<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
--------------- THE LOEWEN GROUP INC.
LOEWEN GROUP INTERNATIONAL, INC. (Exact name of registrant as specified
(Exact name of registrant as specified in its charter)
in its charter)
BRITISH COLUMBIA
DELAWARE
(State or other jurisdiction of incorporation or organization)
7261 7261
(Primary Standard Industrial Classification Code Number)
61-1264590 98-0121376
(I.R.S. Employer Identification Number)
50 EAST RIVERCENTER BOULEVARD 4126 NORLAND AVENUE
SUITE 800 BURNABY, BRITISH COLUMBIA
COVINGTON, KENTUCKY 41011 CANADA V5G 3S8
(606) 431-6663 (604) 299-9321
(Address, including zip or postal code, and telephone number, including area
code, of registrants' principal executive offices)
THE CORPORATION TRUST COMPANY TIMOTHY R. HOGENKAMP
1209 ORANGE STREET LOEWEN GROUP INTERNATIONAL, INC.
WILMINGTON, DELAWARE 19801 50 EAST RIVERCENTER, SUITE 800
(302) 658-7581 COVINGTON, KENTUCKY 41011
(606) 431-6663
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
with copies to:
DWIGHT K. HAWES
VICE-PRESIDENT, FINANCE MICHELLE L. JOHNSON
THE LOEWEN GROUP INC. THELEN, MARRIN, JOHNSON & BRIDGES
4126 NORLAND AVENUE TWO EMBARCADERO CENTER, SUITE 2100
BURNABY, BRITISH COLUMBIA SAN FRANCISCO, CALIFORNIA 94111-3995
CANADA V5G 3S8
Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT (1) OFFERING PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7 1/2% Series 3 Senior Guaranteed
Notes due 2001 ("Series 3
Exchange Notes")................. $225,000,000 100% $225,000,000 $77,586.21
- ----------------------------------------------------------------------------------------------------
8 1/4% Series 4 Senior Guaranteed
Notes due 2003 ("Series 4
Exchange Notes")................. $125,000,000 100% $125,000,000 $43,103.45
- ----------------------------------------------------------------------------------------------------
Guarantees of Series 3 Exchange
Notes and Series 4 Exchange
Notes............................ n/a n/a n/a n/a
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933, as amended.
---------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
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 or on such date as the Commission, acting pursuant to Section 8(a)
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATIONS-K
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION IN FORM S-4 LOCATION OR CAPTION IN PROSPECTUS
----------------------------------- ---------------------------------
<C> <S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement
and Outside Front Cover Page of Cover Page of Registration Statement;
Prospectus......................... Cross Reference Sheet; Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus................ Inside Front Cover Page of Prospectus;
Outside Back Cover Page of
Prospectus; Enforcement of Certain
Civil Liabilities Against Guarantor;
Available Information; Incorporation
of Certain Information by Reference
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other Prospectus Summary; Risk Factors;
Information........................ Business
4. Terms of the Transaction........... Prospectus Summary; The Exchange
Offer; Description of Exchange Notes;
Certain Federal Income Tax
Considerations
5. Pro Forma Financial Information.... Not Applicable
6. Material Contacts With the Company
Being Acquired..................... Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters.......... Not Applicable
8. Interests of Named Experts and
Counsel............................ Not Applicable
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities.................... Not Applicable
B. INFORMATION ABOUT THE REGISTRANTS
10. Information With Respect to S-3
Registrants....................... Prospectus Summary; Risk Factors;
Recent Developments; Consolidated
Capitalization; Business; Description
of Exchange Notes
11. Incorporation of Certain
Information by Reference.......... Incorporation of Certain Information
by Reference
12. Information With Respect to S-2 or
S-3 Registrants................... Not Applicable
13. Incorporation of Certain
Information by Reference.......... Not Applicable
14. Information With Respect to
Registrants Other Than S-2 or S-3
Registrants....................... Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION IN FORM S-4 LOCATION OR CAPTION IN PROSPECTUS
----------------------------------- ---------------------------------
<C> <S> <C>
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
15. Information With Respect to S-3
Companies......................... Not Applicable
16. Information With Respect to S-2 or
S-3 Companies..................... Not Applicable
17. Information With Respect to
Companies Other Than S-2 or S-3
Companies......................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents
or Other Authorizations Are to Be
Solicited......................... Not Applicable
19. Information if Proxies, Consents
or Other Authorizations Are Not to
Be Solicited or in an Exchange Incorporation of Certain Information
Offer............................. by Reference
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THE EXCHANGE NOTES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. EXCHANGE NOTES MAY NOT BE ISSUED NOR MAY +
+OFFERS TO EXCHANGE BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO EXCHANGE +
+NOR SHALL THERE BE ANY ISSUANCE OF EXCHANGE NOTES 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 , 1996
LOEWEN GROUP INTERNATIONAL, INC.
OFFER TO EXCHANGE
$225,000,000 7 1/2% SERIES 3 SENIOR GUARANTEED NOTES DUE 2001
FOR
ALL OUTSTANDING 7 1/2% SERIES 1 SENIOR GUARANTEED NOTES DUE 2001
AND
$125,000,000 8 1/4% SERIES 4 SENIOR GUARANTEED NOTES DUE 2003
FOR
ALL OUTSTANDING 8 1/4% SERIES 2 SENIOR GUARANTEED NOTES DUE 2003
GUARANTEED BY
THE LOEWEN GROUP INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK TIME
ON , 1996, UNLESS EXTENDED.
-----------
Loewen Group International, Inc., a Delaware corporation ("LGII"), hereby
offers (the "Exchange Offer"), upon the terms and subject to conditions set
forth in this Prospectus ("Prospectus") and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), to exchange (i) up to an aggregate
principal amount of $225,000,000 of its 7 1/2% Series 3 Senior Guaranteed Notes
due 2001 (the "Series 3 Exchange Notes") for up to an aggregate principal
amount of $225,000,000 of its outstanding 7 1/2% Series 1 Senior Guaranteed
Notes due 2001 (the "Series 1 Notes") and (ii) up to an aggregate principal
amount of $125,000,000 of its 8 1/4% Series 4 Senior Guaranteed Notes due 2003
(the "Series 4 Exchange Notes" and, together with the Series 3 Exchange Notes,
the "Exchange Notes") for up to an aggregate principal amount of $125,000,000
of its outstanding 8 1/4% Series 2 Senior Guaranteed Notes due 2003 (the
"Series 2 Notes" and together with the Series 1 Notes, the "Outstanding
Notes"). The terms of the Series 3 Exchange Notes are identical in all material
respects to those of the Series 1 Notes, and the terms of the Series 4 Exchange
Notes are identical in all material respects to those of the Series 2 Notes,
except for certain transfer restrictions and registration rights relating to
the Outstanding Notes and except for certain interest provisions relating to
such registration rights. The Exchange Notes will be issued pursuant to, and
entitled to the benefits of, the Indenture (as defined herein) governing the
Outstanding Notes. The Exchange Notes and the Outstanding Notes are sometimes
referred to collectively as the "Notes."
The Exchange Notes will be fully and unconditionally guaranteed, on a senior
basis (the "Guarantees"), by The Loewen Group Inc., a corporation under the
laws of British Columbia, Canada ("Loewen" or the "Guarantor" and, together
with its subsidiaries and associated entities, the "Company"). The Exchange
Notes and the Guarantees will be unsecured senior obligations of LGII and
Loewen, respectively, and will rank pari passu in right of payment with all
unsecured senior indebtedness of LGII and Loewen, respectively.
The Notes include a covenant (the "Lien Limitation") limiting Liens (as
defined) to Permitted Liens (as defined). On February 14, 1996, LGII signed a
commitment letter with a Canadian bank in respect of a new five-year $750
million secured revolving credit facility, which is expected to close by May
31, 1996 (the "New Bank Facility"). The New Bank Facility is expected to be
secured by, among other things, a pledge for the benefit of the lenders under
the New Bank Facility of substantially all of the shares of the direct and
indirect United States and Canadian subsidiaries in which Loewen directly or
indirectly holds more than a 50% voting or economic interest and all of the
assets of LGII (LGII does not have material assets other than financial assets)
(collectively, the "Collateral"). In order to qualify as a Permitted Lien, the
Lien secured by the Collateral will be shared equally and ratably with the
holders of the Indebtedness (as defined) evidenced by the Notes. The Lien
secured by the Collateral also will be shared equally and ratably with all
other holders of Pari Passu Indebtedness (as defined). However, the holders of
the Notes will not have an independent right to require the Lien secured by the
Collateral to remain in place or to require any other security for the Notes.
As at December 31, 1995, the aggregate amount of outstanding Pari Passu
Indebtedness was $771 million, after giving effect to the Initial Notes
Offering (defined herein), the 1996 Equity Offering (defined herein) and the
application of the respective net proceeds thereof. See "Description of
Exchange Notes," "Description of Certain Indebtedness" and "New Bank Facility."
The Notes and the Guarantees are effectively subordinated in right of payment
to all existing and future liabilities, including trade payables, of the
subsidiaries of LGII and Loewen. As at December 31, 1995, the aggregate amount
of Indebtedness of LGII's subsidiaries (excluding intercompany indebtedness)
was approximately $61 million, and the aggregate amount of Indebtedness of
Loewen's subsidiaries other than LGII and its subsidiaries (excluding
intercompany Indebtedness) was approximately $10 million.
LGII will accept for exchange any and all Outstanding Notes that are properly
tendered in the Exchange Offer prior to 5:00 p.m., New York time, on ,
1996, unless extended by LGII, in its sole discretion (the "Expiration Date").
The Exchange Offer will not in any event be extended to a date beyond ,
1996. Tenders of Outstanding Notes may be withdrawn at any time prior to 5:00
p.m., New York time, on the Expiration Date. If LGII terminates the Exchange
Offer and does not accept for exchange any Outstanding Notes with respect to
the Exchange Offer, LGII will promptly return the Outstanding Notes to the
tendering holders thereof. The Exchange Offer is not conditioned upon any
minimum principal amount of Outstanding Notes being tendered for exchange, but
is otherwise subject to certain customary conditions. The Outstanding Notes may
be tendered only in integral multiples of $1,000.
SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED CAREFULLY IN CONNECTION WITH THE EXCHANGE OFFER.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------
THE DATE OF THIS PROSPECTUS IS JUNE , 1996.
<PAGE>
Interest on the Exchange Notes will accrue from the date of issuance thereof
and will be payable semi-annually on April 15 and October 15 of each year,
commencing on October 15, 1996. Holders of the Exchange Notes will receive
interest on October 15, 1996 from the date of initial issuance of the
Outstanding Notes. Interest on the Outstanding Notes accepted for exchange
will cease to accrue upon issuance of the respective Exchange Notes. The
Series 3 Exchange Notes will mature on April 15, 2001, and the Series 4
Exchange Notes will mature on April 15, 2003. The Series 3 Exchange Notes will
not be redeemable prior to maturity. The Series 4 Exchange Notes will be
redeemable at the option of LGII, in whole or in part, at any time on or after
April 15, 2000 at the redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the redemption date. In the event of a Change of
Control (as defined herein), LGII will be obligated to make an offer to
purchase all of the Notes then outstanding at a purchase price equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if any, to
the purchase date. In addition, LGII will be obligated to make an offer to
purchase Notes in the event of certain asset sales. See "Description of
Exchange Notes."
The Exchange Notes are being offered hereunder in order to satisfy certain
obligations of LGII and Loewen contained in the Registration Rights Agreement
dated March 20, 1996 (the "Registration Rights Agreement") by and among LGII
and Loewen and Smith Barney, Inc., Alex. Brown & Sons Incorporated, Morgan
Stanley & Co. Incorporated, Nesbitt Burns Securities Inc. and RBC Dominion
Securities Corporation, as the initial purchasers (the "Initial Purchasers")
with respect to the initial sale of the Outstanding Notes. Based on
interpretations by the staff of the Securities and Exchange Commission (the
"Commission"), the Exchange Notes issued pursuant to the Exchange Offer in
exchange for Outstanding Notes may be offered for resale, resold and otherwise
transferred by respective holders thereof (other than any such holder which is
an "affiliate" of LGII or Loewen within the meaning of Rule 405 under the
Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act of 1933, as amended (the "Securities
Act"), provided that the Exchange Notes are acquired in the ordinary course of
such holder's business and such holder has no arrangement with any person to
participate in the distribution of such Exchange Notes and is not engaged in
and does not intend to engage in a distribution of the Exchange Notes. In the
event that applicable interpretations by the staff of the Commission change or
otherwise do not permit resales of the Exchange Notes without compliance with
the Securities Act, holders of Exchange Notes who transfer Exchange Notes in
violation of the prospectus delivery provisions of the Securities Act or
without an exemption from registration thereunder may incur liability
thereunder. The Company does not assume or indemnify holders against such
liability. Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of the Exchange Notes received in exchange for Outstanding Notes
if such Exchange Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. Each of LGII and Loewen
has agreed that, for a period of 180 days after the Expiration Date, it will
make this Prospectus available to any broker-dealer for use in connection with
any such resale. This Prospectus may not be used for any other offers to
resell or re-transfer any Exchange Notes, whether by a broker-dealer or
otherwise. See "Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the Notes.
There can be no assurance as to the liquidity of any markets that may develop
for the Exchange Notes, the ability of holders to sell the Exchange Notes or
the price at which holders would be able to sell the Exchange Notes. LGII does
not intend to list the Exchange Notes for trading on any national securities
exchange or over-the-counter market system. Future trading prices of the
Exchange Notes will depend on many factors including, among other things,
prevailing interest rates, the Company's operating results and the market for
similar securities. Certain of the Initial Purchasers have advised LGII that
they intend to make a market in the Exchange Notes offered hereby. However,
the Initial Purchasers are not obligated to do so and any market making may be
discontinued at any time without notice.
Neither LGII nor Loewen will receive any proceeds from the Exchange Offer.
LGII has agreed to pay the expenses incident to the Exchange Offer. No
underwriter is being used in connection with this Exchange Offer.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
THE CORPORATE SECRETARY OF THE LOEWEN GROUP INC., 4126 NORLAND AVENUE,
BURNABY, BRITISH COLUMBIA, V5G 3S8, CANADA; TELEPHONE (604) 299-9321. IN ORDER
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
, 1996.
UNTIL , 1996, ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES
MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION
OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
----------------
NO SECURITIES COMMISSION OR SIMILAR AUTHORITY IN CANADA HAS IN ANY WAY
PASSED UPON THE MERITS OF THE SECURITIES OFFERED HEREUNDER AND ANY
REPRESENTATION TO THE CONTRARY IS AN OFFENSE. THE SECURITIES OFFERED HEREUNDER
HAVE NOT BEEN AND WILL NOT BE QUALIFIED FOR SALE UNDER THE SECURITIES LAWS OF
CANADA AND, SUBJECT TO CERTAIN EXCEPTIONS, MAY NOT BE OFFERED OR SOLD IN
CANADA.
----------------
2
<PAGE>
AVAILABLE INFORMATION
LGII and Loewen have filed with the Commission a Registration Statement on
Form S-4 (together with any amendments, exhibits, annexes and schedules
thereto, the "Exchange Offer Registration Statement") pursuant to the
Securities Act and the rules and regulations thereunder, covering the Exchange
Notes. This Prospectus does not include all of the information set forth in
the Exchange Offer Registration Statement, certain parts of which are omitted
in accordance with the rules and regulations of the Commission. Statements
made in the Prospectus as to the contents of any contract, agreement or other
document referred to in the Exchange Offer Registration Statement are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference.
Loewen is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by
Loewen may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's regional offices located
at Seven World Trade Center, Suite 1300, New York, New York 10048, and
Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material can be obtained by mail from the
Public Reference section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Common Shares
are quoted on the Nasdaq National Market and are traded on The Toronto Stock
Exchange and The Montreal Exchange. Reports, proxy statements and other
information filed by Loewen may be inspected at the offices of The Nasdaq
Stock Market at 1735 K Street, N.W., Washington, D.C. 20006, at the offices of
The Toronto Stock Exchange at The Exchange Tower, 2 First Canadian Place,
Toronto, Ontario, Canada M5X 1J2 and at the offices of The Montreal Exchange
at 800 Victoria Square, Montreal, Quebec, Canada H4Z 1A9.
FINANCIAL INFORMATION
All dollar amounts in this Prospectus are in United States dollars ("U.S.$"
or "$") unless otherwise indicated. References to "Cdn.$" are to Canadian
dollars.
The Company prepares its consolidated financial statements included in its
reports filed pursuant to the Exchange Act in accordance with accounting
principles generally accepted in Canada ("Canadian GAAP"). Differences between
Canadian GAAP and accounting principles generally accepted in the United
States ("U.S. GAAP"), as applicable to the Company, are explained in Note 21
to the Company's 1995 Consolidated Financial Statements. The selected
consolidated financial data with respect to Loewen included in this Prospectus
is presented on a Canadian GAAP and a U.S. GAAP basis. The selected
consolidated financial data with respect to LGII is presented on a Canadian
GAAP basis only.
The consolidated financial statements of the Company for the fiscal year
ended December 31, 1993, and for prior fiscal years, were published in
Canadian dollars. Effective January 1, 1994, the Company adopted the United
States dollar as its reporting currency and, accordingly, has published its
consolidated financial statements for the fiscal year ended December 31, 1994
and subsequent periods in United States dollars. Financial information
relating to periods prior to January 1, 1994 has been translated from Canadian
dollars into United States dollars as required by Canadian GAAP at the
December 31, 1993 rate of U.S.$1.00 = Cdn.$1.3217.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the more
detailed information appearing elsewhere in this Prospectus.
