09. Successor Trustee by Merger........................... 25
SECTION 6.10. Eligibility; Disqualification......................... 26
SECTION 6.11. Preferential Collection of Claims Against Company..... 26
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE 7
Discharge of Indenture; Defeasance
----------------------------------
<S> <C> <C>
SECTION 7.01. Discharge of Liability on Securities; Defeasance...... 26
SECTION 7.02. Conditions to Defeasance.............................. 27
SECTION 7.03. Application of Trust Money............................ 28
SECTION 7.04. Repayment to Company.................................. 28
SECTION 7.05. Indemnity for Government Obligations.................. 28
SECTION 7.06. Reinstatement......................................... 29
ARTICLE 8
Amendments
----------
SECTION 8.01. Without Consent of the Holders........................ 29
SECTION 8.02. With Consent of Holders............................... 30
SECTION 8.03. Compliance with Trust Indenture Act................... 31
SECTION 8.04. Revocation and Effect of Consents and Waivers......... 31
SECTION 8.05. Notation on or Exchange of Securities................. 31
SECTION 8.06. Trustee To Sign Amendments............................ 32
ARTICLE 9
Miscellaneous
-------------
SECTION 9.01. Trust Indenture Act Controls.......................... 32
SECTION 9.02. Notices............................................... 32
SECTION 9.03. Communication by Holders with Other Holders........... 33
SECTION 9.04. Certificate and Opinion as to Conditions Precedent.... 33
SECTION 9.05. Statements Required in Certificate or Opinion......... 33
SECTION 9.06. When Securities Disregarded........................... 34
SECTION 9.07. Rules by Trustee, Paying Agent and Registrar.......... 34
SECTION 9.08. Legal Holidays........................................ 34
SECTION 9.09. Governing Law......................................... 34
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 9.10. No Recourse Against Others............................ 35
SECTION 9.11. Successors............................................ 35
SECTION 9.12. Multiple Originals.................................... 35
SECTION 9.13. Table of Contents; Headings........................... 35
Exhibit A--Form of Security
</TABLE>
iv
<PAGE>
CROSS-REFERENCE TABLE 1/
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1) ......................................... 6.10
(a)(2) ......................................... 6.10
(a)(3) ......................................... N.A.
(a)(4) ......................................... N.A.
(b) ......................................... 6.08; 6.10
(c) ......................................... N.A.
311(a) ......................................... 6.11
(b) ......................................... 6.11
(c) ......................................... N.A.
312(a) ......................................... 2.05
(b) ......................................... 9.03
(c) ......................................... 9.03
313(a) ......................................... 6.06
(b)(1) ......................................... N.A.
(b)(2) ......................................... 6.06
(c) ......................................... 6.06; 9.02
(d) ......................................... 6.06
314(a) ......................................... 3.02; 3.05;
9.02
(b) ......................................... N.A.
(c)(1) ......................................... 9.04
(c)(2) ......................................... 9.04
(c)(3) ......................................... N.A.
(d) ......................................... N.A.
(e) ......................................... 9.05
(f)
315(a) ......................................... 6.01
(b) ......................................... 6.05; 9.02
(c) ......................................... 6.01
(d) ......................................... 6.01
(e) ......................................... 5.11
316(a)(1)(A) ......................................... 5.05
(a)(1)(B) ......................................... 5.04
(a)(2) ......................................... N.A.
(a)(last sentence) ................................ 9.06
(b) ......................................... 5.07
(c)
</TABLE>
- ----------
1/ Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
2
<TABLE>
<S> <C>
317(a)(1) ........................................ 5.08
(a)(2) ........................................ 5.09
(b) ........................................ 2.04
318(a) ........................................ 9.01
</TABLE>
N.A. means Not Applicable
<PAGE>
INDENTURE dated as of __________, 1995, between GEICO CORPORATION, a Delaware
corporation (the "Company"), and UNITED STATES TRUST COMPANY OF NEW YORK, a New
York banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Company's ____% Notes Due
__________, 2005 (the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
------------
"Affiliate" means any person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company.
"Business Day" means each day which is not a Legal Holiday.
"Capital Stock" means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) corporate stock, including any Preferred Stock.
"Company" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor under the
indenture securities.
"Consolidated Tangible Net Worth" means, at any date, the total assets
appearing on the most recently prepared consolidated balance sheet of the
Company and its Subsidiaries as at the end of a fiscal quarter of the Company,
prepared in accordance with generally accepted accounting principles
consistently applied, less (a) the total liabilities appearing on such balance
sheet, and (b) intangible assets. "Intangible assets" means the value (net of
any applicable reserves), as shown on or reflected in such balance sheet, of:
(i) all trade names, trademarks, licenses, patents, copyrights and goodwill;
(ii) organizational and development costs (other than deferred policy
<PAGE>
2
acquisition costs); and (iii) unamortized debt discount and expense, less
unamortized premium.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" or "Securityholder" means the person in whose name a Security is
registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Lien" means any mortgage, pledge, security interest, conditional sale or
other title retention agreement or other similar lien.
"Officer" means either President and Chief Executive Officer, any Vice
President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion acceptable to the Trustee from
legal counsel who is acceptable to the Trustee. The counsel may be an employee
of or counsel to the Company or the Trustee.
"person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
"principal" of a Security means the principal of the Security payable on the
Security which is due or overdue or is to become due at the relevant time.
<PAGE>
3
"Restricted Subsidiary" means any Subsidiary which is incorporated under the
laws of the United States of America, any State thereof or the District of
Columbia, and which is a regulated insurance company principally engaged in one
or more of the property, casualty and life insurance businesses; provided,
--------
however, that no Subsidiary shall be a Restricted Subsidiary if the total assets
- -------
of such Subsidiary are less than 10% of the total assets of the Company and its
consolidated Subsidiaries (including such Subsidiary) in each case as set forth
on the most recently prepared balance sheets of such Subsidiary and the Company
and its consolidated Subsidiaries, respectively, as at the end of a fiscal
quarter of the Company or such Subsidiary, as applicable, prepared in accordance
with generally accepted accounting principles.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Subsidiary" means a corporation of which a majority of the Capital Stock
having voting power under ordinary circumstances to elect a majority of the
board of directors is owned by (i) the Company, (ii) the Company and one or more
Subsidiaries or (iii) one or more Subsidiaries.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb)
as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer this Indenture.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" means, with respect to any Subsidiary, stock of any class or
classes (or equivalent interest) the
<PAGE>
4
holders of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of the directors (or persons performing similar functions)
of such Subsidiary, even though the right to so vote has been suspended by the
happening of such a contingency.