THE COMPANY
The Loewen Group Inc. operates the second-largest number of funeral homes and
cemeteries in North America and the largest number of funeral homes in Canada.
The Company also engages in the pre-need selling of funeral services through
its operating locations and the pre-need selling of cemetery and cremation
services through certain of its operating locations. As at April 26, 1996, the
Company operated 877 funeral homes (not all of which are wholly owned)
throughout North America. This included 768 funeral homes in the United States
(including locations in Puerto Rico) and 109 funeral homes in Canada. In
addition, as at such date, the Company operated 216 cemeteries in the United
States and six cemeteries in Canada. As at the close of business on April 26,
1996, the Company had negotiated agreements for the acquisition of a further 53
funeral homes and 60 cemeteries in the United States and six funeral homes in
Canada.
THE FUNERAL SERVICE INDUSTRY
The funeral service industry historically has been characterized by low
business risk compared with most other businesses. According to the 1993
Business Failure Record published by The Dun & Bradstreet Corporation, the
average business failure rate in the United States in 1993 was 109 per 10,000.
The 1993 failure rate of the funeral service and crematoria industry was 24 per
10,000, among the lowest of all industries. Management believes this low
failure rate is the result of a number of factors, including customers'
tendencies to select a funeral home based on reputation for quality service
rather than price and the number of years required to establish a caring
reputation in the community. Further, the funeral service industry historically
has not been significantly affected by economic or market cycles.
Future demographic trends are expected to contribute to the continued
stability of the funeral service industry. The U.S. Department of Commerce,
Bureau of the Census, projects that, reflecting the well-publicized "graying of
America" as the baby boom generation reaches old age, the number of deaths in
the United States will grow at approximately 1.0% annually from 1990 through
2010.
In addition, the funeral service industry in North America is highly
fragmented, consisting primarily of small, stable, family-owned funeral homes.
Management estimates that 9% of the funeral homes in North America are
currently owned and operated by the five largest publicly-traded North American
funeral service companies. Management further estimates that there are still
approximately 10,000 acquisition candidates (those funeral homes with over 100
funeral services annually) in North America, primarily in the United States.
GROWTH STRATEGY
The Company capitalizes on these attractive industry fundamentals through a
growth strategy that emphasizes three principal components: (i) acquiring a
significant number of small, family-owned funeral homes and cemeteries; (ii)
acquiring "strategic" operations consisting predominantly of large, multi-
location urban properties that generally serve as platforms for acquiring
small, family-owned businesses in surrounding regions; and (iii) improving the
revenue and profitability of newly-acquired and established locations.
The first element of the Company's growth strategy is the acquisition of
small, family-owned funeral homes and cemeteries. Management believes that the
Company has a competitive advantage in this market due to its culture and its
well-known and understood reputation for honoring existing owners and staff.
4
<PAGE>
The second element of the Company's growth strategy is the acquisition of
large, multi-location urban properties. In 1995, the Company's "strategic"
acquisitions included Osiris Holding Corporation ("Osiris"), a leading cemetery
operator in the United States, and MHI Group, Inc. ("MHI"), a publicly traded
company that operated 16 funeral homes and five cemeteries in Florida and
Colorado. In addition, in March 1996, the Company acquired certain assets from
S.I. Acquisition Associates, L.P. ("S.I."), which included 15 funeral homes,
two cemeteries and two insurance companies in Louisiana. See "Business--Growth
Strategy."
The final element of the Company's growth strategy is its focus on enhancing
the revenue and profitability of newly-acquired and established locations.
Through the Company's integration process, newly-acquired funeral homes
typically show an immediate improvement in gross margin due in part to the
significant economies of scale available to the Company. Cemeteries typically
show an improvement in gross margin within the first year after acquisition.
Over time, the Company has continued to increase the revenue and profitability
of its established operations through the introduction of additional
merchandising, cost control programs and inflation based pricing. On an ongoing
basis, the Company also seeks to improve the market share and earnings of
established operations by helping local managers to market services more
effectively and to enhance the reputation of their operations in the community.
1996 FINANCINGS
On February 14, 1996, LGII signed a commitment letter with a bank in respect
of a new five-year $750 million secured revolving credit facility, which is
expected to close by May 31, 1996. The New Bank Facility is expected to be
secured by, among other things, a pledge for the benefit of the lenders under
the New Bank Facility of all of the shares of the direct and indirect United
States and Canadian subsidiaries in which Loewen directly or indirectly holds
more than a 50% voting or economic interest and all of the assets of LGII (LGII
does not have material assets other than financial assets) (collectively, the
"Collateral").
The Notes include a Lien Limitation that limits Liens to Permitted Liens. In
order to qualify as a Permitted Lien, the Lien secured by the Collateral will
be shared equally and ratably with the holders of the Indebtedness evidenced by
the Notes. The Lien secured by the Collateral also will be shared equally and
ratably with all other holders of Pari Passu Indebtedness. However, the holders
of the Notes will not have an independent right to require the Lien secured by
the Collateral to remain in place or to require any other security for the
Notes. As at December 31, 1995, the aggregate amount of Pari Passu Indebtedness
was $771 million, after giving effect to the Initial Notes Offering, the 1996
Equity Offering and the application of the respective proceeds thereof. Initial
drawings on the New Bank Facility will be used to repay the outstanding balance
under LGII's unsecured multi-currency revolving credit facilities (the "Multi-
Currency Revolver"). The balance of the New Bank Facility will be used for
general corporate purposes, including future acquisitions. See "Description of
Certain Indebtedness" and "New Bank Facility."
In March 1996, all of the Outstanding Notes were issued pursuant to a private
placement (the "Initial Notes Offering") for gross proceeds of $350 million.
Concurrently with the Initial Notes Offering, Loewen completed a public
offering in Canada and a simultaneous private placement in the United States of
7,000,000 Common shares without par value ("Common Shares") and, in April 1996,
sold an additional 700,000 Common Shares (pursuant to the exercise of an over-
allotment option) for aggregate gross proceeds of approximately Cdn.$302
million (U.S.$221 million) (the "1996 Equity Offering").
In January 1996, Loewen completed a public offering in Canada and a
simultaneous private placement in the United States of 8,800,000 Convertible
First Preferred Shares Series C Receipts (the "Series C Receipts") for gross
proceeds of Cdn.$220 million (the "1996 Preferred Share Offering"). The gross
proceeds were deposited with an escrow agent. The net proceeds will be released
to Loewen from time to time by issuing and depositing with the escrow agent an
equal dollar amount of 6.00% Cumulative Redeemable Convertible First Preferred
Shares, Series C ("Series C Preferred Shares") and used to fund acquisitions.
As at April 26, 1996, 762,350 Series C Preferred Shares had been issued and
approximately Cdn.$191 million (U.S.$140 million) had been released from
escrow, leaving approximately Cdn.$29 million (U.S.$22 million) in escrow to
fund future acquisitions.
----------------
LGII was incorporated in 1987 under the laws of the Delaware. LGII's
principal executive offices are located at 50 East RiverCenter Boulevard,
Covington, Kentucky 41011; telephone (606) 431-6663. Loewen was incorporated in
1985 under the laws of British Columbia, Canada. Loewen's principal executive
offices are located at 4126 Norland Avenue, Burnaby, British Columbia, Canada,
V5G 3S8; telephone (604) 299-9321.
5
<PAGE>
THE EXCHANGE OFFER
The Exchange Notes.......... The form and terms of the Exchange Notes are
identical in all material respects to the terms
of the respective Outstanding Notes for which
they may be exchanged pursuant to the Exchange
Offer, except for certain transfer restrictions
and registration rights relating to the
Outstanding Notes and except for certain interest
provisions relating to such registration rights
described below under "Description of Exchange
Notes."
The Exchange Offer.......... LGII is offering to exchange (i) up to an
aggregate principal amount of $225,000,000 of its
7 1/2% Series 3 Senior Guaranteed Notes due 2001
for up to an aggregate principal amount of
$225,000,000 of its outstanding 7 1/2% Series 1
Senior Guaranteed Notes due 2001 and (ii) up to
an aggregate principal amount of $125,000,000 of
its 8 1/4% Series 4 Senior Guaranteed Notes due
2003 for up to an aggregate principal amount of
$125,000,000 of its outstanding 8 1/4% Series 2
Senior Guaranteed Notes due 2003. Outstanding
Notes may be exchanged only in integral multiples
of $1,000.
Expiration Date; Withdrawal The Exchange Offer will expire at 5:00 p.m., New
of Tender.................. York time, on , 1996, or such later date and
time to which it is extended by LGII, in its sole
discretion. The Exchange Offer will not in any
event be extended to a date beyond , 1996.
The tender of Outstanding Notes pursuant to the
Exchange Offer may be withdrawn at any time prior
to the Expiration Date. Any Outstanding Notes not
accepted for exchange for any reason will be
returned without expense to the tendering holder
thereof as promptly as practicable after the
expiration or termination of the Exchange Offer.
Certain Conditions to the
Exchange Offer............. The Exchange Offer is subject to certain
customary conditions, which may be waived by
LGII. See "The Exchange Offer--Certain Conditions
to the Exchange Offer."
Procedures for Tendering
Outstanding Notes.......... Each holder of Outstanding Notes wishing to
accept the Exchange Offer must complete, sign and
date the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or
such facsimile, together with such Outstanding
Notes and any other required documentation to the
Exchange Agent (as defined herein) at the address
set forth herein. By executing the Letter of
Transmittal, each holder will represent to LGII
that, among other things, (i) any Exchange Notes
to be received by it will be acquired in the
ordinary course of its business, (ii) it has no
arrangement with any person to participate in the
distribution of the Exchange Notes and (iii) it
is not an "affiliate" of LGII or Loewen, within
the meaning of Rule 405 under the Securities Act,
or, if it is an affiliate of LGII or Loewen, it
will comply with the registration and prospectus
delivery requirements of the Securities Act to
the extent applicable.
6
<PAGE>
Interest on the Exchange The Series 3 Exchange Notes will bear interest at
Notes...................... the rate of 7 1/2% per annum and the Series 4
Exchange Notes will bear interest at the rate of
8 1/4% per annum, payable semi-annually on April
15 and October 15 of each year, commencing
October 15, 1996, to holders of record on the
immediately preceding April 1 and October 1,
respectively. Holders of the Exchange Notes will
receive interest on October 15, 1996 from the
date of initial issuance of the Outstanding
Notes. Interest on the Outstanding Notes accepted
for exchange will cease to accrue upon issuance
of the respective Exchange Notes.
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Outstanding Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender such Outstanding Notes
in the Exchange Offer should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes
to tender on its own behalf, such owner must,
prior to completing and executing the Letter of
Transmittal and delivering its Outstanding Notes,
either make appropriate arrangements to register
ownership of the Outstanding Notes in such
owner's name or obtain a properly completed bond
power from the registered holder. The transfer of
registered ownership may take considerable time
and may not be able to be completed prior to the
Expiration Date.
Guaranteed Delivery
Procedures................ Holders of Outstanding Notes who wish to tender
their Outstanding Notes and whose Outstanding
Notes are not immediately available or holders of
Outstanding Notes who cannot deliver their
Outstanding Notes, the Letter of Transmittal or
any other documents required by the Letter of
Transmittal to the Exchange Agent, prior to the
Expiration Date, must tender their Outstanding
Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer--
Guaranteed Delivery Procedures."
Registration Requirements... LGII has agreed to use its best efforts to
consummate the Exchange Offer. The Exchange Offer
will provide holders of the Outstanding Notes
with an opportunity to exchange their Outstanding
Notes for the Exchange Notes, which will be
issued without legends restricting the transfer
thereof. If applicable interpretations of the
staff of the Commission do not permit LGII to
effect the Exchange Offer, or in certain other
circumstances, LGII has agreed to file a shelf
registration statement (the "Shelf Registration
Statement") covering resales of the Outstanding
Notes and to use its best efforts to cause the
Shelf Registration Statement to be declared
effective under the Securities Act and, subject
to certain exceptions, to keep the Shelf
Registration Statement effective for 180 days
after the effective date thereof.
Certain Federal Income Tax
Considerations............. For a discussion of certain federal income tax
considerations relating to the Exchange Notes,
see "Certain Federal Income Tax Considerations."
7
<PAGE>
Use of Proceeds............. There will be no proceeds to LGII or Loewen from
the exchange of Notes pursuant to the Exchange
Offer.
Exchange Agent.............. Fleet National Bank is the Exchange Agent. The
address and telephone number of the Exchange
Agent are set forth in "The Exchange Offer--
Exchange Agent."
SUMMARY DESCRIPTION OF THE EXCHANGE NOTES
Issuer...................... Loewen Group International, Inc.
Exchange Notes.............. $225 million principal amount of 7 1/2% Series 3
Senior Guaranteed Notes due 2001
$125 million principal amount of 8 1/4% Series 4
Senior Guaranteed Notes due 2003
Maturity Dates.............. The Series 3 Exchange Notes will mature on April
15, 2001.
The Series 4 Exchange Notes will mature on April
15, 2003.
Interest Payment Dates...... April 15 and October 15, commencing October 15,
1996
Ranking..................... The Exchange Notes and the Guarantees will be
unsecured senior obligations of LGII and Loewen,
respectively and will rank pari passu in right of
payment with all unsecured senior indebtedness of
LGII and Loewen, respectively. The Notes include
a Lien Limitation that limits Liens to Permitted
Liens. The New Bank Facility is expected to be
secured by, among other things, a pledge for the
benefit of the lenders under the New Bank
Facility of substantially all of the shares of
the direct and indirect United States and
Canadian subsidiaries in which Loewen directly or
indirectly holds more than a 50% voting or
economic interest and all of the assets of LGII
(LGII does not have material assets other than
financial assets). In order to qualify as a
Permitted Lien, the Lien secured by the
Collateral pledged under the New Bank Facility
will be shared equally and ratably with the
holders of the Indebtedness evidenced by the
Notes. The Lien secured by the Collateral also
will be shared equally and ratably with all other
holders of Pari Passu Indebtedness. However, the
holders of the Notes will not have an independent
right to require the Lien secured by the
Collateral to remain in place or to require any
other security for the Notes. As at December 31,
1995, the aggregate amount of Pari Passu
Indebtedness was $771 million, after giving
effect to the Initial Notes Offering, the 1996
Equity Offering and the application of the
respective net proceeds thereof. The Exchange
Notes and related Guarantees are effectively
subordinated in right of payment to all existing
and future liabilities, including trade payables,
of LGII's and Loewen's subsidiaries,
respectively. As at December 31, 1995, the
aggregate amount of Indebtedness of LGII's
subsidiaries (excluding intercompany
indebtedness) was approximately $61 million, and
the aggregate amount of Indebtedness of Loewen's
subsidiaries other than LGII and its subsidiaries
(excluding intercompany Indebtedness) was
approximately $10 million.
8
<PAGE>
Guarantees.................. The Exchange Notes will be fully and
unconditionally guaranteed, on a senior basis, as
to principal and interest by Loewen.
Optional Redemption......... The Series 3 Exchange Notes will not be
redeemable prior to maturity. The Series 4
Exchange Notes will be redeemable at the option
of LGII, in whole or in part, at any time on or
after April 15, 2000 at a premium declining to
par in 2002, plus accrued and unpaid interest, if
any, to the redemption date.
Offers to Purchase.......... In the event of a Change of Control (as defined
herein), LGII will be obligated to make an offer
to purchase the then outstanding Notes at a
purchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest,
if any, to the purchase date. In addition, LGII
will be obligated to make an offer to purchase
the Notes at a purchase price equal to 100% of
the principal amount thereof, plus accrued and
unpaid interest, if any, to the purchase date,
with the net cash proceeds of certain sales or
other dispositions of assets. LGII's ability to
purchase the Notes will be dependent upon
obtaining third-party financing to the extent it
may not have available funds to meet its purchase
obligations. There can be no assurance that LGII
or the Guarantor will be able to obtain such
financing. The term "Change of Control" is
limited to certain specified transactions and may
not include other events that might adversely
affect the financial condition of LGII or result
in a downgrade of the credit rating of the Notes.
Certain Covenants........... The Indenture contains certain covenants by
Loewen and its Restricted Subsidiaries (as
defined herein and including LGII), including,
but not limited to, covenants with respect to
limitations on the following matters: (i) the
incurrence of additional indebtedness, (ii)
certain payments, including dividends and
investments, (iii) the creation of liens, (iv)
sales of assets and preferred stock, (v)
transactions with interested persons, (vi)
payment restrictions affecting subsidiaries,
(vii) sale-leaseback transactions and (viii)
mergers and consolidations. During any time that
the ratings assigned to the Notes by the Rating
Agencies (as defined herein) are no less than
BBB- and Baa3, the covenants described under (i),
(ii), (iv), (v) and (vi) above will be suspended.
See "Description of Exchange Notes--Certain
Covenants."
9
<PAGE>
THE LOEWEN GROUP INC.