SECTION 1.02. Other Definitions.
------------------
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Bankruptcy Law".......................... 5.01
"Custodian"............................... 5.01
"Debt".................................... 3.03
"defeasance option"....................... 7.01(b)
"Event of Default"........................ 5.01
"Legal Holiday"........................... 9.08
"Paying Agent"............................ 2.03
"Registrar"............................... 2.03
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
--------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
<PAGE>
5
SECTION 1.04. Rules of Construction. Unless the contest otherwise
----------------------
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in
effect from time to time;
(3) "or" is not exclusive;
(4) "including" means including, without limitation;
(5) words in the singular include the plural and words in the plural
include the singular; and
(6) unsecured debt shall not be deemed to be subordinate or junior to
secured debt merely by virtue of its nature as unsecured debt.
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating. The Securities and the Trustee's
----------------
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture.
The Securities may have notations, legends or endorsements required by law,
stock exchange rule, agreements to which the Company is subject, if any, or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). Each Security shall be dated the date of its
authentication. The terms of the Securities set forth in Exhibit A are part of
the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers shall sign the
-----------------------------
Securities for the Company by manual or facsimile signature. The Company's seal
shall be impressed, affixed, imprinted or reproduced on the Securities and may
be in facsimile form.
If an Officer whose signature is on a Security no longer holds that office
at the time the Trustee
<PAGE>
6
authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate and deliver Securities for original issue in
an aggregate principal amount of $100,000,000, upon a written order of the
Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company. Such order shall specify
the amount of the Securities to be authenticated and the date on which the
original issue of Securities is to be authenticated. The aggregate principal
amount of Securities outstanding at any time may not exceed that amount except
as provided in Section 2.07.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an
---------------------------
office or agency where Securities may be presented for registration of transfer
or for exchange (the "Registrar") and an office or agency where Securities may
be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA and the relevant provisions of this
Indenture and shall not otherwise be inconsistent with this Indenture. The
agreement shall implement the provisions of this Indenture that relate to such
agent. The Company shall notify the Trustee of the name and address of any such
agent. If the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 6.07. The Company or any Subsidiary or Affiliate
may act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying Agent in
connection with the Securities.
<PAGE>
7
SECTION 2.04. Paying Agent To Hold Money in Trust. On or prior to each
------------------------------------
due date of the interest on any Security, the Company shall deposit with the
Paying Agent a sum sufficient to pay such interest when so becoming due. At
least one Business Day prior to each due date of the principal of any Security,
the Company shall deposit with the Paying Agent a sum (which may be next-day
funds) sufficient to pay such principal when so becoming due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that the
Paying Agent shall hold in trust for the benefit of Securityholders or the
Trustee all money held by the Paying Agent for the payment of principal of or
interest on the Securities and shall notify the Trustee of any default by the
Company in making any such payment. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate the money held by it as Paying Agent and hold
it as a separate trust fund. The Company at any time may require a Paying Agent
to pay all money held by it to the Trustee and to account for any funds
disbursed by the Paying Agent. Upon complying with this Section, the Paying
Agent shall have no further liability for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
---------------------
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be issued in
----------------------
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer. When a Security is presented to the Registrar or
a co-registrar with a request to register a transfer, the Registrar shall
register the transfer as requested. When Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's or co-registrar's
request. The Company may require payment of a sum
<PAGE>
8
sufficient to pay all taxes, assessments or other governmental charges. Every
Security presented or surrendered for transfer or exchange shall (if so required
by the Company or the Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing. The Company shall not be required to make and the Registrar need
not register transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities for a period of 15 days before a selection
of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any Security,
the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar
may deem and treat the person in whose name a Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
SECTION 2.07. Replacement Securities. If a mutilated Security is
-----------------------
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if neither the Trustee
nor the Company has notice that such Security has been acquired by a bona fide
purchaser and the Holder satisfies any other reasonable requirements of the
Trustee and the Company. If required by the Trustee or the Company, such Holder
shall furnish an indemnity bond sufficient in the judgment of the Company and
the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar
and any co-registrar from any loss which any of them may suffer if a Security is
replaced. The Company and the Trustee may charge the Holder for their expenses
in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. Outstanding Securities. Securities outstanding at any time
-----------------------
are all Securities authenticated by the Trustee except for those canceled by it,
those delivered
<PAGE>
9
to it for cancelation and those described in this Section as not outstanding. A
Security does not cease to be outstanding because the Company or an affiliate of
the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with this
Indenture, on a maturity date money sufficient to pay all principal and interest
payable on that date with respect to the Securities maturing then on and after
that date such Securities cease to be outstanding and interest on them ceases to
accrue.
SECTION 2.09. Temporary Securities. Until definitive Securities are ready
---------------------
for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form
of definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.10. Cancelation. The Company at any time may deliver Securities
------------
to the Trustee for cancelation. The Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee to deliver canceled Securities to the Company.
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancelation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a payment of
-------------------
interest on the Securities, the Company shall pay defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner.
The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date, which date shall be at
least five Business Days
<PAGE>
10
prior to the payment date. The Company shall fix or cause to be fixed any such
special record date and payment date, and, at least 15 days before any such
special record date, the Company shall mail or cause to be mailed by first-class
mail to each Securityholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid. Notwithstanding
the foregoing, the Company may make payment of any defaulted interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the Trustee
of such proposed method of payment, such payment shall be deemed practicable by
the Trustee in its sole discretion.
ARTICLE 3
COVENANTS
SECTION 3.01. Payment of Securities. The Company shall promptly pay the
----------------------
principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due.
The Company shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the rate borne by the Securities plus 1% per annum
to the extent lawful.
SECTION 3.02. SEC Reports. The Company shall (a) file with the Trustee,
------------
within 15 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which the
Company may be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Company is not required to file
information, documents or reports pursuant to either of said Sections, then it
will file with the Trustee and the Commission, in accordance with rules and
<PAGE>
11
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations; (b) file with the Trustee and
the Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants of this
Indenture as may be required from time to time by such rules and regulations;
(c) transmit to all Holders, to the extent and in the manner required by TIA (S)
313(c), such summaries of any information, documents and reports required to be
filed by the Company pursuant to paragraphs (a) and (b) of this Section as may
be required by rules and regulations prescribed from time to time by the
Commission; and (d) comply with all other provisions of TIA (S) 314(a).
SECTION 3.03. Limitation on Liens. Except as provided in this Section,
--------------------
the Company will not itself, and will not permit any Restricted Subsidiary to,
incur, issue, assume or guarantee any indebtedness for borrowed money (all such
indebtedness for borrowed money incurred, issued, assumed or guaranteed being
hereinafter in this Section called "Debt") secured by a Lien on any property or
assets, whether now owned or hereafter acquired, of the Company or any
Restricted Subsidiary, or any shares of stock of any Restricted Subsidiary,
without effectively providing that the Securities (together with, if the Company
shall so determine, any other Debt (or any bonds, debentures, notes or other
similar evidences of indebtedness, whether or not for borrowed money) of the
Company or such Restricted Subsidiary then existing or thereafter created which
is not subordinated to the Securities) shall be secured equally and ratably with
(or prior to) such Debt, so long as such Debt shall be so secured, unless, after
giving effect thereto, the aggregate amount of all such secured Debt of the
Company and its Restricted Subsidiaries would not exceed 10% of Consolidated
Tangible Net Worth of the Company and its Restricted Subsidiaries; provided,
however, that this Section shall not apply to, and there shall be excluded from
<PAGE>
12
secured Debt in any computation under this Section, Debt secured by:
(1) Liens on property of, or on any shares of stock of, any
corporation existing at the time such corporation becomes a Restricted
Subsidiary;
(2) Liens on property or shares of stock existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary;
(3) Liens on property or shares of stock hereafter acquired (or, in
the case of property, constructed (including construction of improvements
or additions to improvements on existing property)) by the Company or any
Restricted Subsidiary and created prior to, at the time of, or within one
year after such acquisition (or, in the case of property, the completion of
such construction (including construction of improvements or additions to
improvements on existing property) or commencement of commercial operation
of such property, whichever is later) to secure or provide for the payment
of all or any part of the purchase price (or, in the case of property
(including construction of improvements or additions to improvements on
existing property), the construction price) thereof;
(4) Liens in favor of the Company or any Restricted Subsidiary;
(5) Liens in favor of the United States of America, any State thereof
or the District of Columbia, or any political subdivision, agency,
department or other instrumentality thereof, to secure progress, advance or
other payments pursuant to any contract or provisions of any statute;
(6) Liens on property of a person existing at the time such person is
merged into or consolidated with the Company or a Restricted Subsidiary; or
(7) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Lien referred to
in the foregoing clauses (1) to (6), inclusive, provided, however, that (i)
such extension, renewal or replacement Lien shall be limited to all or a
part of the same property or shares of stock that secured the
<PAGE>
13
Lien extended, renewed or replaced (plus improvements (including additions
to improvements) on such property) and (ii) the Debt secured by such Lien
at such time is not increased (except, with respect to a Lien on property,
to the extent that additional Debt was incurred to provide for the payment
of all or any part of the construction price of improvements or additions
to improvements on such property).
SECTION 3.04. Limitation on Disposition of Stock of Restricted
------------------------------------------------
Subsidiaries. The Company will not, and will not permit any Subsidiary to,
- -------------
sell, transfer or otherwise dispose of any shares of Capital Stock of any
Restricted Subsidiary (or of any Subsidiary having direct or indirect control of
any Restricted Subsidiary) except for, subject to Article 4, (i) a sale,
transfer or other disposition of any Capital Stock of any Restricted Subsidiary
(or of any Subsidiary having direct or indirect control of any Restricted
Subsidiary) to a wholly owned Subsidiary of the Company; (ii) a sale, transfer
or other disposition of the entire Capital Stock of any Restricted Subsidiary
(or of any Subsidiary having direct or indirect control of any Restricted
Subsidiary) held by the Company and its Subsidiaries for at least fair value (as
determined by the Board of Directors of the Company acting in good faith); or
(iii) a sale, transfer or other disposition of any Capital Stock of any
Restricted Subsidiary (or of any Subsidiary having direct or indirect control of
any Restricted Subsidiary) for at least fair value (as determined by the Board
of Directors of the Company acting in good faith) if, after giving effect
thereto, the Company and its Subsidiaries would own at least 80% of the issued
and outstanding Voting Stock of such Restricted Subsidiary (or Subsidiary).
SECTION 3.05. Compliance Certificate. The Company shall deliver to the
-----------------------
Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default by the Company and whether or not the signers know of
any Default that occurred during such period. If they do, the certificate shall
describe the Default, its status and what action the Company is taking or
proposes to take with respect thereto. The Company also shall comply with TIA
(S) 314(a)(4).
<PAGE>
14
SECTION 3.06. Further Instruments and Acts. Upon request of the Trustee,
-----------------------------
the Company will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE 4
SUCCESSOR COMPANY
SECTION 4.01. When Company May Merge or Transfer Assets. The Company
------------------------------------------
shall not consolidate with or merge with or into, or convey, transfer or lease
all or substantially all its assets as or entirety to, any person, unless:
(1) the resulting, surviving or transferee person (if not the Company)
shall be a person organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and such
person (if not the Company) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
Securities and this Indenture;
(2) immediately after giving effect to such transaction, no Default
shall have occurred and be continuing; and
(3) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
The resulting, surviving or transferee person shall be the successor
Company, but the predecessor Company in the case of a transfer or lease shall
not be released from the obligation to pay the principal of and interest on the
Securities.