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(IN THOUSANDS OF U.S.$, EXCEPT PER SHARE DATA, OPERATING DATA AND RATIOS)
Set forth below are certain selected consolidated financial and other
data of the Company for the periods indicated. This information should be
read in conjunction with the Company's 1995 Consolidated Financial
Statements and other information included or incorporated by reference
herein. The selected consolidated financial data for each of the years in
the five year period ended December 31, 1995 are derived from the Company's
audited consolidated financial statements and notes thereto, which have
been prepared in accordance with Canadian GAAP.
The financial results for the year ended December 31, 1995 include
provisions for the costs of settlements of two significant legal
proceedings, litigation-related finance costs and certain additional legal
and general and administrative costs. See "Recent Developments--Litigation
Settlements" for a more detailed description of the settlements and "Recent
Developments--1995 Results" for a more detailed description of the costs
related thereto.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
CANADIAN GAAP ----------------------------------------------------
1995 1994 (1) 1993 (1) 1992 (1) 1991 (1)
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue................. $599,939 $417,328 $303,011 $218,907 $162,605
Gross margin............ 226,808 158,854 115,118 83,708 63,087
Earnings from
operations............. 119,053 95,113 65,697 50,563 39,053
Net earnings (loss)..... (76,684) 38,494 28,182 19,766 14,425
Basic earnings (loss)
per share (2).......... (1.69) 0.97 0.77 0.59 0.46
Fully diluted earnings
(loss) per share
(2)(3)................. (1.69) 0.97 0.76 0.58 0.46
OTHER FINANCIAL DATA AND
RATIOS:
Depreciation and
amortization........... $40,103 $28,990 $21,196 $16,059 $11,053
EBITDA (4).............. (25,758) 124,103 86,893 66,622 50,106
Ratio of earnings to
fixed charges (5)...... -- 2.5x 2.9x 2.6x 2.6x
Aggregate dividends
declared per share..... 0.050 0.070 0.045 0.030 0.015
<CAPTION>
AS AT DECEMBER 31,
----------------------------------------------------
1995 1994 (1) 1993 (1) 1992 (1) 1991 (1)
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets............ $2,262,980 $1,326,275 $913,661 $675,111 $518,492
Total long-term debt
(6).................... 934,509 516,654 341,977 246,715 193,853
Preferred securities of
subsidiary............. 75,000 75,000 -- -- --
Shareholders' equity.... 614,682 411,139 325,890 236,317 172,394
OPERATING DATA:
Number of funeral home
locations (7).......... 815 641 533 451 365
Number of funeral
services............... 114,319 93,760 78,847 63,516 52,212
Number of cemeteries
(7).................... 179 116 70 38 23
</TABLE>
10
<PAGE>
(1) Certain of the comparative figures have been reclassified to conform to the
presentation adopted in 1995.
(2) Earnings (loss) per share reflect the two-for-one subdivision of Common
Shares in June 1991.
(3) Fully diluted earnings (loss) per share figures assume exercise, if
dilutive, of employee and other stock options effective on their dates of
issue and that the funds derived therefrom were invested at annual after-
tax rates of return ranging from 5.85% to 8.49%, in accordance with
Canadian GAAP.
(4) EBITDA represents net earnings (loss) before interest, dividends on
preferred securities of subsidiary, income taxes, depreciation and
amortization. EBITDA has been included solely to facilitate the
consideration of the covenants of the Indenture that are based, in part,
on EBITDA. In addition, the Company understands that EBITDA is used by
certain investors as one measure of the Company's historical ability to
service its debt. EBITDA data are not a measure of financial performance,
and do not represent cash flow from operations, under generally accepted
accounting principles, and should not be considered as a substitute for
net earnings as an indicator of the Company's operating performance or for
cash flow as a measure of liquidity.
(5) The 1995 loss is not sufficient to cover fixed charges by a total of
$126,584 and as such the ratio of earnings to fixed charges has not been
computed. Reference is made to the Statement re Computation of Earnings to
Fixed Charges Ratio, which is an exhibit to the Exchange Offer
Registration Statement (as defined herein).
(6) Total long-term debt comprises long-term debt, including current portion.
(7) The numbers of locations for 1994 and 1993 include adjustments and
consolidations related to prior periods.
Had the Company's Consolidated Financial Statements been prepared in
accordance with U.S. GAAP (see Note 21 to the Company's 1995 Consolidated
Financial Statements), selected consolidated financial data would be as
follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
U.S. GAAP -------------------------------------------------
1995 1994 (1) 1993 (1) 1992 (1) 1991 (1)
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue...................... $ 599,939 $ 417,479 $308,402 $239,452 $185,993
Earnings from operations..... 117,376 94,758 66,711 54,838 43,692
Earning (loss) before
cumulative effect of change
in accounting principles.... (75,800) 39,652 28,912 21,330 15,893
Fully diluted earnings (loss)
per share before cumulative
effect of change in
accounting principles(2).... (1.67) 0.98 0.77 0.62 0.50
Aggregate dividends declared
per share................... 0.050 0.070 0.047 0.033 0.017
<CAPTION>
AS AT DECEMBER 31,
-------------------------------------------------
1995 1994 (1) 1993 (1) 1992 (1) 1991 (1)
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets................. $2,345,874 $1,329,928 $921,342 $702,096 $592,666
Total long-term debt(3)...... 894,509 516,654 341,977 256,577 221,736
Preferred securities of sub-
sidiary..................... 75,000 75,000 -- -- --
Shareholders' equity......... 519,006 385,950 299,059 245,472 196,071
</TABLE>
- --------
(1) Certain of the comparative figures have been reclassified to conform to the
presentation adopted in 1995.
(2) Earnings (loss) per share reflects the two-for-one subdivision of Common
Shares in June 1991.
(3) Total long-term debt comprises long-term debt, including current portion.
11
<PAGE>
LOEWEN GROUP INTERNATIONAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS OF U.S.$)
Loewen Group International, Inc. serves as the holding company for the United
States assets and operations of the Company. At April 26, 1996, LGII's
operations consisted of 764 funeral homes and 212 cemeteries. Loewen
beneficially owns, directly or indirectly, all of the outstanding common stock
of LGII.
Set forth below are certain selected consolidated financial data relating to
LGII. The selected consolidated financial data are derived from the audited
consolidated financial statements of LGII, which have been prepared in
accordance with Canadian GAAP.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------
1995 1994(1) 1993(1) 1992(1) 1991(1)
--------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue........................ $540,825 $365,458 $263,493 $190,047 $135,248
Gross margin................... 198,867 136,639 97,328 69,675 48,940
Earnings from operations....... 75,715 84,390 59,462 44,910 29,297
Net earnings (loss) (2)........ (127,353) 7,491 10,671 9,766 7,661
<CAPTION>
AS AT DECEMBER 31,
-----------------------------------------------
1995 1994(1) 1993(1) 1992(1) 1991(1)
--------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets................. $ 184,289 $ 96,943 $ 81,028 $ 57,145 $ 49,028
Non-current assets............. 1,776,425 998,753 686,260 507,545 398,239
--------- --------- -------- -------- --------
Total assets................... 1,960,714 1,095,696 767,288 564,690 447,267
Current liabilities............ 221,555 81,472 36,722 27,242 17,394
Non-current liabilities........ 1,696,709 844,421 568,254 427,807 329,998
--------- --------- -------- -------- --------
Total liabilities.............. 1,918,264 925,893 604,976 455,049 347,392
Shareholders' equity........... 42,450 169,803 162,312 109,641 99,875
</TABLE>
- --------
(1) Certain of the comparative figures have been reclassified to conform to the
presentation adopted in 1995.
(2) Losses incurred during the year ended December 31, 1995 are as a result of
LGII recording the litigation settlements and additional intercompany
charges payable to Loewen. These intercompany charges are eliminated in the
consolidated financial statements of the Company.
12
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, including
information set forth in "Recent Developments" and "Legal Proceedings," the
following factors should be considered carefully prior to tendering
Outstanding Notes in the Exchange Offer.
HOLDING COMPANY STRUCTURE
LGII and Loewen are holding companies with no significant independent
business operations. Accordingly, their primary sources of cash to meet debt
service and other obligations (including payments on the Notes) are dividends
and other payments from their respective subsidiaries. Consequently,
obligations of LGII and Loewen to their creditors, including holders of the
Notes, are effectively subordinated in right of payment and junior to all
liabilities (including trade payables) of their respective subsidiaries. As at
December 31, 1995, the aggregate amount of indebtedness of LGII's subsidiaries
(excluding intercompany indebtedness) was approximately $61 million, and the
aggregate amount of indebtedness of Loewen's subsidiaries, other than LGII and
its subsidiaries, was approximately $10 million.
COLLATERAL
The Lien secured by the Collateral, if such Collateral is pledged in
connection with the New Bank Facility, will be shared equally and ratably with
the other holders of Pari Passu Indebtedness. There can be no assurance that
the Collateral would be sufficient to cover any payments due on the Notes. In
addition, the Collateral, if pledged, would secure the Pari Passu
Indebtedness, including the Notes, only so long as it is required under the
New Bank Facility. The Collateral therefore could be released by the lenders
under the New Bank Facility, in certain circumstances, without the approval of
all the other holders of Pari Passu Indebtedness, including the holders of the
Notes. The holders of the Notes have no independent right to require the Lien
secured by the Collateral to remain in place or to require any other security
for the Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE; POSSIBLE ADVERSE EFFECT ON
TRADING MARKET FOR OUTSTANDING NOTES
Holders of Outstanding Notes who do not exchange their Outstanding Notes for
Exchange Notes pursuant to the Exchange Offer will continue to be subject to
the restrictions on transfer of such Notes as set forth in the legend thereon
as a consequence of the issuance of the Outstanding Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Outstanding Notes may not be offered or sold unless registered
under the Securities Act and applicable state laws, or pursuant to an
exemption therefrom. Subject to the obligation by LGII and Loewen to file a
Shelf Registration Statement covering resales of Outstanding Notes in certain
circumstances, LGII and Loewen do not intend to register the Outstanding Notes
under the Securities Act and, after consummation of the Exchange Offer, will
not be obligated to do so. In addition, any holders of Outstanding Notes who
tender in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes may be deemed to have received restricted
securities and, if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Further, as a result of the Exchange Offer, it is expected
that a substantial decrease in the aggregate principal amount of Outstanding
Notes outstanding will occur. As a result, it is unlikely that a liquid
trading market will exist for the Outstanding Notes at any time. This lack of
liquidity will make transactions more difficult and may reduce the trading
price of the Outstanding Notes. See "The Exchange Offer" and "Description of
Exchange Notes--Registration Rights Agreement."
ABSENCE OF PUBLIC MARKET
There is no existing public market for the Notes, nor can there be any
assurance that a public market will develop. Certain of the Initial Purchasers
have advised LGII that they intend to make a market in the Notes; however, the
Initial Purchasers are not obligated to do so and any market making may be
discontinued at any time without notice.
13
<PAGE>
RECENT DEVELOPMENTS
ACQUISITION PROGRAM
From January 1, 1996 to April 26, 1996, the Company closed approximately
$300 million of funeral home, cemetery and related acquisitions. The Company
has signed agreements for additional acquisitions aggregating approximately
$200 million ("Signed Acquisitions"), the majority of which the Company
expects to close prior to the end of the second quarter of 1996, for a total
of approximately $500 million.
In addition, as at April 26, 1996, the Company was in the process of
evaluating or negotiating prospective acquisitions in competition with other
potential purchasers. The Company does not expect that all such potential
acquisitions will be completed during 1996, if at all. Several of such
potential acquisitions, one or more of which may be completed in 1996, would
be considered significant based on acquisition price. See "Business--Future
Acquisitions."
LITIGATION SETTLEMENTS
In November 1995, a Mississippi state court jury awarded J.J. O'Keefe, Sr.,
Gulf National Insurance Company and certain affiliates (collectively, "Gulf
National") $100 million in compensatory damages and $400 million in punitive
damages (the "Gulf National award") for claims arising out of a 1991 lawsuit
alleging breach of contract and related causes of action against Loewen, LGII
and two indirect subsidiaries (the "Company Defendants"). On February 1, 1996,
Gulf National and the Company Defendants executed a settlement agreement
pursuant to which, among other things, the parties agreed to a full mutual
release of all claims, and the Company Defendants agreed to deliver to Gulf
National or its designees $50 million in cash, 1.5 million Common Shares (the
"Gulf National Settlement Shares") and a promissory note in the amount of $80
million, payable over 20 years in equal annual installments of $4 million,
without interest (the "Gulf National settlement"). In connection with the
issuance of Common Shares pursuant to the Gulf National settlement, on
February 9, 1996, Loewen, LGII, Gulf National and certain other parties
entered into a shareholders' agreement, providing for, among other things, a
price guarantee of $30 per share in certain circumstances on the Common
Shares, a voting agreement and a right of first refusal in favor of Loewen.
In April 1992, Provident American Corporation and a subsidiary (together,
"Provident") commenced a lawsuit against Loewen and LGII claiming compensatory
and punitive damages arising out of terminated negotiations relating to a pre-
need funeral insurance marketing arrangement. On February 12, 1996, Provident,
Loewen and LGII agreed to settle the litigation. On March 19, 1996, the
parties entered into a settlement agreement whereby, among other things, the
parties agreed to a full mutual release of all claims, and Provident received
from the Company $3 million in cash and one million Common Shares with a price
guarantee of $27 per share in certain circumstances (the "Provident
settlement").
See "Legal Proceedings" for further information regarding the Gulf National
and Provident settlements and for information regarding three class action
lawsuits against Loewen and certain affiliates and officers commenced after
the Gulf National award.
1995 RESULTS
The results for the year ended December 31, 1995 were significantly affected
by the Gulf National award in November 1995 and the Gulf National and
Provident settlements during the first quarter of 1996. The related costs are
reflected primarily in the results for the three months ended December 31,
1995. For that period, the Company recorded a net loss of $113.2 million as
compared to net earnings of $11.4 million in the same period of 1994. For the
year ended December 31, 1995, the Company recorded a net loss of $76.7 million
compared to net earnings of $38.5 million in 1994.
14
<PAGE>
Consolidated revenue increased 43.8% to $599.9 million in the year ended
December 31, 1995 from $417.3 million in 1994, with funeral revenue increasing
25.1% and cemetery revenue increasing 126.4%. Consolidated gross margin
increased 42.8% to $226.8 million in 1995 from $158.9 million in 1994. As a
percentage of revenue, funeral gross margin increased to 41.5% in 1995 from
40.5% in 1994 and cemetery gross margin increased to 27.8% in 1995 from 24.3%
in 1994 and as a result of the change in mix between funeral and cemetery
operations, the combined gross margin decreased to 37.8% in 1995 from 38.1%
for the same period in 1994.
Funeral revenue increased 25.1% to $442.8 million in 1995 compared with
$353.9 million in 1994, primarily due to acquisitions. The funeral revenue
from locations in operation for all of 1994 and 1995 ("Established Locations")
increased by $7.5 million while corresponding funeral gross margins increased
from 40.6% to 42.1%. With the implementation of merchandising programs and
inflation-based price increases, the Company was able to more than offset a
1.3% decline in the number of funeral services performed at these Established
Locations.
Cemetery revenue increased 126.4% to $143.6 million in 1995 compared with
$63.4 million in 1994, primarily due to acquisitions. Cemetery gross margin
increased to 27.8% in 1995 from 24.3% in 1994, primarily as a result of
increased sales activity and the integration of acquisitions with a higher
cemetery gross margin.
In addition to its focus on quality at-need funeral and cemetery services,
the Company provides advanced funeral and cemetery planning to the communities
it serves. In 1995, approximately 16.0% of the funeral services performed by
the Company were prearranged, an increase from 14.8% in 1994. During 1995, the
Company sold approximately 28,000 funeral services to families planning in
advance compared with approximately 24,000 funeral services in 1994. In 1995,
approximately 60.9% of the Company's cemetery revenue was generated from pre-
need cemetery planning compared with 53.1% in 1994. The Company expects that
approximately 66% of its cemetery revenue will be generated from pre-need
planning in 1996. Notes 1 and 4 to the Company's 1995 Consolidated Financial
Statements provide information regarding the accounting treatment of pre-need
sales.
Insurance revenue in 1995 was $13.5 million. The Company determined in 1995
that it would not, as previously planned, sell a life insurance subsidiary
which had been acquired in connection with a larger acquisition in 1994 with
the intent that it be sold. The subsidiary was accounted for at cost from the
date of acquisition to June 30, 1995. Beginning July 1, 1995, the Company
reported the operations of the life insurance subsidiary on a consolidated
basis. On March 26, 1996, the Company purchased certain net assets of S.I.
Acquisitions Associates, L.P., which included two insurance companies. The
Company may acquire additional insurance businesses in 1996.
United States based operations contributed 91.3% of 1995 consolidated
revenue compared with 88.4% in 1994.
For the year ended December 31, 1995, general and administrative expenses
increased 94.7% to $67.7 million from $34.8 million in 1994. As a percentage
of consolidated revenue, general and administrative expenses in 1995 were
11.3% as compared with 8.3% in 1994. Included in general and administrative
expenses in 1995, and principally in the fourth quarter, are litigation,
acquisition and other expenses, including $10.8 million for professional fees
and other costs related to the Gulf National and Provident litigation and
settlements, and a $3.5 million write-off of acquisition costs.
Interest expense on long-term debt increased by $16.7 million in 1995
primarily as a result of additional borrowings by the Company to finance its
acquisitions. The Company's credit ratings were reduced as a result of the
Gulf National award. Until the credit ratings are raised to the investment
grade ratings applied to the Company prior to the Gulf National award, the
Company's cost of borrowing will be higher than that experienced in 1995.
15
<PAGE>
The dividends on preferred securities of an associated entity, Loewen Group
Capital, L.P. ("LGCLP"), increased from $2.7 million to $7.1 million as a
result of the Monthly Income Preferred Securities (the "MIPS") issued by LGCLP
in 1994 being outstanding for a full year. See Note 8 to the Company's 1995
Consolidated Financial Statements for particulars of the MIPS.
The Company recorded an expense of $165.0 million for the year ended
December 31, 1995 for the Gulf National and Provident settlements announced on
January 29, 1996 and February 12, 1996, respectively. The accrual of $135.0
million for the Gulf National settlement consisted of (i) $50.0 million
recorded in current liabilities in respect of a cash payment made in February
1996, (ii) $45.0 million recorded in shareholders' equity for the issue of 1.5
million Common Shares in February 1996 with a price guarantee of $30 per share
in certain circumstances, and (iii) $40.0 million recorded as long-term debt
representing the discounted value of a non-interest bearing promissory note
dated January 31, 1996 with payments of $4.0 million per annum over 20 years.
See "Legal Proceedings--Gulf National Settlement."
The accrual of $30 million for the Provident settlement consisted of (i)
$3.0 million recorded in current liabilities in respect of a payment made
March 19, 1996 and (ii) $27.0 million recorded in shareholders' equity for the
issue in March 1996 of one million Common Shares with a price guarantee of $27
in certain circumstances. See "Legal Proceedings--Provident Settlement."
The deferred income tax benefit of $60.3 million from the Gulf National and
Provident settlements has been recorded as a deferred income tax asset. Prior
to the tax recovery from the Gulf National and Provident settlements, income
taxes were $13.2 million, an effective rate of 32.0%, compared with $19.7
million in 1994, an effective rate of 33.9%. The decrease in the effective tax
rate in 1995 was primarily due to the expansion of the Company's international
financing arrangements. As a result of the above, the Company shows a net
income tax recovery of $47.2 million versus a net income tax expense of $19.7
million in 1994.
The Company expects that future income tax expense will be at an effective
tax rate which approximates, or is lower than, the 1995 rate of 32.0%.
As a result of litigation during 1995 and the resulting Gulf National and
Provident settlements, litigation-related finance costs, aggregating $19.9
million, were expensed in 1995. These finance costs included (i) $7.4 million
of finance costs incurred as a result of posting a $125 million bond in
connection with the appeal of the Gulf National award, (ii) $3.9 million for
amendment of bank facilities due to litigation and write-off of related
existing deferred financing costs, and (iii) $8.6 million including $7.1
million for the termination of interest rate agreements and a $1.5 million
unrealized loss with respect to interest rate agreements entered into in
anticipation of a long-term debt issue that was aborted as a result of the
Gulf National award.
The cash provided from operations for 1995 decreased from $43.3 million to
$13.2 million primarily as a result of increased expenses associated with the
Gulf National litigation and increases in required working capital and other
non-cash balances arising from the additional cemetery operations. As at
December 31, 1995, there was a working capital deficiency arising from the $53
million accrual for the cash payments required to be made in 1996 under the
Gulf National and Provident settlements. The $50 million payment for the Gulf
National settlement was funded in 1996 by borrowings under the Company's
credit facilities. Cash provided from operations also reflects Common Shares
and debt to be issued under legal settlements which will be reflected as cash
applied to operations in 1996.
16
<PAGE>
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain obligations of LGII and
Loewen under the Registration Rights Agreement. Neither LGII nor Loewen will
receive any proceeds from the issuance of the Exchange Notes offered hereby.
In consideration for issuing the Exchange Notes as contemplated in this
Prospectus, LGII will receive Outstanding Notes in like principal amount. The
form and terms of the Exchange Notes are identical in all material respects to
the form and terms of the respective Outstanding Notes, except as otherwise
described herein under "The Exchange Offer--Terms of the Exchange Offer." The
Outstanding Notes surrendered in exchange for Exchange Notes will be retired
and cancelled and cannot be reissued. Accordingly, issuance of the Exchange
Notes will not result in any increase in the outstanding debt of LGII or
Loewen.
CONSOLIDATED CAPITALIZATION
The following table sets forth the cash and marketable securities and total
capitalization of the Company as at March 31, 1996, adjusted to reflect (i)
the exchange of all Series C Receipts not exchanged as of March 31, 1996 for
Series C Preferred Shares for net proceeds of approximately $ . million (see
"Prospectus Summary--1996 Financings"), (ii) the net proceeds of approximately
$19 million from the exercise of the underwriters' over-allotment option with
respect to the 1996 Equity Offering and (iii) repayment of the Multi-Currency
Revolver and completion of the New Bank Facility. For purposes of the
following table only, the remaining net proceeds from the 1996 Preferred Share
Offering and the exercise of the underwriters' over-allotment option with
respect to the 1996 Equity Offering are translated into U.S. dollars at the
March 31, 1996 rate of U.S.$1.00 = Cdn.$1.3591.
<TABLE>
<CAPTION>
AS AT MARCH 31, 1996
------------------------
ACTUAL AS ADJUSTED
---------- ------------
(IN THOUSANDS)
<S> <C> <C>
Cash and marketable securities...................... $ . $ .
========== ==========
Short-term debt, including current portion of long-
term debt......................................... $ . $ .
---------- ----------
Long-term debt
New Bank Facility................................. . .
Outstanding Notes and Exchange Notes.............. . .
Senior guaranteed notes, Series A-E............... . .
Multi-Currency Revolver........................... . .
Canadian Revolver................................. . .
Term credit facilities............................ . .
Other long-term debt.............................. . .
Less current portion.............................. . .
---------- ----------
Total long-term debt.............................. . .
Preferred securities of subsidiary (1).............. . .
Total shareholders' equity.......................... . .
---------- ----------
Total capitalization................................ $ . $ .
========== ==========
</TABLE>
- --------
(1) Reference is made to Note 8 to the Company's 1995 Consolidated Financial
Statements for particulars of the preferred securities of subsidiary.
17
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Outstanding Notes were sold by the Company on March 20, 1996 to the
Initial Purchasers. The Initial Purchasers then sold the Outstanding Notes to
certain institutional investors in reliance on Rule 144A and Regulation D
under the Securities Act. In connection with the sale of the Outstanding
Notes, LGII and Loewen and the Initial Purchasers entered into the
Registration Rights Agreement, pursuant to which LGII and Loewen agreed (i) to
file a registration statement with respect to an offer to exchange the
Outstanding Notes for senior subordinated debt securities of LGII with terms
substantially identical to the Outstanding Notes (except that the Exchange
Notes will not contain terms with respect to transfer restrictions) within 45
days after the date of original issuance of the Outstanding Notes and (ii) to
use their best efforts to cause such registration statement to become
effective under the Securities Act within 120 days after such issue date. If
applicable law or interpretations of the staff of the Commission do not permit
the Company to file the registration statement containing this Prospectus or
to effect the Exchange Offer, or if certain holders of the Outstanding Notes
notify the Company that they are not permitted to participate in, or would not
receive freely tradable Exchange Notes pursuant to, the Exchange Offer, the
Company will use its best efforts to cause to become effective the Shelf
Registration Statement with respect to the resale of the Outstanding Notes and
to keep the Shelf Registration Statement effective until 180 days after the
effective date thereof. The interest rate on the Outstanding Notes is subject
to increase under certain circumstances if the Company is not in compliance
with its obligations under the Registration Rights Agreements. See
"Description of the Exchange Notes--Registration Rights Agreement." Unless the
context requires otherwise, the term "holder" with respect to the Exchange
Offer means the registered holder of Outstanding Notes or any other person who
has obtained a properly completed bond power from a registered holder.
Each holder of Outstanding Notes who wishes to exchange Outstanding Notes
for Exchange Notes in the Exchange Offer will be required to make certain
representations, including representations that (i) any Exchange Notes to be
received by it will be acquired in the ordinary course of its business, (ii)
it has no arrangement with any person to participate in the distribution of
the Exchange Notes and (iii) it is not an "affiliate" of LGII or Loewen,
within the meaning of Rule 405 under the Securities Act, or, if it is an
affiliate of LGII or Loewen, it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent
applicable. See "Description of Exchange Notes--Registration Rights
Agreement."
RESALE OF EXCHANGE NOTES
Based on interpretations by the staff of the Commission set forth in no
action letters issued to third-parties, LGII and Loewen believe that, except
as described below, Exchange Notes issued pursuant to the Exchange Offer in
exchange for Outstanding Notes may be offered for resale, resold and otherwise
transferred by any holder thereof (other than a holder which is an "affiliate"
of LGII or Loewen within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery requirements
of the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of such holder's business and such holder does not intend to
participate and has no arrangement or understanding with any person to
participate in the distribution of such Exchange Notes. Any holder who tenders
in the Exchange Offer with the intention or for the purpose of participating
in a distribution of the Exchange Notes cannot rely on such interpretation by
the staff of the Commission and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. Unless an exemption from registration is
otherwise available, any such resale transaction should be covered by an
effective registration statement containing the selling security holders
information required by Item 507 of Regulation S-K under the Securities Act.
This Prospectus may be used for an offer to resell, resale or other
retransfer of Exchange Notes only as specifically set forth herein. Each
broker-dealer that receives Exchange Notes for its own account in exchange for
Outstanding Notes, where such Outstanding Notes were acquired by such broker-
dealer as a result of market-making activities or other trading activities,
must acknowledge that it will deliver a prospectus in connection with any
resale of such Exchange Notes. See "Plan of Distribution."
18
<PAGE>
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, LGII will accept for exchange any and all
Outstanding Notes properly tendered and not withdrawn prior to 5:00 p.m., New
York time, on the Expiration Date. LGII will issue $1,000 principal amount of
Exchange Notes in exchange for each $1,000 principal amount of Outstanding
Notes surrendered pursuant to the Exchange Offer. Outstanding Notes may be
tendered only in integral multiples of $1,000.
The form and terms of the Exchange Notes will be the same as the form and
terms of the Outstanding Notes, except that the Exchange Notes will be
registered under the Securities Act and hence will not bear legends
restricting the transfer thereof. The Exchange Notes will evidence the same
debt as the Outstanding Notes. The Exchange Notes will be issued under and
entitled to the benefits of the Indenture, which also authorized the issuance
of the Outstanding Notes, such that the Series 1 Notes and the Series 3
Exchange Notes will be treated as a single class of senior notes under the
Indenture, and the Series 2 Notes and the Series 4 Exchange Notes will be
treated as a single class of senior notes under the Indenture.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Outstanding Notes being tendered for exchange. Holders of
Outstanding Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer.
As of the date of this Prospectus, $350,000,000 aggregate principal amount
of the Outstanding Notes are outstanding. This Prospectus, together with the
Letter of Transmittal, is being sent to all registered holders of Outstanding
Notes. There will be no fixed record date for determining registered holders
of Outstanding Notes entitled to participate in the Exchange Offer.
LGII intends to conduct the Exchange Offer in accordance with the provisions
of the Registration Rights Agreement and the applicable requirements of the
Exchange Act, and the rules and regulations of the Commission thereunder.
Outstanding Notes which are not tendered for exchange in the Exchange Offer
will remain outstanding and continue to accrue interest but will not retain
any rights under the Registration Rights Agreement.
LGII shall be deemed to have accepted for exchange properly tendered
Outstanding Notes when, as and if LGII shall have given oral or written notice
thereof to the Exchange Agent and complied with the applicable provisions of
the Registration Rights Agreement. The Exchange Agent will act as agent for
the tendering holders for the purposes of receiving the Exchange Notes from
LGII. LGII expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Outstanding Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions specified
below under "--Certain Conditions to the Exchange Offer."
Holders who tender Outstanding Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
Outstanding Notes pursuant to the Exchange Offer. LGII will pay all charges
and expenses, other than certain applicable taxes described below, in
connection with the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York time on ,
1996, unless LGII, in its sole discretion, extends the Exchange Offer, in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended. The Exchange Offer will not in any event
be extended to a date beyond , 1996.
In order to extend the Exchange Offer, LGII will notify the Exchange Agent
of any extension by oral or written notice and will mail to the registered
holders of Outstanding Notes an announcement thereof, each prior to 9:00 a.m.,
New York time, on the next business day after the then Expiration Date.
19
<PAGE>
LGII reserves the right, in its sole discretion, (i) to delay accepting for
exchange any Outstanding Notes, to extend the Exchange Offer or to terminate
the Exchange Offer if any of the conditions set forth below under "--Certain
Conditions to the Exchange Offer" shall not have been satisfied, by giving
oral or written notice of such delay, extension or termination to the Exchange
Agent or (ii) to amend the terms of the Exchange Offer in any manner. Any such
delay in acceptance, extension, termination or amendment will be followed as
promptly as practicable by oral or written notice thereof to the registered
holders of Outstanding Notes. If the Exchange Offer is amended in a manner
determined by LGII to constitute a material change, LGII and Loewen will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered holders, and LGII will extend the Exchange
Offer for a period of five to ten business days, depending upon the
significance of the amendment and the manner of disclosure to the registered
holders, if the Exchange Offer would otherwise expire during such five to ten
business day period.
INTEREST ON THE EXCHANGE NOTES
The Series 3 Exchange Notes will bear interest at the rate of 7 1/2% per
annum and the Series 4 Exchange Notes will bear interest at the rate of 8 1/4%
per annum, payable semi-annually on April 15 and October 15 of each year,
commencing October 15, 1996, to holders of record on the immediately preceding
April 1 and October 1, respectively. Holders of the Exchange Notes will
receive interest on October 15, 1996 from the date of initial issuance of the
Outstanding Notes. Interest on the Outstanding Notes accepted for exchange
will cease to accrue upon issuance of the respective Exchange Notes.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, LGII will not be
required to accept for exchange, or exchange any Exchange Notes for, any
Outstanding Notes, and may terminate the Exchange Offer as provided herein
before the acceptance of any Outstanding Notes for exchange, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in LGII's reasonable judgment, might materially impair the ability
of LGII to proceed with the Exchange Offer; or
(b) any law, statute, rule or regulation is proposed, adopted or enacted,
or any existing law, statute, rule or regulation is interpreted by the
staff of the Commission, which, in LGII's reasonable judgment, might
materially impair the ability of LGII to proceed with the Exchange Offer;
or
(c) any governmental approval has not been obtained, which approval LGII
shall, in its reasonable judgment, deem necessary for the consummation of
the Exchange Offer as contemplated hereby.
LGII expressly reserves the right to amend or terminate the Exchange Offer,
and not to accept for exchange any Outstanding Notes not theretofore accepted
for exchange, upon the occurrence of any of the conditions of the Exchange
Offer specified above. LGII will give oral or written notice of any extension,
amendment, non-acceptance or termination to the holders of the Outstanding
Notes as promptly as practicable, such notice in the case of any extension to
be issued no later than 9:00 a.m., New York time, on the next business day
after the previously scheduled Expiration Date.
The foregoing conditions are for the sole benefit of LGII and may be
asserted by LGII regardless of the circumstances giving rise to any such
condition or may be waived by LGII in whole or in part at any time and from
time to time in its reasonable judgment. The failure by LGII at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, LGII will not accept for exchange any Outstanding Notes
tendered, and no Exchange Notes will be issued in exchange for any such
Outstanding Notes, if at such time any stop order shall be threatened or in
effect with respect to the Registration Statement of which this Prospectus
constitutes a part or the qualification of the Indenture under the Trust
Indenture Act of 1939.
20
<PAGE>
PROCEDURES FOR TENDERING
Only a holder of Outstanding Notes may tender such Outstanding Notes in the
Exchange Offer. To tender in the Exchange Offer, a holder must complete, sign
and date the Letter of Transmittal, or facsimile thereof, have the signature
thereon guaranteed if required by the Letter of Transmittal, and mail or
otherwise deliver such Letter of Transmittal or such facsimile to the Exchange
Agent prior to 5:00 p.m., New York time, on the Expiration Date. In addition,
either (i) Outstanding Notes must be received by the Exchange Agent along with
the Letter of Transmittal, or (ii) a timely confirmation of book-entry
transfer (a "Book-Entry Confirmation") of such Outstanding Notes, if such
procedure is available, into the Exchange Agent's account at the Depository
Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedure
for book-entry transfer described below must be received by the Exchange Agent
prior to the Expiration Date, or (iii) the holder must comply with the
guaranteed delivery procedures described below. To be tendered effectively,
the Letter of Transmittal and other required documents must be received by the
Exchange Agent at the address set forth below under "The Exchange Offer--
Exchange Agent" prior to 5:00 p.m., New York time, on the Expiration Date.
The tender by a holder which is not withdrawn prior to 5:00 p.m., New York
time, on the Expiration Date will constitute an agreement between such holder
and LGII in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO LGII OR
LOEWEN. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR OTHER NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR
SUCH HOLDERS.