<PAGE>
15
ARTICLE 5
DEFAULTS AND REMEDIES
SECTION 5.01. Event of Default. An "Event of
-----------------
Default" occurs if:
(1) the Company defaults in any payment of interest on any Security
when the same becomes due and payable, and such default continues for a
period of 30 days;
(2) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at its stated maturity, upon
declaration or otherwise;
(3) the Company fails to comply with Section 3.04 or Section 4.01, and
such failure continues for 15 days after the notice specified below;
(4) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in (1), (2) or
(3) above) and such failure continues for 60 days after the notice
specified below;
(5) the principal amount of any indebtedness for borrowed money (other
than the Securities) of the Company or any Restricted Subsidiary is not
paid within any applicable grace period after the final maturity of such
indebtedness or is accelerated by the holders thereof because of an event
of default, the total amount of such indebtedness for borrowed money unpaid
or accelerated exceeds $25,000,000 and such default continues for 15 days
after the notice specified below;
(6) the Company or any Restricted Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
<PAGE>
16
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or
(7) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Restricted
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Restricted
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Restricted Subsidiary;
and the order or decree remains unstayed and in effect for 90 days.
The term "Bankruptcy Law" means Title 11, United States Code, or any other
------------------
Federal or state bankruptcy, insolvency, reorganization or other similar law.
The term "Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
A Default under clause (3), (4) or (5) is not an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the Securities
notify the Company of the Default and the Company does not cure such Default
within the time specified after receipt of such Notice. Such Notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which constitutes an Event of Default or which with the giving of
notice or the lapse of time or both would become an Event of Default under
clause (3), (4) or (5), its status and what action the Company is taking or
proposes to take with respect thereto.
<PAGE>
17
SECTION 5.02. Acceleration. If an Event of Default occurs and is
-------------
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in principal amount of the Securities by notice to the Company and the Trustee,
may declare the principal of and accrued interest on all the Securities to be
due and payable. Upon such a declaration, such principal and interest shall be
due and payable immediately. The Holders of a majority in principal amount of
the Securities by notice to the Trustee and the Company may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
SECTION 5.03. Other Remedies. If an Event of Default occurs and is
---------------
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 5.04. Waiver of Past Defaults. The Holders of a majority in
------------------------
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security or (ii) a Default in respect of a
provision that under Section 8.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any
consequent right.
SECTION 5.05. Control by Majority. The Holders of a majority in principal
--------------------
amount of the Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. However, the
<PAGE>
18
Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 6.01, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking or not taking any action hereunder, the Trustee
shall be entitled to indemnification satisfactory to it in its sole discretion
against all losses and expenses caused by taking or not taking such action.
SECTION 5.06. Limitation on Suits. A Securityholder may not pursue any
--------------------
remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the Securities
make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority of principal amount of the Securities do
not give the Trustee a direction inconsistent with the request during such
60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 5.07. Rights of Holders To Receive Payment. Notwithstanding any
-------------------------------------
other provision of this Indenture, the right of any Holder to receive payment of
principal of and interest on the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
<PAGE>
19
SECTION 5.08. Collection Suit by Trustee. If an Event of Default in
---------------------------
payment of interest or principal specified in Section 5.01(1) or (2) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company for the whole amount of principal and
interest remaining unpaid (together with interest on such unpaid interest to the
extent lawful) and the amounts provided for in Section 6.07.
SECTION 5.09. Trustee May File Proofs of Claim, etc. The Trustee may file
--------------------------------------
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
6.07.
SECTION 5.10. Priorities. If the Trustee collects any money pursuant to
-----------
this Article 5, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 6.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
Third: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Company shall mail or cause to be mailed by first-class mail to each
<PAGE>
20
Securityholder and the Trustee a notice that states the record date, the payment
date and amount to be paid.
SECTION 5.11. Undertaking for Costs. In any suit for the enforcement of
----------------------
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 5.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
SECTION 5.12. Waiver of Stay or Extension Laws. The Company (to the
---------------------------------
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE 6
TRUSTEE
SECTION 6.01. Duties of Trustee. (a) If an Event of Default has occurred
------------------
and is continuing, the Trustee shall exercise the rights and powers vested in it
by this Indenture and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations
<PAGE>
21
shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own wilful misconduct, except
that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received by
it.
(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights or powers,
if it shall have reasonable grounds to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
<PAGE>
22
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section and to the provisions of the TIA.
SECTION 6.02. Rights of Trustee. (a) The Trustee may rely on any document
------------------
believed by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
SECTION 6.03. Individual Rights of Trustee. The Trustee in its individual
-----------------------------
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or co-
paying agent may do the same with like rights. However, the Trustee must comply
with Sections 6.10 and 6.11.
SECTION 6.04. Trustee's Disclaimer. The Trustee shall not be responsible
---------------------
for and makes no representation as to the validity or adequacy of this Indenture
or the Securities, it shall not be accountable for the Company's use of the
<PAGE>
23
proceeds from the Securities, and it shall not be responsible for any statement
of the Company in the Indenture or in any document issued in connection with the
sale of the Securities or in the Securities other than the Trustee's certificate
of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and is continuing
-------------------
and a Trust Officer has actual knowledge thereof, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security,
the Trustee may withhold the notice if and so long as its Board of Directors,
the Executive Committee of its Board of Directors or a trust committee of its
Board of Directors or Trust Officers in good faith determines that withholding
the notice is in the interests of Securityholders.
SECTION 6.06. Reports by Trustee to Holders. As promptly as practicable
------------------------------
after each May 15 beginning with the May 15 following the date of this
Indenture, and in any event prior to July 15 in each year, the Trustee shall, to
the extent so required by TIA (S) 313(a), mail to each Securityholder a brief
report dated as of such May 15 that complies with TIA (S) 313(a). The Trustee
also shall comply with TIA (S) 313(b) and TIA (S) 313(c).
A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each stock exchange on which the Securities are
listed. The Company agrees to notify promptly the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
SECTION 6.07. Compensation and Indemnity. The Company shall pay to the
---------------------------
Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including, but not limited to, costs of collection, costs of preparing and
reviewing reports, certificates and other documents, costs of preparation and
mailing of notices to Securityholders and reasonable costs of counsel retained
by the Trustee in connection with the delivery of an Opinion of Counsel or
otherwise, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and
<PAGE>
24
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Company shall indemnify the Trustee against any
and all loss, liability or expense (including attorneys' fees) incurred by it in
connection with the administration of this trust and the performance of its
duties hereunder, including the costs and expenses of enforcing this Indenture
(including this Section 6.07) and of defending itself against any claims
(whether asserted by any Securityholder, the Company or otherwise). The Trustee
shall notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
may have separate counsel and the Company shall pay the fees and expenses of
such counsel. The Company need not reimburse any expense or indemnify against
any loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Section 6.07 shall not be
subordinate to any other liability or indebtedness of the Company.
The Company's payment obligations pursuant to this Section shall survive
the discharge of this Indenture.
When the Trustee incurs expenses after the occurrence of a Default
specified in Section 5.01(6) or (7), the expenses are intended to constitute
expenses of administration under the Bankruptcy Law.
SECTION 6.08. Replacement of Trustee. The Trustee may resign at any time
-----------------------
by so notifying the Company. The Holders of a majority in principal amount of
the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 6.10;
(2) the Trustee is adjudged bankrupt or insolvent;
<PAGE>
25
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason (the Trustee in such event being referred to herein as
the retiring Trustee), the Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Securityholders. The retiring Trustee shall promptly transfer all property held
by it as Trustee to the successor Trustee, subject to the lien provided for in
Section 6.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in principal amount of the Securities may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section,
the Company's obligations under Section 6.07 shall continue for the benefit of
the retiring Trustee.
SECTION 6.09. Successor Trustee by Merger. If the Trustee consolidates
----------------------------
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
<PAGE>
26
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 6.10. Eligibility; Disqualification. The Trustee shall at all
------------------------------
times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
of TIA (S) 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.
SECTION 6.11. Preferential Collection of Claims Against Company. The
--------------------------------------------------
Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship
listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be
subject to TIA (S) 311(a) to the extent indicated.
ARTICLE 7
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 7.01. Discharge of Liability on Securities; Defeasance. (a) When
-------------------------------------------------
(i) the Company delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.07) for cancelation or (ii) all
outstanding Securities have become due and payable and the Company irrevocably
deposits with the Trustee funds sufficient to pay at maturity all outstanding
Securities, including interest thereon (other than Securities replaced pursuant
to Section 2.07), and if in either case the Company
<PAGE>
27
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Sections 7.01(c) and 7.06, cease to be of further effect. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on demand
of the Company accompanied by an Officers' Certificate and an Opinion of Counsel
and at the cost and expense of the Company.
(b) Subject to Sections 7.01(c), 7.02 and 7.06, the Company at any time may
terminate all its obligations under the Securities and this Indenture
("defeasance option").
If the Company exercises its defeasance option, payment of the Securities
may not be accelerated because of an Event of Default.
Upon satisfaction of the conditions set forth herein and upon request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's obligations in
Sections 2.03, 2.04, 2.05, 2.06, 2.07, 6.07, 6.08, 7.04, 7.05 and 7.06 shall
survive until the Securities have been paid in full. Thereafter, the Company's
obligations in Sections 6.07, 7.04 and 7.05 shall survive.
SECTION 7.02. Conditions to Defeasance. The Company may exercise its
-------------------------
defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal and interest on
the Securities to maturity;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity;
(3) 91 days pass after the deposit is made and during the 91-day
period no Default specified in
<PAGE>
28
Section 5.01(6) or (7) with respect to the Company occurs which is
continuing at the end of the period;
(4) no Default has occurred and is continuing on the date of such
deposit and after giving effect thereto;
(5) the deposit does not constitute a default under any other
agreement binding on the Company;
(6) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940; and
(7) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
7 have been complied with.
SECTION 7.03. Application of Trust Money. The Trustee shall hold in trust
---------------------------
money or U.S. Government Obligations deposited with it pursuant to this Article
7. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities. The Trustee shall
not be required to reinvest any payments of principal or interest received by
the Trustee in respect of any U.S. Government Obligations.
SECTION 7.04. Repayment to Company. Subject to Section 6.07, the Trustee
---------------------
and the Paying Agent shall promptly turn over to the Company upon request any
excess money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years, and,
thereafter, Securityholders entitled to the money must look to the Company for
payment as general creditors.
SECTION 7.05. Indemnity for Government Obligations. The Company shall pay
-------------------------------------
and shall indemnify the Trustee against any tax, fee or other charge imposed on
or assessed
<PAGE>
29
against deposited U.S. Government Obligations or the principal and interest
received on such U.S. Government Obligations.
SECTION 7.06. Reinstatement. If the Trustee or Paying Agent is unable to
--------------
apply any money or U.S. Government Obligations in accordance with this Article 7
by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 7 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with this Article 7; provided, however, that, if the Company has made any
payment of interest on or principal of any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE 8
AMENDMENTS
SECTION 8.01. Without Consent of the Holders. The Company and the
-------------------------------
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 4;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Internal Revenue Code of 1986, as amended, or in a
manner such that the uncertificated Securities are described in Section
163(f)(2)(B) of the Internal Revenue Code of 1986, as amended;
<PAGE>
30
(4) to add guarantees with respect to the Securities;
(5) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(6) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA; or
(7) to make any change that does not adversely affect the rights of
any Securityholder.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 8.02. With Consent of Holders. The Company and the Trustee may
------------------------
amend this Indenture or the Securities without notice to any Securityholder but
with the written consent of the Holders of at least a minority in principal
amount of the Securities. However, without the consent of each Securityholder
affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or extend the fixed maturity of any
Security;
(4) make any Security payable in a currency other than that stated in
the Security; or
(5) make any change in Section 5.04 or 5.07 or this Section.