Any beneficial owner whose Outstanding Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender, should contact the registered holder promptly and instruct such
registered holder of Outstanding Notes to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender on its own behalf, such
owner must, prior to completing and executing the Letter of Transmittal and
delivering such owner's Outstanding Notes, either make appropriate
arrangements to register ownership of the Outstanding Notes in such owner's
name or obtain a properly completed bond power from the registered holder of
Outstanding Notes. The transfer of registered ownership may take considerable
time and may not be able to be completed prior to the Expiration Date.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below, as the case may be, must be guaranteed by an Eligible Institution (as
defined below) unless the Outstanding Notes tendered pursuant thereto are
tendered (i) by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible Institution. If
signatures on a Letter Transmittal or a notice of withdrawal, as the case may
be, are required to be guaranteed, such guarantor must be a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act which is a member of
one of the recognized signature guarantee programs identified in the Letter of
Transmittal (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Outstanding Notes listed therein, such Outstanding Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Outstanding
Notes with the signature thereon guaranteed by an Eligible Institution.
21
<PAGE>
If the Letter of Transmittal or any Outstanding Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by
LGII, evidence satisfactory to LGII of their authority to so act must be
submitted with the Letter of Transmittal.
All questions to the validity, form, eligibility (including time of
receipt), acceptance of tendered Outstanding Notes and withdrawal of tendered
Outstanding Notes will be determined by LGII in its sole discretion, which
determination will be final and binding. LGII reserves the absolute right to
reject any and all Outstanding Notes not properly tendered or any Outstanding
Notes LGII's acceptance of which would, in the opinion of counsel for LGII, be
unlawful. LGII also reserves the right to waive any defects, irregularities or
conditions of tender as to particular Outstanding Notes. LGII's interpretation
of the terms and conditions of the Exchange Offer (including the instructions
in the Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of
Outstanding Notes must be cured within such time as LGII shall determine.
Although LGII intends to notify holders of defects or irregularities with
respect to tenders of Outstanding Notes, neither LGII, the Exchange Agent nor
any other person shall incur any liability for failure to give such
notification. Tenders of Outstanding Notes will not be deemed to have been
made until such defects or irregularities have been cured or waived. Any
Outstanding Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In all cases, issuance of Exchange Notes for Outstanding Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of Outstanding Notes or a timely Book-
Entry Confirmation of such Outstanding Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility, a properly completed and duly executed
Letter of Transmittal and all other required documents. If any tendered
Outstanding Notes are not accepted for exchange for any reason set forth in
the terms and conditions of the Exchange Offer or if Outstanding Notes are
submitted for a greater principal amount than the holder desires to exchange,
such unaccepted or non-exchanged Outstanding Notes will be returned without
expense to the tendering holder thereof (or, in the case of Outstanding Notes
tendered by book-entry transfer into the Exchange Agent's account at the Book-
Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such non-exchanged Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Outstanding Notes at the Book-Entry Transfer Facility for purposes of
the Exchange Offer within two business days after the date of this Prospectus,
and any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Outstanding Notes by causing
the Book-Entry Transfer Facility to transfer such Outstanding Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance
with such Book-Entry Transfer Facility's procedures for transfer. However,
although delivery of Outstanding Notes may be effected through book-entry
transfer at the Book-Entry Transfer Facility, the Letter of Transmittal or
facsimile thereof, with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received by the
Exchange Agent at the address set forth below under "--Exchange Agent" on or
prior to the Expiration Date or, if the guaranteed delivery procedures
described below are to be complied with, within the time period provided under
such procedures. Delivery of documents to the Book-Entry Transfer Facility
does not constitute delivery to the Exchange Agent.
22
<PAGE>
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Outstanding Notes and (i) whose Outstanding
Notes are not immediately available or (ii) who cannot deliver their
Outstanding Notes, the Letter of Transmittal or any other required documents
to the Exchange Agent prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the registered number(s)
of such Outstanding Notes and the principal amount of Outstanding Notes
tendered, stating that the tender is being made thereby and guaranteeing
that, within three (3) New York Stock Exchange trading days after the
Expiration Date, the Letter of Transmittal (or facsimile thereof) and any
other documents required by the Letter of Transmittal will be deposited by
the Eligible Institution with the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Notes in proper form for
transfer or a Book-Entry Confirmation, as the case may be, and all other
documents required by the Letter of Transmittal, are received by the
Exchange Agent within three (3) New York Stock Exchange trading days after
the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Outstanding Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time prior to 5:00 p.m., New York time, on the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
timely received by the Exchange Agent at one of the addresses set forth below
under "--Exchange Agent." Any such notice of withdrawal must specify the name
of the person having tendered the Outstanding Notes to be withdrawn, identify
the Outstanding Notes to be withdrawn (including the principal amount of such
Outstanding Notes), and (where certificates for Outstanding Notes have been
transmitted) specify the name in which such Outstanding Notes were registered,
if different from that of the withdrawing holder. If certificates for
Outstanding Notes have been delivered or otherwise identified to the Exchange
Agent, then, prior to the release of such certificates, the withdrawing holder
must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such holder is an Eligible Institution. If
Outstanding Notes have been tendered pursuant to the procedures for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Outstanding Notes and otherwise comply with the procedures of
such facility. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by LGII, whose
determination shall be final and binding on all parties. Any Outstanding Notes
so withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Outstanding Notes which have been tendered
for exchange but which are not exchanged for any reason will be returned to
the holder thereof without cost to such holder (or, in the case of Outstanding
Notes tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described above, such Outstanding Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Outstanding Notes)
as soon as practicable after withdrawal, rejection of tender or termination of
the Exchange Offer. Properly withdrawn Outstanding Notes may be retendered by
following one of the procedures described under "--Procedures for Tendering"
above at any time on or prior to the Expiration Date.
23
<PAGE>
EXCHANGE AGENT
Fleet National Bank has been appointed as Exchange Agent of the Exchange
Offer. Questions and requests for assistance, requests for additional copies
of this Prospectus or the Letter of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
By Hand: By Registered or Certified Mail or
Fleet National Bank Courier:
Corporate Trust Operations Fleet National Bank
777 Main Street, Lower Level Corporate Trust Operations
Hartford, Connecticut 06115 777 Main Street, Lower Level
Attn: Patricia Williams CTMO 0224
Hartford, Connecticut 06115
Attn: Patricia Williams
By Facsimile:
(860) 986-7908
(For Eligible Institutions Only)
Confirm by Telephone:
(860) 986-1271
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by LGII. The principal
solicitation is being made by mail; however, additional solicitation may be
made by telegraph, telephone or in person by officers and regular employees of
the Company.
LGII has not retained any dealer-manager in connection with the Exchange
Offer and will not make any payments to broker-dealers or others soliciting
acceptances of the Exchange Offer. LGII, however, will pay the Exchange Agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by LGII and are estimated in the aggregate to be approximately $ . .
Such expenses include registration fees, fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, and related
fees and expenses.
TRANSFER TAXES
LGII will pay all transfer taxes, if any, applicable to the exchange of
Notes pursuant to the Exchange Offer. If, however, certificates representing
Outstanding Notes for principal amounts not tendered or accepted for exchange
are to be delivered to, or are to be issued in the name of, any person other
than the registered holder of Notes tendered, or if tendered Notes are
registered in the name of any person other than the person signing the Letter
of Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Notes pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment
of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Outstanding Notes who do not exchange their Outstanding Notes for
Exchange Notes pursuant to the Exchange Offer will continue to be subject to
the restrictions on transfer of such Outstanding Notes, as set
24
<PAGE>
forth in the legend thereon, as a consequence of the issuance of the
Outstanding Notes pursuant to the exemptions from, or in transactions not
subject to, the registration requirements of the Securities Act and applicable
state securities laws. In general, the Outstanding Notes may not be offered or
sold, unless registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. LGII does not currently anticipate that it
will register the Outstanding Notes under the Securities Act. See "Risk
Factors--Consequences of Failure to Exchange; Possible Adverse Effect on
Trading Market for Outstanding Notes."
25
<PAGE>
BUSINESS
OVERVIEW
The Company operates the second-largest number of funeral homes and
cemeteries in North America and the largest number of funeral homes in Canada.
The Company also engages in the pre-need selling of funeral services through
its operating locations and the pre-need selling of cemetery and cremation
services through certain of its operating locations. As at April 26, 1996, the
Company operated 877 funeral homes (not all of which are wholly owned)
throughout North America. This included 768 funeral homes in the United States
(including locations in Puerto Rico) and 109 funeral homes in Canada. In
addition, as at such date, the Company operated 216 cemeteries in the United
States and six cemeteries in Canada. As at the close of business on April 26,
1996, the Company had negotiated agreements for the acquisition of a further
53 funeral homes and 60 cemeteries in the United States and six funeral homes
in Canada. See "--Growth Strategy."
For the year ended December 31, 1995, consolidated revenue was $599.9
million. Consideration paid for acquired funeral homes and cemeteries totaled
approximately $265.6 million in 1994 and $487.9 million in 1995. Despite this
growth, the Company has maintained consistent margins over the past three
years, including a gross margin of at least 37%.
The Company's management structure and remuneration practices are designed
to support and encourage entrepreneurial drive and individual responsibility.
Each funeral home and cemetery is operated as a distinct profit center, with
monthly and annual financial performance monitored by regional and corporate
management in accordance with budgeted projections. Local managers are given a
high degree of autonomy. The Company believes that its funeral home and
cemetery managers, as members of the local community, are best able to judge
how to conduct day-to-day operations in a manner consistent with the
established character of the particular firm and the needs of the community.
THE FUNERAL SERVICE INDUSTRY
The funeral service industry historically has been characterized by low
business risk compared with most other businesses. According to the 1993
Business Failure Record published by The Dun & Bradstreet Corporation, the
average business failure rate in the United States in 1993 was 109 per 10,000.
The 1993 failure rate of the funeral services and crematoria industry was 24
per 10,000, among the lowest of all industries. Management believes this low
failure rate is the result of a number of factors, including customers'
tendencies to select a funeral home based on reputation for quality service
rather than price and the number of years required to establish a caring
reputation in the community. Further, the funeral service industry
historically has not been significantly affected by economic or market cycles.
Future demographic trends are expected to contribute to the continued
stability of the funeral service industry. The U.S. Department of Commerce,
Bureau of the Census, projects that, reflecting the well-publicized "graying
of America" as the baby boom generation reaches old age, the number of deaths
in the United States will grow at approximately 1.0% annually from 1990
through 2010. The following table reflects the actual or estimated number of
deaths in the United States and the percentage of the total United States
population over 65 and over 75.
<TABLE>
<CAPTION>
UNITED STATES
-----------------------------
PERCENTAGE OF
TOTAL POPULATION
DEATHS ----------------
(MILLIONS) OVER 65 OVER 75
---------- -------- --------
<S> <C> <C> <C>
1980.......................................... 1.99 11.3% 4.4%
1985.......................................... 2.09 11.8 4.8
1990.......................................... 2.15 12.5 5.2
1995 (est.)................................... 2.21 12.8 5.6
2000 (est.)................................... 2.36 12.8 6.1
2010 (est.)................................... 2.60 13.3 6.4
</TABLE>
- --------
Source: U.S. Department of Commerce, Bureau of the Census, Current Population
Reports: Population Estimates and Projections. Series P-25, 1018.
26
<PAGE>
In addition, the funeral service industry in North America is highly
fragmented, consisting primarily of small, stable, family-owned funeral homes.
Management estimates that 9% of the funeral homes in North America are
currently owned and operated by the five largest publicly-traded North
American funeral service companies. Management further estimates that there
are still approximately 10,000 acquisition candidates (those funeral homes
with over 100 funeral services annually) in North America, primarily in the
United States.
GROWTH STRATEGY
The Company capitalizes on the foregoing industry fundamentals through a
growth strategy that emphasizes three principal components: (i) acquiring a
significant number of small, family-owned funeral homes and cemeteries; (ii)
acquiring "strategic" operations consisting predominantly of large, multi-
location urban properties that generally serve as platforms for acquiring
small, family-owned businesses in surrounding regions; and (iii) improving the
revenue and profitability of newly-acquired and established locations.
The following table provides historical data on the Company's acquisition
program during the years ended December 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1995 1994 1993
------ ------ ------
(DOLLARS IN
MILLIONS)
<S> <C> <C> <C>
Funeral homes acquired.................................... 177 110 83
Cemeteries acquired....................................... 64 46 33
Consideration............................................. $487.9 $265.6 $148.0
</TABLE>
From January 1 through April 26, 1996, the Company acquired 62 funeral homes
and 43 cemeteries for total consideration of approximately $300 million.
Family-Owned Funeral Homes
The first element of the Company's growth strategy is the acquisition of
small, family-owned funeral homes and cemeteries. Management believes that the
Company has a competitive advantage in this market due to its culture and its
well-known and understood reputation for honoring existing owners and staff.
Strategic Acquisitions
The second element of the Company's growth strategy is the acquisition of
large, multi-location urban properties. The Company entered into commitments
for or consummated several "strategic" acquisitions during 1995.
Osiris
In March 1995, the Company purchased all of the outstanding shares of Osiris
Holding Corporation of Philadelphia, Pennsylvania which operated 22
cemeteries, four funeral home/cemetery combinations and one funeral home, all
located in the United States. The Osiris purchase has complemented the
Company's existing locations, as the Osiris locations were in markets in which
the Company did not have a strong presence. In addition, the Osiris
acquisition has provided the Company with an experienced cemetery management
team which will benefit the Company's other cemetery operations. The total
consideration for the transaction was $103.8 million plus additional
consideration of up to approximately $42 million payable to the former
shareholders of Osiris if certain performance related criteria are achieved
over a period of up to six years from the closing of the acquisition. For
financial reporting purposes, such additional consideration, if any, is
accrued as a liability once the likely outcome with respect to its payment is
determinable beyond a reasonable doubt. The Company has determined that, as at
December 31, 1995, the performance-related criteria would likely be met over
the term of the agreement and, accordingly, has allocated $35.3 million
representing the present value of additional consideration to cemetery
property and accrued a corresponding liability of $35.3 million. The full
amount of any unpaid contingent consideration will be immediately payable in
certain events, including the death, permanent disability, or termination of
employment without cause, of either of two former shareholders of Osiris who
are now part of the Company's senior management.
27
<PAGE>
MHI
In September 1995, the Company acquired MHI Group, Inc., a publicly traded
company. At the time of acquisition, MHI operated 16 funeral homes and five
cemeteries in Florida and Colorado. The total cost of the acquisition was
approximately $86 million.
S.I. Acquisition Associates, L.P.
In March 1996, the Company acquired from S.I. Acquisition Associates, L.P.
certain funeral, cemetery and insurance assets, including 15 funeral homes,
two cemeteries and two insurance companies, all of which are located in
Louisiana and were acquired by S.I. from Ourso Investment Corporation. The
total cost to the Company of the acquisition was approximately $140 million.
Growth through Integration
The final element of the Company's growth strategy is its focus on enhancing
the revenue and profitability of newly-acquired and established locations.
Through the Company's integration process, newly-acquired funeral homes
typically show an immediate improvement in gross margin due in part to the
significant economies of scale offered by the Company.
The Company believes that newly-acquired cemeteries will also show an
improvement in gross margin over time. Cemetery operations are predominantly
sales driven with a steady "at-need" revenue base. Management believes that
gross margins will increase as cost efficiencies are achieved and revenue is
enhanced through improved sales efforts.
The Company continues to increase the revenue and profitability of
established operations through the introduction of additional merchandising,
cost control programs and inflation based pricing. On an ongoing basis, the
Company also seeks to improve the market share and earnings of its established
operations by helping local managers to market services more effectively and
to enhance the reputation of their operations in the community.
FUTURE ACQUISITIONS
At the close of business on April 26, 1996, the Company had signed
agreements, some of which are non-binding, for the acquisition of 59
additional funeral homes and 60 additional cemeteries aggregating
approximately $200 million. The Company expects to close most of the Signed
Acquisitions by the end of the second quarter of 1996.
In addition, as at April 26, 1996, the Company was in the process of
evaluating or negotiating prospective acquisitions in competition with other
potential purchasers. Several of such potential acquisitions, one or more of
which may be completed in 1996, would be considered significant based on
acquisition price. The Company is not able at this time to determine the
number or aggregate purchase price of the prospective acquisitions to which
the Company may become committed. The Company does not expect that all such
acquisitions will be completed during 1996, if at all.
ACQUISITION FUNDING
The timing and certainty of completion of Signed Acquisitions and future
acquisitions are based on many factors, including the availability of
financing. The Company will continue to finance acquisitions with a
combination of debt and equity offerings and credit facilities. The Company
believes that it will have sufficient funding for all Signed Acquisitions.
Funding for future acquisitions will be provided in part by the New Bank
Facility and by additional equity and debt offerings and credit facilities.
There can be no assurance that funds will be available to complete all future
acquisitions. Accordingly, there is no assurance that the Company will
complete any specific number or dollar amount of acquisitions in a particular
year. Failure by the Company to consummate certain acquisitions may result in
the payment of liquidated damages or actions alleging breach of contract
which, individually or in the aggregate, may have a material adverse effect on
the Company's financial condition and prospects for future growth.
28
<PAGE>
BUSINESS OPERATIONS
Funeral Homes
The Company's funeral homes offer a full range of funeral services, which
encompass the collection of remains, registration of death, professional
embalming, use of funeral home facilities, sale of caskets and related
merchandise, transportation to a place of worship or funeral chapel for a
religious service and transportation to a cemetery or crematorium. To provide
the public with the opportunity to choose the service that is most appropriate
from both an emotional and financial perspective, the Company offers complete
funeral services (including caskets and related merchandise) at prices ranging
from approximately $750 to $7,500 (and averaging approximately $3,500).
Cremation rates vary considerably from one region of North America to
another. The Company has operations in regions with both high and low
cremation rates. As a percentage of total funeral services, cremations in
North America have been increasing by approximately 1% annually over the past
five years. However, because the number of deaths has been increasing,
industry information reflects that the number of caskets sold (typically
associated with a traditional funeral service) has remained constant. The
Company has proprietary programs to provide a full range of service
alternatives to families choosing cremation.
The services offered by funeral homes can be purchased at the time of death
("at-need") or in advance through a prearranged agreement ("pre-need").
Prearranged funeral services enable the family to select the type of service
and merchandise in advance at prices prevailing at the time of selection. The
Company believes that families in large urban markets are more aware of and
are more willing to purchase funeral products and services in advance. The
Company recognizes that the increasing demand for advanced funeral and
cemetery planning is a natural extension of the service and care it offers
families, and is committed to providing quality advanced funeral and cemetery
planning to the communities it serves.
As the Company has increased its presence in large urban markets, it has
significantly expanded its efforts to sell prearranged funeral services in
those markets. For example, the Company now has 20 regional marketing centers
that focus primarily on advanced funeral planning. In order to protect and
enhance its market share in these large urban markets, management believes
that the Company will need to continue to implement programs designed to
increase pre-need sales.
Payments made for pre-need contracts are either placed in trust by the
Company or are used on behalf of the purchaser of the pre-need contract to pay
premiums on life insurance policies under which the Company is designated the
beneficiary. At the date of performing a prearranged service, the Company
records as funeral revenue the amount originally trusted or the insurance
contract amount, together with all related accrued trust earnings and
increased insurance benefits.
Cemeteries and Insurance
The Company's cemetery division assists families in making at-need and pre-
need arrangements and offers a complete line of cemetery products (including a
selection of burial spaces, burial vaults, lawn crypts, memorials, niches and
mausoleum crypts), the opening and closing of graves and cremation services.
The sale of cemetery pre-need arrangements is a significant component of the
cemetery operations. In 1995, 60.9% of cemetery revenue resulted from pre-need
sales, compared with 53.1% in 1994. The pre-need sale of interment rights and
other related products is recorded as revenue when customer contracts are
signed and, concurrently, related costs are recorded and an allowance is
established for customer cancellations and refunds based on management's
estimates of expected cancellations. Actual cancellation rates in the future
may result in a change in the estimate.
The Company determined in 1995 that it would not, as previously planned,
sell a life insurance subsidiary which had been acquired in connection with a
larger acquisition in 1994 with the intent that is be sold. The
29
<PAGE>
subsidiary was accounted for at cost from the date of acquisition to June 30,
1995. Beginning July 1, 1995, the Company reported the operations of the life
insurance subsidiary on a consolidated basis. On March 26, 1996, the Company
purchased certain net assets of S.I. Acquisition Associates, L.P., which
included two insurance companies. The Company may acquire additional insurance
businesses in 1996.
COMPETITION
Competition generally arises from two sources in the funeral industry. Local
community competition is oriented towards gaining market share. The market
share of a single funeral home or cemetery in any community is primarily a
function of the name and reputation of that funeral home or cemetery. Market
share increases within a community are usually gained over a long period of
time due to the high component of goodwill. Modest and tasteful promotional
programs can help enhance community profile but typically do not increase
market share significantly.
The Company also faces competition in its acquisition program. In the United
States funeral industry acquisition market, the Company's competition includes
Service Corporation International and Stewart Enterprises, Inc., both of which
are publicly-traded funeral services companies with significant United States
operations. Various smaller companies provide competition on a regional basis
in the United States. The Company also experiences competition on a local
level from operators who have focused on acquiring funeral home groupings in
concentrated geographic regions of the United States.
REGULATION
The funeral industry is regulated primarily on a state and provincial basis
with a vast majority of jurisdictions requiring licensing and supervision of
individuals who provide funeral-related services. A number of jurisdictions
also regulate the sale of pre-need services and the administration of any
resulting trust funds or insurance contracts. In addition, concerns regarding
lack of competition have led a few jurisdictions to enact legislation designed
to encourage competition by restricting the common ownership of funeral homes
and related operations within a specific geographic region.
The Company's United States operations must also comply with federal
legislation, including the laws administered by the Occupational Safety and
Health Administration, the Americans with Disabilities Act and the Federal
Trade Commission ("FTC") regulations. The FTC administers the Trade Regulation
Rule on Funeral Industry Practices, the purpose of which is to prevent unfair
or deceptive acts or practices in connection with the provision of funeral
goods or services.
ENVIRONMENT
Management believes that the Company's primary environmental risk arises
upon the acquisition of a funeral home or cemetery. The Company manages this
risk by conducting extensive environmental due diligence of all potential
acquisition candidates. Management endeavors to ensure that any environmental
issues which occur prior to acquisition of an operation are identified and
addressed in advance of acquisition or are covered by an appropriate indemnity
by the seller.
Management does not believe that an environmental problem at any single
location will have a material adverse effect on the Company's financial
results.
EMPLOYEES
At December 31, 1995, the Company employed approximately 10,000 people with
approximately 400 people employed at the Company's corporate offices.
Management believes that its relationship with employees is good. Fewer than
75 of the Company's employees are members of collective bargaining units. All
full-time and eligible part-time employees who have been employed by the
Company for more than 90 days are entitled to five Common Shares as part of
the Company's "Sharing The Vision" program.
30
<PAGE>
LEGAL PROCEEDINGS
Gulf National Settlement. In November 1995, a jury in the Circuit Court of
the First Judicial District of Hinds County, Mississippi, awarded Gulf
National $100 million in compensatory damages and $400 million in punitive
damages in a lawsuit against the Company Defendants in which Gulf National
claimed breach of contract and related torts in connection with its
allegations that the Company failed to consummate certain business
transactions. The Company Defendants appealed the Gulf National award. On
January 24, 1996, the Mississippi Supreme Court ruled that in order to stay
execution of the Gulf National award pending the appeal thereof, the Company
Defendants would be required to post a supersedeas bond with the Circuit Court
in an amount equal to 125% of the judgment, or $625 million.
On February 1, 1996, the Company Defendants and Gulf National executed a
settlement agreement pursuant to which, among other things, the parties agreed
a full mutual release of all claims against each other, and the Company
Defendants agreed to deliver to Gulf National or its designees $50 million in
cash, 1.5 million Common Shares and a promissory note in the amount of $80
million payable over 20 years in equal annual installments of $4 million,
without interest. In connection with the issuance of the Gulf National
Settlement Shares, on February 9, 1996, Loewen, LGII, Gulf National and
various individuals and law firms that represented Gulf National (collectively
the "Shareholders") entered into an agreement with respect to the Gulf
National Settlement Shares (the "Shareholders' Agreement"), pursuant to which,
among other things, Loewen agreed to file by September 1, 1996 a registration
statement relating to the Gulf National Settlement Shares with the Commission
and to have such registration statement declared effective by December 31,
1996. LGII also has agreed to pay to each Shareholder, upon due notice
("Notice") a per share price guarantee amount in certain circumstances. The
per share price guarantee amount is equal to the amount, if any, by which $30
exceeds the weighted average trading price of the Common Shares for the five
consecutive trading days preceding the date of Notice. LGII may elect to pay
the aggregate price guarantee in Common Shares or cash. Notice may be
delivered, and LGII is required to pay the price guarantee, only with respect
to a 30-day period commencing February 14, 1997 (the "Determination Period").
LGII is relieved of its obligation to make such payment if during the
Determination Period the trading price of the Common Shares exceeds $30 for
any five consecutive trading days, provided that the registration statement
has become effective before the Determination Period or the Shareholders have
otherwise had an opportunity to sell their Gulf National Settlement Shares
during the Determination Period. The Shareholders have granted to Loewen or
its assignee a right of first refusal with respect to the Gulf National
Settlement Shares and have agreed, until February 9, 1998, to vote the Gulf
National Settlement Shares in accordance with the recommendations of the Board
of Directors of Loewen. The right of first refusal does not apply in respect
of any offers and sales at prices of $30 or more per Common Share during the
Determination Period.
Provident Settlement. In April 1992, Provident filed a lawsuit against
Loewen and LGII in the United States District Court for the Eastern District
of Pennsylvania alleging breach of contract and related tort claims arising
out of terminated negotiations concerning a possible pre-need funeral
insurance marketing arrangement. The complaint requested compensatory damages
in excess of $58.8 million and unspecified punitive damages, based on
allegations that the loss of the Company's pre-need business had deprived the
plaintiffs of aggregate future profits of approximately $58.8 million to $132
million.
On February 12, 1996, Provident, Loewen and LGII agreed to settle the
litigation. On March 19, 1996 the parties entered into a settlement providing
for a full mutual release from all claims against each other, and Loewen and
LGII delivered $3 million in cash and one million Common Shares (the
"Provident Settlement Shares") to Provident and certain designees. Loewen
agreed to file a registration statement relating to the Provident Settlement
Shares with the Commission by June 30, 1996. LGII agreed to pay to Provident
for each Provident Settlement Share, in cash or Common Shares, at LGII's
election, the amount, if any, by which $27 exceeds the weighted average
trading price of the Common Shares during the five consecutive trading days
ending on the day before the registration statement is declared effective.
Shareholder Suits. On November 4, 1995, a class action lawsuit claiming
violations of Federal securities laws was filed on behalf of a class of
purchasers of the Company's securities against Loewen and five officers
31
<PAGE>
(four of whom are directors) in the United States District Court for the
Eastern District of Pennsylvania. LGII, LGCLP and the lead underwriters of the
MIPS offering were subsequently added as defendants. The underwriters have
indicated they will seek indemnity from the Company. On November 7, 1995, a
class action lawsuit was filed on behalf of a class of purchasers of Common
Shares against Loewen and the same individual defendants in the United States
District Court for the Southern District of Mississippi alleging Federal
securities law violations and related common law claims. On December 1, 1995,
a class action lawsuit was filed on behalf of a class of purchasers of the
Company's securities against Loewen, LGII, LGCLP and the same individual
defendants in the United States District Court for the Eastern District of
Pennsylvania. All suits (collectively, the "Shareholder Suits") allege that
the defendants failed to disclose the Company's anticipated liability in
connection with the Gulf National litigation and the Pennsylvania Shareholder
Suits allege failure to disclose the potential liability in connection with
the Provident litigation. In each of the foregoing claims, the plaintiffs seek
compensatory money damages in an unspecified amount, together with attorneys
fees, expert fees and other costs and disbursements and in addition, the
November 7 action seeks unspecified punitive damages. The longest class period
specified is from April 16, 1993 to November 1, 1995. Pursuant to a Transfer
Order filed April 15, 1996 by the Judicial Panel on Multidistrict Litigation,
the Mississippi Shareholder Suit was transferred to the Eastern District of
Pennsylvania for consolidation of pretrial proceedings with the two
Pennsylvania Shareholder Suits. The Company referred the claims to its
insurance carrier under its directors and officers insurance policy. On
February 9, 1996 the carrier denied coverage of the claim. There is no
coverage for the Company's liability (other than with respect to
indemnification of directors and officers) and defense under such policy. The
Company cannot predict at this time the extent to which any settlement or
litigation that may result from these claims will ultimately be covered by
insurance, if at all. The Company has determined that it is not possible to
predict the final outcome of these legal proceedings and that it is not
possible to establish a reasonable estimate of possible damages, if any, or
reasonably to estimate the range of possible damages that may be awarded to
the plaintiffs. Accordingly, no provision has been made in the Company's 1995
Consolidated Financial Statements.
Roe, et al. and Palladino et al. In October 1995, Roe and 22 other families
filed a lawsuit against LGII and Osiris in Florida Circuit Court in St.
Petersburg. The complaint, as amended, now includes a total of 62 families.
Plaintiffs allege that in July 1992, employees of the Royal Palm Cemetery
facility who were installing a sprinkler line disturbed the remains of infants
in one section of the cemetery. Each plaintiff in Roe is seeking damages in
excess of $15,000, but counsel for the plaintiffs in Roe has publicly stated
that the claims will aggregate to $1 million per family ($62 million based on
the current plaintiffs). In early April 1996, a related lawsuit, Palladino et
al., was filed by eight families against LGII and Osiris in Florida Circuit
Court in St. Petersburg, and was assigned to the same judge handling the Roe
matter. The factual allegations underlying the Palladino complaint, which was
filed as a class action lawsuit, are identical to those in Roe. The Company is
in the process of determining whether to agree to or oppose the certification
of a class in Palladino.
At the time the remains allegedly were disturbed, the Royal Palm Cemetery
was owned by Osiris. Osiris was acquired by the Company in March 1995. The
insurance carrier for Osiris has assumed the defense of these claims, subject
to a reservation of rights. The policy limit is $11 million. No provision with
respect to this lawsuit has been made in the Company's 1995 consolidated
financial statements.
Rojas et al. On February 22, 1995, Juan Riveras Rojas, Leyda Rivera Vega,
the Conjugal Partnership constituted between them, and Carlos Rivera
Bustamente instituted a legal action against Loewen, LGII and a subsidiary in
the United States District Court for the District of Puerto Rico. The
complaint alleges that the defendants breached a contract and ancillary
agreements with the plaintiffs relating to the purchase of funeral homes and
cemeteries, and committed related torts. The plaintiffs seek compensatory
damages of $12.5 million, and unspecified punitive damages (although the
Company is advised by counsel that there is no entitlement to punitive damages
under Puerto Rican law). The Company has filed a motion to dismiss the
complaint on the grounds of failure to join an indispensable party. In
addition, the Company claims it has suffered damages far in excess of the
amount claimed by the plaintiffs as a result of breach of contract and related
torts on the part of the plaintiffs. A subsidiary of Loewen has filed a
complaint seeking damages in excess of $19 million from the plaintiffs in the
General Court of Justice of the Commonwealth of Puerto Rico. The Company has
determined that it is not possible to predict the final outcome of these legal
proceedings and that it is not possible to establish
32
<PAGE>
a reasonable estimate of possible damages, if any, or reasonably to estimate
the range of possible damages that may be awarded to the plaintiffs.
Accordingly, no provision has been made in the Company's 1995 Consolidated
Financial Statements.
Esner Estate. As described in the Company's previous periodic reports, on
February 1, 1995, Stuart B. Esner and Sandra Esner (the "Executors") as co-
executors for the Estate of Gerald F. Esner (the "Esner Estate") filed an
action in the Court of Common Pleas in Bucks County, Pennsylvania against
Osiris and a law firm that previously represented Osiris and its principal
shareholders, Gerald F. Esner, Lawrence Miller and William R. Shane. Messrs.
Miller and Shane currently are executive officers of Loewen and LGII. The
complaint alleged that Osiris breached the terms of a Second Amended and
Restated Shareholders' Agreement among Messrs. Esner, Miller and Shane (the
"Shareholders' Agreement") by attempting to repurchase shares of Osiris held
by the Esner Estate (the "Esner Shares") without complying with the terms of
the Shareholders' Agreement, and that the law firm breached its fiduciary duty
and committed malpractice in connection with the drafting of the Shareholders'
Agreement and its representation of Esner and Osiris. The Executors asked the
Court (i) to have the value of Osiris reappraised pursuant to the terms of the
Shareholders' Agreement and (ii) to require Osiris to repurchase the Esner
Shares pursuant to a new appraisal and the alleged terms of the Shareholders'
Agreement or, alternatively, to pay the Esner Estate the fair value of the
Esner Shares as determined by the new appraisal.
On March 17, 1995, LGII purchased all of the issued and outstanding shares
of Osiris, including the Esner Shares. In connection with the purchase, LGII
entered into an indemnification agreement whereby Messrs. Miller and Shane
agreed to indemnify and hold LGII harmless with respect to any claims,
liabilities, losses and expenses, including reasonable attorneys' fees, in
connection with or arising from the Esner Estate litigation.
On April 9, 1996, the Executors filed a second complaint, which names
Messrs. Miller and Shane and LGII as defendants. The second complaint alleges
breach of contract, fraud and related claims against Messrs. Miller and Shane,
and that LGII joined in a civil conspiracy by acquiring Osiris. The Executors
request compensatory damages of $24.3 million against the various defendants,
and seek punitive damages from Messrs. Miller and Shane. A motion for
consolidation of the two cases is pending.
No provision with respect to these lawsuits have been made in the Company's
1995 consolidated financial statements.
Other. The Company is a party to other legal proceedings in the ordinary
course of its business but does not expect the outcome of any such proceedings
to have a material adverse affect on the Company's financial condition.
33
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DESCRIPTION OF EXCHANGE NOTES
The Exchange Notes will be issued in two separate series under an indenture
dated as at March 20, 1996 (the "Indenture") between LGII, Loewen, as
guarantor of the obligations of LGII under the Indenture, and Fleet National
Bank, as trustee (the "Trustee"). The following summary of the material
provisions of the Indenture does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the provisions of the Indenture
(a copy of which has been filed with the Commission as an exhibit to the
Exchange Act Registration Statement), including the definitions of certain
terms contained therein and those terms made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the "TIA"), as in
effect on the date of the Indenture. The definitions of certain capitalized
terms used in the following summary are set forth below under "--Certain
Definitions."