It shall not be necessary for the consent of the Holders under this Section
8.02 to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
<PAGE>
31
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 8.03. Compliance with Trust Indenture Act. Every amendment to
------------------------------------
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 8.04. Revocation and Effect of Consents and Waivers. A consent to
----------------------------------------------
an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or portion of the Security if the Trustee receives the notice of revocation
before the date the amendment or waiver becomes effective. After an amendment
or waiver becomes effective, it shall bind every Securityholder.
The Company shall fix a record date for the purpose of determining the
Securityholders entitled to give their consent or take any other action
described above and the Company shall give the Trustee written notice of such
date. Notwithstanding the immediately preceding paragraph, those persons who
were Securityholders at such record date (or their duly designated proxies), and
only those persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such persons
continue to be Holders after such record date. No such consent shall be valid
or effective for more than 120 days after such record date.
SECTION 8.05. Notation on or Exchange of Securities. If an amendment
--------------------------------------
changes the terms of a Security, the Company may require the Holder of the
Security to deliver it to the Trustee. The Company may cause the Trustee to
place an appropriate notation on the Security regarding the changed terms and
return it to the Holder. Alternatively, if the Company so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
<PAGE>
32
SECTION 8.06. Trustee To Sign Amendments. The Trustee shall sign any
---------------------------
amendment authorized pursuant to this Article 8 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 6.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Trust Indenture Act Controls. If any provision of this
-----------------------------
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 9.02. Notices. Any notice or communication shall be in writing
--------
and delivered in person or mailed by first-class mail addressed as follows:
if to the Company:
GEICO Corporation
One GEICO Plaza
Washington, D.C. 20076-0001
Attention: Corporate Secretary
if to the Trustee:
United States Trust Company of New York
114 West 47th Street (15th Floor)
New York, N.Y. 10036
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
<PAGE>
33
Any notice or communication mailed to a Securityholder shall be mailed to
the Securityholder at the Security-holder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 9.03. Communication by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S) 312(c).
SECTION 9.04. Certificate and Opinion as to Conditions Precedent. Upon
---------------------------------------------------
any request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 9.05. Statements Required in Certificate or Opinion. Each
----------------------------------------------
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the
<PAGE>
34
statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such covenant or condition has been complied with.
SECTION 9.06. When Securities Disregarded. In determining whether the
----------------------------
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether a Trust Officer
shall be protected in relying on any such direction, waiver or consent, only
Securities which a Trust Officer actually knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 9.07. Rules by Trustee, Paying Agent and Registrar. The Trustee
---------------------------------------------
may make reasonable rules for action by or a meeting of Securityholders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 9.08. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday
---------------
or a day on which banking institutions are not required to be open in the State
of New York. If a payment date is a Legal Holiday, payment shall be made on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period. If a regular record date is a Legal Holiday, the
record date shall not be affected.
SECTION 9.09. Governing Law. This Indenture and the Securities shall be
--------------
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the laws of another jurisdiction would be
required thereby.
<PAGE>
35
SECTION 9.10. No Recourse Against Others. A director, officer, employee
---------------------------
or stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 9.11. Successors. All agreements of the Company in this
-----------
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 9.12. Multiple Originals. The parties may sign any number of
-------------------
copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 9.13. Table of Contents; Headings. The table of contents, cross-
----------------------------
reference sheet and headings of the Articles and Sections of this Indenture have
been inserted for convenience of reference only, are not intended to be
considered a part hereof and shall not modify or restrict any of the terms or
provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
GEICO CORPORATION,
Attest:
by
- --------------------------- ---------------------------
Name: Rosalind A. Phillips Name: W. Alvon Sparks, Jr.
Title: Corporate Secretary Title: Executive Vice
President and Chief
Financial Officer
<PAGE>
36
UNITED STATES TRUST COMPANY OF
NEW YORK,
Attest:
by
- ------------------------------ ------------------------------
Name: Name:
Title: Title:
<PAGE>
EXHIBIT A
[FORM OF FACE OF SECURITY]
NO. $
___ % NOTE DUE 2005
GEICO Corporation, a Delaware corporation, promises to pay to , or
registered assigns, the principal sum of Dollars on _______, 2005.
Interest Payment Dates: Each _______ and ________.
Record Dates: Each _______ and _______.
Additional provisions of this Security are set forth on the other side of this
Security.
Dated:
GEICO CORPORATION,
BY _____________________________
President and Chief Executive
Officer-Insurance Operations
_____________________________
President and Chief Executive
Officer-Capital Operations
_____________________________
Secretary
A-1
<PAGE>
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee, certifies that this is [Seal]
one of the Securities referred
to in the Indenture.
by_______________________
Authorized Signatory
A-2
<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
___ % NOTE DUE 2005
1. Interest
--------
GEICO Corporation, a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on ________ and ________ of each year. Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from __________, 1995. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay interest
on overdue principal at the rate borne by the Securities plus 1% per annum, and
it shall pay interest on overdue installments of interest at the rate borne by
the Securities plus 1% per annum to the extent lawful.
2. Method of Payment
-----------------
The Company will pay interest on the Securities (except defaulted interest)
to the persons who are registered holders of Securities at the close of business
on the ________ or ________ next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
--------------------------
Initially, United States Trust Company of New York, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar at any time
and shall promptly notify the Securityholders thereof. The Company or
A-3
<PAGE>
any of its Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
---------
The Company issued the Securities under an Indenture dated as of _________,
1995 ("Indenture"), between the Company and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the Company limited to
$100,000,000 aggregate principal amount (subject to Section 2.07 of the
Indenture). The Indenture imposes certain limitations on the creation of Liens
by the Company and the Restricted Subsidiaries.
5. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations of
$1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture.
6. Persons Deemed Owners
---------------------
The registered holder of this Security may be treated as the owner of it
for all purposes.
7. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an
A-4
<PAGE>
abandoned property law designates another person. After any such payment,
Holders entitled to the money must look only to the Company and not to the
Trustee for payment.
8. Defeasance
----------
Subject to certain conditions, the Company at any time may terminate
certain of its obligations under the Securities and the Indenture if the Company
deposits with the Trustee money or U.S. Government Obligations for the payment
of principal and interest on the Securities to maturity.