GENERAL
The Exchange Notes and the Guarantees will be unsecured senior obligations
of LGII and Loewen, respectively, and will rank pari passu in right of payment
with all unsecured senior indebtedness of LGII and Loewen, respectively. The
Notes include a Lien Limitation that limits Liens to Permitted Liens. The New
Bank Facility is expected to be secured by, among other things, a pledge for
the benefit of the lenders under the New Bank Facility of substantially all of
the shares of the direct and indirect United States and Canadian subsidiaries
in which Loewen directly or indirectly holds more than a 50% voting or
economic interest and all of the assets of LGII (LGII does not have material
assets other than financial assets). In order to qualify as a Permitted Lien,
the Lien secured by the Collateral pledged under the New Bank Facility will be
shared equally and ratably with the holders of the Indebtedness evidenced by
the Notes. The Lien secured by the Collateral also will be shared equally and
ratably with all other holders of Pari Passu Indebtedness. However, the
holders of the Notes will not have an independent right to require the Lien
secured by the Collateral to remain in place or to require any other security
for the Notes. As at December 31, 1995, the aggregate amount of Pari Passu
Indebtedness was $771 million, after giving effect to the Initial Notes
Offering, the 1996 Equity Offering and the application of the respective net
proceeds thereof. The Exchange Notes and related Guarantees are effectively
subordinated in right of payment to all existing and future liabilities,
including trade payables, of LGII's and Loewen's subsidiaries, respectively.
As at December 31, 1995, the aggregate amount of Indebtedness of LGII's
subsidiaries (excluding intercompany indebtedness) was approximately $61
million, and the aggregate amount of Indebtedness of Loewen's subsidiaries
other than LGII and its subsidiaries (excluding intercompany Indebtedness) was
approximately $10 million.
MATURITY, INTEREST AND PRINCIPAL
The Series 3 Senior Notes will mature on April 15, 2001, and the Series 4
Senior Notes will mature on April 15, 2003. Interest on the Series 3 Senior
Notes will accrue at the rate of 7 1/2% per annum and interest on the Series 4
Senior Notes will accrue at the rate of 8 1/4% per annum. Interest will be
payable semiannually on each April 15 and October 15, commencing October 15,
1996, to the holders of record of Exchange Notes at the close of business on
the April 1 and October 1 immediately preceding such interest payment date.
Interest on the Exchange Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the original
date of issuance (the "Issue Date"). Interest will be computed on the basis of
a 360-day year comprised of twelve 30-day months.
The Notes are not entitled to the benefit of any mandatory sinking fund.
REDEMPTION AND OFFER TO PURCHASE
Optional Redemption. The Series 3 Senior Notes will not be redeemable prior
to maturity. The Series 4 Senior Notes will be redeemable at the option of
LGII, in whole or in part, at any time on or after April 15, 2000, on not less
than 30 nor more than 60 days' prior notice, at the redemption prices
(expressed as percentages of principal amount) set forth below, plus accrued
and unpaid interest, if any, to the redemption date, if redeemed during the
12-month period beginning April 15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2000.............................................................. 104.125%
2001.............................................................. 102.063%
2002.............................................................. 100.000%
</TABLE>
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<PAGE>
Offer to Repurchase in Certain Circumstances. LGII is obligated to make, and
the Guarantor will ensure that LGII makes, (a) upon the occurrence of a Change
of Control, an offer to purchase all outstanding Notes at a purchase price of
101% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the date of purchase, and (b) upon the occurrence of certain sales or
dispositions of assets, an offer to purchase Notes with a portion of the net
cash proceeds thereof, at a purchase price of 100% of the principal amount of
the Notes, plus accrued and unpaid interest, if any, to the date of purchase.
See "--Certain Covenants; Change of Control" and "--Disposition of Proceeds of
Asset Sales."
CERTAIN COVENANTS
LGII and the Guarantor will jointly and severally make the following
covenants, among others, in the Indenture.
Limitation on Indebtedness. The Guarantor will not, and will not permit any
of its Restricted Subsidiaries (including without limitation LGII) to,
directly or indirectly, create, incur, issue, assume, guarantee or in any
manner become directly or indirectly liable, contingently or otherwise, for
the payment of (collectively, to "incur") any Indebtedness (including, without
limitation, any Acquired Indebtedness) other than Permitted Indebtedness.
Notwithstanding the foregoing limitations, the Guarantor and LGII (and any
Wholly-Owned Subsidiary with respect to Seller Financing Indebtedness) will be
permitted to incur Indebtedness (including, without limitation, Acquired
Indebtedness) if at the time of such incurrence, and after giving pro forma
effect thereto, the Consolidated Fixed Charge Coverage Ratio of the Guarantor
is at least equal to 2.25:1.
Limitation on Restricted Payments. The Guarantor will not, and will not
permit any of its Restricted Subsidiaries (including without limitation LGII)
to, directly or indirectly:
(a) declare or pay any dividend or make any other distribution or payment
on or in respect of Capital Stock of the Guarantor or any of its Restricted
Subsidiaries or any payment made to the direct or indirect
holders (in their capacities as such) of Capital Stock of the Guarantor or
any of its Restricted Subsidiaries (other than (x) dividends or
distributions payable solely in Capital Stock of the Guarantor (other than
Redeemable Capital Stock) or in options, warrants or other rights to
purchase Capital Stock of the Guarantor (other than Redeemable Capital
Stock) and (y) dividends or other distributions to the extent declared or
paid to the Guarantor or any Wholly-Owned Subsidiary of the Guarantor),
(b) purchase, redeem, defease or otherwise acquire or retire for value
any Capital Stock of the Guarantor or any of its Restricted Subsidiaries
(other than any such Capital Stock of a Wholly-Owned Subsidiary of the
Guarantor),
(c) make any principal payment on, or purchase, defease, repurchase,
redeem or otherwise acquire or retire for value, prior to any scheduled
maturity, scheduled repayment, scheduled sinking fund payment or other
Stated Maturity, any Indebtedness that is subordinate or junior in right of
payment to the Senior Notes or Pari Passu Indebtedness (other than any such
subordinated or Pari Passu Indebtedness owned by the Guarantor or a Wholly-
Owned Subsidiary of the Guarantor) or
(d) make any Investment (other than any Permitted Investment) in any
person,
(such payments or Investments described in the preceding clauses (a), (b), (c)
and (d) are collectively referred to as "Restricted Payments"), unless, at the
time of and after giving effect to the proposed Restricted Payment (the amount
of any such Restricted Payment, if other than cash, shall be the Fair Market
Value on the date of such Restricted Payment of the asset(s) proposed to be
transferred by the Guarantor or such Restricted Subsidiary, as the case may
be, pursuant to such Restricted Payment), (A) no Default or Event of Default
shall have occurred and be continuing, (B) immediately prior to and after
giving effect to such Restricted Payment, the Guarantor would be able to incur
$1.00 of additional Indebtedness pursuant to the covenant described under "--
Limitation on Indebtedness" above (assuming a market rate of interest with
respect to such additional Indebtedness) and (C) the aggregate amount of all
Restricted Payments declared or made from and after the Issue Date would not
exceed the sum of (1) 50% of the aggregate Consolidated Net Income of the
Guarantor accrued on a cumulative
35
<PAGE>
basis during the period beginning on the first day of the fiscal quarter of
the Guarantor during which the Issue Date occurs and ending on the last day of
the fiscal quarter of the Guarantor immediately preceding the date of such
proposed Restricted Payment, which period shall be treated as a single
accounting period (or, if such aggregate cumulative Consolidated Net Income of
the Guarantor for such period shall be a deficit, minus 100% of such deficit)
plus (2) the aggregate net cash proceeds received by the Guarantor or LGII
(without duplication) either (x) as capital contributions to the Guarantor or
LGII (without duplication) after the Issue Date from any person (other than
the Guarantor, LGII or a Restricted Subsidiary of the Guarantor or LGII, as
the case may be) or (y) from the issuance or sale of Capital Stock (excluding
Redeemable Capital Stock, but including Capital Stock issued upon the
conversion of convertible Indebtedness or from the exercise of options,
warrants or rights to purchase Capital Stock (other than Redeemable Capital
Stock)) of the Guarantor or LGII (without duplication) to any person (other
than to the Guarantor, LGII or a Restricted Subsidiary of the Guarantor or
LGII, as the case may be) after the Issue Date plus (3) in the case of the
disposition or repayment of any Investment constituting a Restricted Payment
made after the Issue Date (excluding any Investment described in clause (v) of
the following paragraph), an amount equal to the lesser of the return of
capital with respect to such Investment and the cost of such Investment less,
in either case, the cost of the disposition of such Investment plus (4) the
sum of $15,000,000. For purposes of the preceding clause (C)(2), the value of
the aggregate net proceeds received by the Guarantor or LGII (without
duplication) upon the issuance of Capital Stock upon the conversion of
convertible Indebtedness or upon the exercise of options, warrants or rights
will be the net cash proceeds received upon the issuance of such Indebtedness,
options, warrants or rights plus the incremental cash amount received by the
Guarantor or LGII (without duplication) upon the conversion or exercise
thereof.
None of the foregoing provisions will prohibit (i) the payment of any dividend
within 60 days after the date of its declaration, if at the date of declaration
such payment would be permitted by the foregoing paragraph; (ii) so long as no
Default or Event of Default shall have occurred and be continuing, the
redemption, repurchase or other acquisition or retirement of any shares of any
class of Capital Stock of the Guarantor, LGII or any Restricted Subsidiary of
the Guarantor or LGII in exchange for, or out of the net cash proceeds of, a
substantially concurrent (x) capital contribution to the Guarantor or LGII from
any person (other than a Related Obligor (within the meaning of this covenant)
or (y) issue and sale of other shares of Capital Stock (other than Redeemable
Capital Stock) of the Guarantor or LGII to any person (other than to a Related
Obligor); (iii) so long as no Default or Event of Default shall have occurred
and be continuing, any redemption, repurchase or other acquisition or retirement
of Indebtedness that is subordinate or junior in right of payment to the Senior
Notes and the Guarantee by exchange for, or out of the net cash proceeds of, a
substantially concurrent (x) capital contribution to the Guarantor or LGII from
any person (other than a Related Obligor) or (y) issue and sale of (1) Capital
Stock (other than Redeemable Capital Stock) of the Guarantor or LGII to any
person (other than a Related Obligor); provided, however, that the amount of any
such net proceeds that are utilized for any such redemption, repurchase or other
acquisition or retirement shall be excluded from clause (C)(2) of the preceding
paragraph; or (2) Indebtedness of the Guarantor or LGII issued to any person
(other than a Related Obligor), so long as such Indebtedness is Pari Passu
Indebtedness or Indebtedness that is subordinate or junior in right of payment
to the Senior Notes and the Guarantee in the same manner and at least to the
same extent as the Indebtedness so purchased, exchanged, redeemed, acquired or
retired; (iv) so long as no Default or Event of Default shall have occurred and
be continuing, any redemption, repurchase or other acquisition or retirement of
Pari Passu Indebtedness by exchange for, or out of the net cash proceeds of, a
substantially concurrent (x) capital contribution to the Guarantor or LGII from
any person (other than a Related Obligor) or (y) issue and sale of (1) Capital
Stock (other than Redeemable Capital Stock) of the Guarantor or LGII to any
person (other than a Related Obligor); provided, however, that the amount of any
such net proceeds that are utilized for any such redemption, repurchase or other
acquisition or retirement shall be excluded from clause (C)(2) of the preceding
paragraph; or (2) Indebtedness of the Guarantor or LGII issued to any person
(other than a Related Obligor), so long as such Indebtedness is Pari Passu
Indebtedness or Indebtedness that is subordinate or junior in right of payment
to the Senior Notes and the Guarantee in the same manner and at least to the
same extent as the Indebtedness so purchased, exchanged, redeemed, acquired or
retired; (v) Investments constituting Restricted Payments made as a result of
the receipt of consideration that consists of cash or Cash Equivalents from any
Asset Sale made pursuant to and in compliance with the covenant described under
"--Disposition of Proceeds
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<PAGE>
of Asset Sales" below; (vi) so long as no Default or Event of Default has
occurred and is continuing, repurchases by the Guarantor of Common Stock of
the Guarantor from employees of the Guarantor or their authorized
representatives upon the death, disability or termination of employment of
such employees, in an aggregate amount not exceeding $10,000,000 in any
calendar year; (vii) Investments constituting Restricted Payments that are
permitted by subparagraphs (iv) and (v) of the proviso to the section entitled
"Limitation on Transactions with Interested Persons;" and (viii) the
declaration or the payment of dividends on, or the scheduled purchase or
redemption of, the Preferred Securities of a Special Finance Subsidiary or the
Series C Preferred Shares of the Guarantor. In computing the amount of
Restricted Payments previously made for purposes of clause (C) of the
preceding paragraph, Restricted Payments made under the preceding clauses (v),
(vi) and (vii) shall be included and those under clauses (i), (ii), (iii),
(iv) and (viii) shall not be so included. For purposes of this covenant only,
the term "Related Obligor" shall mean the Guarantor, LGII or a Restricted
Subsidiary of the Guarantor or LGII.
Limitation on Liens. The Guarantor will not, and will not permit any of its
Restricted Subsidiaries (including without limitation LGII) to, create, incur,
assume or suffer to exist any Liens of any kind against or upon any of its
property or assets, or any proceeds therefrom where the aggregate amount of
Indebtedness secured by any such Liens, together with the aggregate amount of
property subject to any Sale-Leaseback Transactions of the Guarantor and its
Restricted Subsidiaries (other than Permitted Sale-Leaseback Transactions),
exceeds 10% of the Guarantor's Consolidated Net Worth unless (x) in the case
of Liens securing Indebtedness that is subordinate or junior in right of
payment to the Notes, the Notes are secured by a Lien on such property, assets
or proceeds that is senior in priority to such Liens and (y) in all other
cases, the Senior Notes are equally and ratably secured except for (a) Liens
existing as at the Issue Date; (b) Liens securing the Securities or the
outstanding Notes; (c) Liens in favor of the Guarantor, LGII or any Wholly-
Owned Subsidiary; (d) Liens securing Indebtedness which is incurred to
refinance Indebtedness which has been secured by a Lien permitted under the
Indenture and which has been incurred in accordance with the provisions of the
Indenture; provided, however, that such Liens do not extend to or cover any
property or assets of the Guarantor or any of its Restricted Subsidiaries not
securing the Indebtedness so refinanced; and (e) Permitted Liens.
Change of Control. Upon the occurrence of a Change of Control, LGII will be,
and the Guarantor will ensure that LGII will be, obligated to make an offer to
purchase (a "Change of Control Offer"), and shall purchase, on a business day
(the "Change of Control Purchase Date") not more than 60 nor less than 30 days
following the occurrence of the Change of Control, all of the then outstanding
Senior Notes properly tendered and not withdrawn at a purchase price (the
"Change of Control Purchase Price") equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the Change of Control
Purchase Date. The Change of Control Offer is required to remain open for at
least 20 business days and until the close of business on the Change of
Control Purchase Date.
If a Change of Control occurs and LGII fails to pay the Purchase Price for
all Senior Notes properly tendered and not withdrawn, the Guarantor will be
obligated to purchase all such Senior Notes at the Change of Control Purchase
Price on the Change of Control Purchase Date.
In order to effect such Change of Control Offer, LGII or the Guarantor, as
the case may be, shall, not later than the 30th day after the occurrence of
the Change of Control, mail to each holder of Senior Notes notice of the
Change of Control Offer, which notice shall govern the terms of the Change of
Control Offer and shall state, among other things, the procedures that holders
of Senior Notes must follow to accept the Change of Control Offer.
If a Change of Control were to occur, there can be no assurance that LGII or
the Guarantor would have sufficient funds to pay the purchase price for all
Senior Notes that LGII or the Guarantor might be required to purchase. In the
event that LGII or the Guarantor were required to purchase Senior Notes
pursuant to a Change of Control Offer, each of LGII and the Guarantor expect
that they would need to seek third-party financing to
37
<PAGE>
the extent they may not have available funds to meet their purchase
obligations. However, there can be no assurance that LGII or the Guarantor
would be able to obtain such financing on favorable terms, if at all.
Neither LGII nor the Guarantor shall be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements applicable to a Change of Control Offer made by LGII and
purchases all Senior Notes validly tendered and not withdrawn under such
Change of Control Offer.
LGII and the Guarantor will comply with Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable, in the event that a Change of Control
occurs and LGII or the Guarantor is required to purchase Senior Notes as
described above.
With respect to the sale of assets referred to in the definition of Change
of Control, the phrase "all or substantially all" as used in such definition
varies according to the facts and circumstances of the subject transaction,
has no clearly established meaning under relevant law and is subject to
judicial interpretation. Accordingly, in certain circumstances there may be a
degree of uncertainty in ascertaining whether a particular transaction would
involve a disposition of "all or substantially all" of the assets of a person
and, therefore, it may be unclear whether a Change of Control has occurred and
whether the Senior Notes are subject to a Change of Control Offer.
Disposition of Proceeds of Asset Sales. The Guarantor will not, and will not
permit any of its Restricted Subsidiaries (including without limitation LGII)
(or First Capital Life Insurance Company of Louisiana, National Capital Life
Insurance Company or a Subsidiary holding the insurance company assets
obtained from S.I. Acquisition Associates, L.P.) to, make any Asset Sale
unless (a) the Guarantor or such Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the shares or assets sold or otherwise disposed of and
(b) at least 75% of such consideration consists of cash or Cash Equivalents.