9. Amendment, Waiver
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount outstanding of the Securities and (ii) any
default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount outstanding of the
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company and the Trustee may amend the
Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 4 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to comply with the Act or to add additional covenants or surrender Company
rights, or to make any change that does not adversely affect the rights of any
Securityholder.
10. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) default for 30 days in
payment of interest on the Securities; (ii) default in payment of principal on
the Securities at maturity; (iii) failure by the Company to comply with other
agreements in the Indenture or the Securities, subject to notice and lapse of
time; (iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other indebtedness of the Company or any
Restricted Subsidiary if the amount accelerated (or so unpaid) exceeds
$25,000,000 and continues for 15 days after the required notice to the Company;
and (v) certain
A-5
<PAGE>
events of bankruptcy or insolvency. Subject to certain exceptions, if an Event
of Default occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the Securities may declare all the Securities to be due
and payable immediately.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of principal or interest) if it determines that withholding notice is
in their interest.
11. Trustee Dealings with the Company
---------------------------------
Subject to certain limitations imposed by the Act, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its affiliates and may otherwise deal with the Company
or its affiliates with the same rights it would have if it were not Trustee.
12. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the Company or
the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
13. Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
A-6
<PAGE>
14. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
15. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities. No representation is made as to the accuracy of such
numbers either as printed on the Securities or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.
The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture which has in it the
text of this Security in larger type. Requests may be made to:
GEICO Corporation
One GEICO Plaza
Washington, D.C. 20076-0001
Attention of Corporate Secretary
A-7
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
_____________________________________________________
(Print or type assignee's name, address and zip code)
_____________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ____________________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Date: __________________ Your Signature: ____________________
Sign exactly as your name appears on the other side of this Security.
A-8
<PAGE>
EXHIBIT 5
Charles R. Davies
Vice President
And
General Counsel
April , 1995
GEICO Corporation
GEICO Plaza
Washington, D.C. 20076
Dear Sirs:
I am Vice President and General Counsel of GEICO Corporation, a
Delaware corporation (the "Company"), and in such capacity have represented the
Company in connection with a Registration Statement on Form S-3 (the
"Registration Statement") relating to the proposed public offering of the
Company's Notes Due 2005 (the "Notes").
I have examined the Certificate of Incorporation and Bylaws of the
Company, such records of the corporate proceedings as I have deemed relevant,
the Registration Statement in the form in which it is to be filed with the
Securities and Exchange Commission, the proposed form of Underwriting Agreement
to be entered into between the Company and Salomon Brothers Inc (the
"Underwriting Agreement"), the proposed form of Indenture to be entered into
between the Company and United States Trust Company of New York, as Trustee (the
"Trustee") (the "Indenture"), and such other certificates, records and documents
as I deemed necessary for the purpose of this opinion.
Based on the foregoing, I am of the opinion that the Notes, when duly
executed by the Company, authenticated by the Trustee in accordance with the
terms of the Indenture and duly issued and delivered by the Company against
payment therefor in accordance with the Underwriting Agreement will be duly
issued and will constitute valid and binding obligations of the Company entitled
to the benefits of the Indenture.
I know that I am referred to under the heading "Legal Matters" in the
Prospectus forming a part of the Registration Statement, and I consent to such
use of my name in the Registration Statement and to the use of this opinion for
filing as an exhibit to the Registration Statement.
Very truly yours,
Charles R. Davies
<PAGE>
EXHIBIT 12
GEICO CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net income before taxes and
cumulative effects of accounting
changes $251,194 $378,620 $218,001 $240,994 $222,808
Loss undistributed earnings of
less than 50% owned affiliates - (2,937) (1,382) (3,539) (2,940)
Adjustment to include 100% of
pretax losses of unconsolidated
subsidiaries - (251) (331) (437) (374)
Add fixed charges, excluding
capitalized interest 32,605 24,529 33,259 36,720 36,869
-------- -------- -------- -------- --------
Adjusted earnings 283,799 399,961 249,547 273,738 256,363
-------- -------- -------- -------- --------
Interest expense 27,696 19,975 27,669 30,097 30,923
Interest capitalized 166 1,429 267 - -
Portion of rent representative
of interest (one-third of rent
expense) 4,909 4,554 5,590 6,623 5,946
-------- -------- -------- -------- --------
Fixed Charges 32,771 25,958 33,526 36,720 36,869
-------- -------- -------- -------- --------
Ratio of earnings to fixed charges 8.66 15.41 7.44 7.45 6.95
======== ======== ======== ======== ========
</TABLE>
<PAGE>
EXHIBIT 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
GEICO Corporation (the Company) on Form S-3 of our report dated February 17,
1995, on our audit of the consolidated financial statements of the Company and
its subsidiaries as of December 31, 1994 and 1993, and for the three years in
the period ended December 31, 1994, which appears on page 27 of the Company's
1994 Annual Report to Shareholders and is incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994, and
of our report dated February 17, 1995 on the related Financial Statement
Schedules, which appears on page 17 of such Annual Report on Form 10-K. We also
consent to the reference to our Firm under the heading "Experts" in such
registration statement.
Coopers & Lybrand L.L.P.
Washington, D.C.
April 6, 1995
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
__________________________
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
__________________________
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5459866
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036
New York, New York (Zip Code)
(Address of principal
executive offices)
__________________________
GEICO Corporation
(Exact name of OBLIGOR as specified in its charter)
Delaware 52-1135801
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
One Geico Plaza
Washington, DC 20076-0001
(Address of principal executive offices) (Zip code)
__________________________
$100,000,000 ____% Notes Due 2005
(Title of the indenture securities)
<PAGE>
- 2 -
GENERAL
1. General Information
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System).
Federal Deposit Insurance Corporation, Washington, D. C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3. Voting Securities of the Trustee
--------------------------------
2,999,020 shares of Common Stock - Par Value $5 per share
4. Trusteeships under Other Indentures
-----------------------------------
If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following
information:
(a) Title of the securities outstanding under each such indenture.
GEICO Corporation 9.15% Debentures due 2021
GEICO Corporation 7.35% Debentures due 2023.
(b) A brief statement of the facts relied upon as a basis for the claim
that no conflicting interest within the meaning of Section 310(b)(1)
of the Act arises as a result of the trusteeship under any such
indenture, including a statement as to how the indenture
<PAGE>
- 3 -
securities will rank as compared with the securities issued under such
other indenture.
The facts relied upon as a basis that no conflicting interest within
the meaning of Section 310(b)(1) of the Act arises as a result of
trusteeships under the indenture dated as of September 15, 1991 under
which the 9.15% Debentures due 2021 were issued and under the
indenture dated as of July 1, 1993 under which the 7.35% Debentures
due 2023 were issued (the "other indentures") under which the GEICO
Corporation Notes due 2005 (the "indenture to be qualified") will be
issued is that the indenture to be qualified and the other indentures
are wholly unsecured. The securities to be issued under the indenture
to be qualified will rank equally as to the right of payment with the
other indentures.
5. Interlocking Directorates and Similar Relationships with the Obligor or
-----------------------------------------------------------------------
Underwriters
------------
Not applicable
6. Voting Securities of the Trustee Owned by the Obligor or its Officials
----------------------------------------------------------------------
Not applicable
7. Voting Securities of the Trustee Owned by Underwriters or their Officials
-------------------------------------------------------------------------
Not applicable
8. Securities of the Obligor Owned or Held by the Trustee
------------------------------------------------------
Not applicable
9. Securities of Underwriters Owned or Held by the Trustee
-------------------------------------------------------
Not applicable
10. Ownership or Holdings by the Trustee of Voting Securities of Certain
--------------------------------------------------------------------
Affiliates or Security Holders of the Obligor
---------------------------------------------
Not applicable
<PAGE>
- 4 -
11. Ownership or Holdings by the Trustee of any Securities of a Person Owning
-------------------------------------------------------------------------
50 Percent or More of the Voting Securities of the Obligor
----------------------------------------------------------
Not applicable.
12. Indebtedness of the Obligor to the Trustee
------------------------------------------
Not applicable.
13. Defaults by the Obligor
-----------------------
Not applicable.
14. Affiliations with the Underwriters
----------------------------------
Not applicable.
15. Foreign Trustee
---------------
Not applicable.
16. List of Exhibits
----------------
T-1.1 -- "Chapter 204, Laws of 1853, An Act to Incorporate the United
States Trust Company of New York, as Amended", is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on September 20,
1991 with the Securities and Exchange Commission (the
"Commission") pursuant to the Trust Indenture Act of 1939
(Registration No. 2221291).
<PAGE>
- 5 -
16. List of Exhibits
----------------
(cont'd)
T-1.2 -- The trustee was organized by a special act of the New York
Legislature in 1853 prior to the time that the New York Banking
Law was revised to require a Certificate of authority to commence
business. Accordingly, under New York Banking Law, the Charter
(Exhibit T-1.1) constitutes an equivalent of a certificate of
authority to commence business.
T-1.3 -- The authorization of the trustee to exercise corporate trust
powers is contained in the Charter (Exhibit T-1.1).
T-1.4 -- The By-laws of the United States Trust Company of New York,
as amended to date, are incorporated by reference to Exhibit T-
1.4 to Form T-1 filed on September 20, 1991 with the Commission
pursuant to the Trust Indenture Act of 1939 (Registration No.
2221291).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939.
T-1.7 -- A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
<PAGE>
- 6 -
NOTE
As of March 31, 1995, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U. S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility, as to matters
peculiarly within the knowledge of the obligor or its directors, the
trustee has relied upon information furnished to it by the obligor and will
rely on information to be furnished by the obligor and the trustee
disclaims responsibility for the accuracy or completeness of such
information.
_____________________
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, United States Trust Company of New York, a corporation organized
and existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New
York, on the 6th day of April, 1995.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
/s/ Patricia Stermer
By: _______________________________________
Patricia Stermer
Assistant Vice President
PST/pg
033195
<PAGE>
EXHIBIT T-1.6
- -------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
March 19, 1992
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/ Gerard F. Ganey
---------------------
S/Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
Consolidated Report of Condition of
UNITED STATES TRUST COMPANY OF NEW YORK
and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System,
at the close of business on December 31, 1994, published in accordance with a
call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN THOUSANDS
<S> <C>
Cash and balances due from depository institutions:
a. Noninterest bearing balances and currency and coin: $ 164,610
b. Interest bearing balances: 21,524
Securities: 1,033,526
Federal funds sold and securities purchased under
agreements to resell 120,000
Loans 1,626,898
LESS: Allowance credit losses 14,699
Net Loans 1,612,199
Premises and Equipment: 109,346
Other assets: 162,006
----------
TOTAL ASSETS: $3,223,211
==========
LIABILITIES
Deposits: $2,440,371
(1) Non interest bearing: 1,031,538
(2) Interest bearing: 1,408,833
Federal funds purchased, securities sold under agreements
to repurchase and other borrowings: 350,515
Accounts Payable & Accrued Liabilities 148,078
Long Term Debt 60,924
----------
TOTAL LIABILITIES: $2,999,888
==========
EQUITY CAPITAL
Common Stock: $ 11,581
Capital Surplus: 72,605
Treasury Stock, at cost: (86,139)
Loan to ESOP (16,171)
Net unrealized holding gains (losses) on available-for-sale
securities (3,192)
TOTAL EQUITY CAPITAL: $ 223,323
----------
TOTAL LIABILITY AND EQUITY CAPITAL: $3,223,211
==========
</TABLE>
<PAGE>
I, RICHARD E. BRINKMANN, SENIOR VICE PRESIDENT & CONTROLLER, of the above-named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
RICHARD E. BRINKMANN, SVP & CONTROLLER
December 31, 1994
We, the undersigned directors, attest the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
H. MARSHALL SCHWARZ ) Directors
JEFFREY S. MAURER )
FREDERICK S. WONHAM )
PST/pg
033195