To the extent the Net Cash Proceeds of any Asset Sale are not required to be
applied to repay, and permanently reduce the commitments under, the Credit
Agreements (as required by the terms thereof) or any other Pari Passu
Indebtedness, or are not so applied, the Guarantor or such Restricted
Subsidiary, as the case may be, may, within 180 days of such Asset Sale, apply
such Net Cash Proceeds to an investment in properties and assets that replace
the properties and assets that were the subject of such Asset Sale or in
properties and assets that will be used in the business of the Guarantor and
its Restricted Subsidiaries existing on the Issue Date or in businesses
reasonably related thereto ("Replacement Assets"). Any Net Cash Proceeds from
any Asset Sale that are neither used to repay, and permanently reduce the
commitments under, the Credit Agreements nor invested in Replacement Assets
within the 180-day period described above constitute "Excess Proceeds" subject
to disposition as provided below.
When the aggregate amount of Excess Proceeds equals or exceeds $10,000,000,
the Guarantor shall cause LGII to make an offer to purchase (an "Asset Sale
Offer"), from all holders of the Senior Notes, not more than 40 Business Days
thereafter, an aggregate principal amount of Senior Notes equal to such Excess
Proceeds, at a price in cash equal to 100% of the outstanding principal amount
thereof plus accrued and unpaid interest, if any, to the purchase date. To the
extent that the aggregate principal amount of Senior Notes tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, LGII may use such
deficiency for general corporate purposes. If the aggregate principal amount
of Senior Notes validly tendered and not withdrawn by holders thereof exceeds
the Excess Proceeds, Senior Notes to be purchased will be selected on a pro
rata basis. Upon completion of such Asset Sale Offer, the amount of Excess
Proceeds shall be reset to zero.
LGII and the Guarantor or LGII will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable, in the event that an Asset
Sale occurs and the Guarantor or LGII is required to purchase Senior Notes as
described above.
Limitation on Issuances and Sale of Preferred Stock by Restricted
Subsidiaries. The Guarantor (a) will not permit any of its Restricted
Subsidiaries (including without limitation LGII) to issue any Preferred Stock
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<PAGE>
(other than (i) Preferred Stock issued to the Guarantor or a Wholly-Owned
Subsidiary of the Guarantor and (ii) Preferred Securities of a Special Finance
Subsidiary); and (b) will not permit any person to own any Preferred Stock of
any Restricted Subsidiary of the Guarantor (other than (i) Preferred Stock
owned by the Guarantor or a Wholly-Owned Subsidiary of the Guarantor and (ii)
Preferred Securities of a Special Finance Subsidiary); provided, however, that
this covenant shall not prohibit the issuance and sale of (x) all, but not
less than all, of the issued and outstanding Capital Stock of any Restricted
Subsidiary of the Guarantor owned by the Guarantor or any of its Restricted
Subsidiaries in compliance with the other provisions of the Indenture or (y)
directors' qualifying shares or investments by foreign nationals mandated by
applicable law.
Limitation on Transactions with Interested Persons. The Guarantor will not,
and will not permit any of its Restricted Subsidiaries (including without
limitation LGII) to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, transfer, disposition, purchase, exchange or lease of assets,
property or services) with, or for the benefit of, any Affiliate of the
Guarantor or any beneficial owner (determined in accordance with the
Indenture) of 5% or more of the Common Shares at any time outstanding
("Interested Persons"), unless (a) such transaction or series of related
transactions are on terms that are no less favorable to the Guarantor or such
Restricted Subsidiary, as the case may be, than those which could have been
obtained in a comparable transaction at such time from persons who are not
Affiliates of the Guarantor or Interested Persons, (b) with respect to a
transaction or series of transactions involving aggregate payments or value
equal to or greater than $10,000,000, the Guarantor has obtained a written
opinion from an Independent Financial Advisor stating that the terms of such
transaction or series of transactions are fair to the Guarantor or its
Restricted Subsidiary, as the case may be, from a financial point of view and
(c) with respect to a transaction or series of transactions involving
aggregate payments or value equal to or greater than $2,500,000, the Guarantor
shall have delivered an officers' certificate to the Trustee certifying that
such transaction or series of transactions comply with the preceding clause
(a) and, if applicable, certifying that the opinion referred to in the
preceding clause (b) has been delivered and that such transaction or series of
transactions have been approved by a majority of the Board of Directors of the
Guarantor (including a majority of the disinterested directors); provided,
however, that this covenant will not restrict the Guarantor from (i) paying
dividends in respect of its Capital Stock permitted under the covenant
described under "--Limitation on Restricted Payments" above, (ii) paying
reasonable and customary fees to directors of the Guarantor or any Restricted
Subsidiary who are not employees of the Guarantor or any Restricted
Subsidiary, (iii) entering into transactions with its Wholly-Owned
Subsidiaries or permitting its Wholly-Owned Subsidiaries from entering into
transactions with other Wholly-Owned Subsidiaries of the Guarantor, (iv)
making loans or advances to senior officers and directors of the Guarantor or
any Restricted Subsidiary not in excess of $6,000,000 in the aggregate at any
one time outstanding, (v) guaranteeing loans made to officers and other
employees of the Guarantor and its Restricted Subsidiaries in connection with
the Guarantor's 1994 Management Equity Investment Plan not in excess of
$6,000,000 in the aggregate at any one time outstanding, (vi) making loans or
advances to officers, employees or consultants of the Guarantor and its
Restricted Subsidiaries for travel and moving expenses in the ordinary course
of business for bona fide business purposes of the Guarantor and its
Restricted Subsidiaries, (vii) making other loans or advances to officers,
employees or consultants of the Guarantor and its Restricted Subsidiaries in
the ordinary course of business for bona fide business purposes of the
Guarantor and its Restricted Subsidiaries not in excess of $10,000,000 in the
aggregate at any one time outstanding, (viii) making payments to officers or
employees of the Guarantor or its Restricted Subsidiaries pursuant to
obligations undertaken, at a time when such persons were not officers or
employees of the Guarantor or its Restricted Subsidiaries, in connection with
arms' length Asset Acquisitions or (ix) declaring or paying dividends on, or
purchasing or redeeming, the Preferred Securities of a Special Finance
Subsidiary.
Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Guarantor will not, and will not permit any of its
Restricted Subsidiaries (including without limitation LGII) to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Restricted Subsidiary of
the Guarantor to (a) pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock or any other interest or
participation in, or measured by, its profits, (b) pay any Indebtedness owed
to the Guarantor or any other Restricted Subsidiary of the Guarantor,
39
<PAGE>
(c) make loans or advances to, or any Investment in, the Guarantor or any
other Restricted Subsidiary of the Guarantor, (d) transfer any of its
properties or assets to the Guarantor or any other Restricted Subsidiary of
the Guarantor or (e) guarantee any Indebtedness of the Guarantor or any other
Restricted Subsidiary of the Guarantor, except for such encumbrances or
restrictions existing under or by reason of (i) applicable law, (ii) customary
non-assignment provisions of any contract or any lease governing a leasehold
interest of the Guarantor or any Restricted Subsidiary of the Guarantor, (iii)
customary restrictions on transfers of property subject to a Lien permitted
under the Indenture which could not materially adversely affect the
Guarantor's ability to satisfy its obligations under the Indenture and the
Senior Notes, (iv) any agreement or other instrument of a person acquired by
the Guarantor or any Restricted Subsidiary of the Guarantor (or a Restricted
Subsidiary of such person) in existence at the time of such acquisition (but
not created in contemplation thereof), which encumbrance or restriction is not
applicable to any person, or the properties or assets of any person, other
than the person, or the properties or assets of the person, so acquired, (v)
provisions contained in any agreement or instrument relating to Indebtedness
which prohibit the transfer of all or substantially all of the assets of the
obligor thereunder unless the transferee shall assume the obligations of the
obligor under such agreement or instrument and (vi) encumbrances and
restrictions under Indebtedness in effect on the Issue Date (including under
the Senior Notes) and encumbrances and restrictions in permitted refinancings
or replacements thereof which are no less favorable to the holders of the
Senior Notes than those contained in the Indebtedness so refinanced or
replaced.
Limitation on Sale-Leaseback Transactions. The Guarantor will not, and will
not permit any of its Restricted Subsidiaries (including without limitation
LGII) to, enter into any Sale-Leaseback Transaction with respect to any
property of the Guarantor or any of its Restricted Subsidiaries where the
aggregate amount of property subject to such Sale-Leaseback Transactions,
together with the aggregate amount of Liens securing Indebtedness of the
Guarantor and its Restricted Subsidiaries (other than Permitted Liens),
exceeds 10% of the Guarantor's Consolidated Net Worth. Notwithstanding the
foregoing, the Guarantor and its Restricted Subsidiaries may enter into Sale-
Leaseback Transactions ("Permitted Sale-Leaseback Transactions") with respect
to property acquired or constructed after the Issue Date; provided that (a)
the Attributable Value of such Sale-Leaseback Transaction shall be deemed to
be Indebtedness of the Guarantor or such Restricted Subsidiary, as the case
may be, and (b) after giving pro forma effect to any such Sale-Leaseback
Transaction and the foregoing clause (a), the Guarantor would be able to incur
$1.00 of additional Indebtedness pursuant to the covenant described under "--
Limitation on Indebtedness" above (assuming a market rate of interest with
respect to such additional Indebtedness).
Limitation on Applicability of Certain Covenants. During any period of time
that (i) the ratings assigned to the Notes by each of S&P and Moody's
(collectively, the "Rating Agencies") are no less than BBB- and Baa3,
respectively (the "Investment Grade Ratings"), and (ii) no Default or Event of
Default has occurred and is continuing, the Guarantor and its Restricted
Subsidiaries, including without limitation LGII, will not be subject to the
covenants entitled "Limitation on Indebtedness," "Limitation on Restricted
Payments," "Disposition of Proceeds of Asset Sales," "Limitation on Issuances
and Sale of Preferred Stock by Restricted Subsidiaries," "Limitations on
Transactions with Interested Persons" and "Limitation on Dividends and Other
Payment Restrictions Affecting Restricted Subsidiaries" (collectively, the
"Suspended Covenants"). If one or both Rating Agencies withdraws its rating or
downgrades its Investment Grade Rating, then thereafter the Guarantor and its
Restricted Subsidiaries will be subject, on a prospective basis, to the
Suspended Covenants (until the Rating Agencies have again assigned Investment
Grade Ratings to the Senior Notes) and compliance with the Suspended Covenants
with respect to Restricted Payments made after the time of such withdrawal or
downgrade will be calculated in accordance with the covenant entitled
"Limitation on Restricted Payments" as if such covenant had been in effect at
all times after the date of the Indenture.
Reporting Requirements. The Guarantor will file with the Commission, or if
not permitted or required to so file will deliver to the Trustee, the annual
reports, quarterly reports and other documents required to be filed with the
Commission pursuant to Sections 13 and 15 of the Exchange Act, whether or not
the Guarantor has a class of securities registered under the Exchange Act. The
Guarantor will be required to file with the Trustee and
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provide to each Noteholder within 15 days after it files them with the
Commission (or if any such filing is not permitted under the Exchange Act, 15
days after the Guarantor would have been required to make such filing) copies
of such reports and documents.
Rule 144A Information Requirement. If at any time the Guarantor is no longer
subject to the reporting requirements of the Exchange Act, it will furnish to
the Holders or beneficial holders of the Senior Notes and prospective
purchasers of the Senior Notes designated by the holders of the Senior Notes,
upon their request, any information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
MERGER, SALE OF ASSETS, ETC.
The Guarantor will not, and will not permit LGII to, in any transaction or
series of transactions, merge or consolidate with or into, or sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of
its properties and assets as an entirety to, any person or persons, and the
Guarantor will not permit any of its Restricted Subsidiaries (including
without limitation LGII) to enter into any such transaction or series of
transactions if such transaction or series of transactions, in the aggregate,
would result in a sale, assignment, conveyance, transfer, lease or other
disposition of all or substantially all of the properties and assets of the
Guarantor or LGII or the Guarantor and its Restricted Subsidiaries, taken as a
whole, or LGII and its Restricted Subsidiaries, taken as a whole, to any other
person or persons, unless at the time of and after giving effect thereto (a)
either (i) if the transaction or series of transactions is a merger or
consolidation, the Guarantor or LGII or the Restricted Subsidiary, as the case
may be, shall be the surviving person of such merger or consolidation, or
(ii) the person formed by such consolidation or into which the Guarantor, LGII
or such Restricted Subsidiary, as the case may be, is merged or to which the
properties and assets of the Guarantor, LGII or such Restricted Subsidiary, as
the case may be, are transferred (any such surviving person or transferee
person being the "Surviving Entity") shall be a corporation organized and
existing under the laws of the United States of America, any state thereof,
the District of Columbia, Canada or any province thereof and shall expressly
assume by a supplemental indenture executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, all the obligations of the
Guarantor or LGII, as the case may be, under the Senior Notes and the
Indenture, and in each case, the Indenture shall remain in full force and
effect; (b) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (including, without
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions),
no Default or Event of Default shall have occurred and be continuing and the
Guarantor, LGII or the Surviving Entity, as the case may be, after giving
effect to such transaction or series of transactions on a pro forma basis
(including, without limitation, any Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction or series of
transactions), could incur $1.00 of additional Indebtedness pursuant to the
covenant described under "--Certain Covenants; Limitation on Indebtedness"
above (assuming a market rate of interest with respect to such additional
Indebtedness); and (c) immediately after giving effect to such transaction or
series of transactions on a pro forma basis (including, without limitation,
any Indebtedness incurred or anticipated to be incurred in connection with or
in respect of such transaction or series of transactions), the Consolidated
Net Worth of the Guarantor, LGII or the Surviving Entity, as the case may be,
is at least equal to the Consolidated Net Worth of the Guarantor or LGII, as
the case may be, immediately before such transaction or series of
transactions.
In connection with any consolidation, merger, transfer, lease, assignment or
other disposition contemplated hereby, the Guarantor or LGII, as the case may
be, shall deliver, or cause to be delivered, to the Trustee, in form and
substance reasonably satisfactory to the Trustee, an officers' certificate and
an opinion of counsel, each stating that such consolidation, merger, transfer,
lease, assignment or other disposition and the supplemental indenture in
respect thereof comply with the requirements under the Indenture; provided,
however, that, solely for purposes of computing amounts described in subclause
(C) of the covenant described under "--Certain Covenants; Limitation on
Restricted Payments" above, any such successor person shall only be deemed to
have succeeded to and be substituted for the Guarantor or LGII, as the case
may be, with respect to periods subsequent to the effective time of such
merger, consolidation or transfer of assets.
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Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Guarantor or LGII in accordance with the foregoing, in
which the Guarantor or LGII is not the continuing corporation, the successor
corporation formed by such a consolidation or into which the Guarantor or LGII
is merged or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Guarantor or
LGII, as the case may be, under the Indenture with the same effect as if such
successor corporation had been named as the Guarantor or LGII therein.
EVENTS OF DEFAULT
The following will be "Events of Default" with respect to each series of
Senior Notes under the Indenture:
(i) default in the payment of the principal of or premium, if any, on any
Senior Note of such series when the same becomes due and payable (upon
Stated Maturity, acceleration, required purchase, scheduled principal
payment or otherwise); or
(ii) default in the payment of an installment of interest on any of the
Senior Notes of such series, when the same becomes due and payable, which
default continues for a period of 30 days; or
(iii) failure to perform or observe any other term, covenant or agreement
contained in the Senior Notes of such series or the Indenture or the
Guarantee with respect to Senior Notes of such series (other than a default
specified in clause (i) or (ii) above) and such default continues for a
period of 30 days after written notice of such default requiring the
Guarantor and LGII to remedy the same shall have been given (x) to the
Guarantor and LGII by the Trustee or (y) to the Guarantor, LGII and the
Trustee by holders of 25% in aggregate principal amount of the Senior Notes
of such series then outstanding; or
(iv) default or defaults under one or more agreements, instruments,
mortgages, bonds, debentures or other evidences of Indebtedness under which
the Guarantor or any Restricted Subsidiary of the Guarantor (including
without limitation LGII) then has outstanding Indebtedness in excess of
$20,000,000 (including Senior Notes of another series), individually or in
the aggregate, and either (a) such Indebtedness is already due and payable
in full or (b) such default or defaults have resulted in the acceleration
of the maturity of such Indebtedness; or
(v) one or more judgments, orders or decrees of any court or regulatory
or administrative agency of competent jurisdiction for the payment of money
in excess of $20,000,000, either individually or in the aggregate, shall be
entered against the Guarantor or any Restricted Subsidiary of the Guarantor
(including without limitation LGII) or any of their respective properties
and shall not be discharged or bonded against or stayed and there shall
have been a period of 60 days after the date on which any period for appeal
has expired and during which a stay of enforcement of such judgment, order
or decree shall not be in effect; or
(vi) either (i) the collateral agent under the Credit Agreements or (ii)
any holder of at least $20,000,000 in aggregate principal amount of
Indebtedness of the Guarantor or any of its Restricted Subsidiaries
(including without limitation LGII) shall commence judicial proceedings to
foreclose upon assets of the Guarantor or any of its Restricted
Subsidiaries having an aggregate Fair Market Value, individually or in the
aggregate, in excess of $20,000,000 or shall have exercised any right under
applicable law or applicable security documents to take ownership of any
such assets in lieu of foreclosure; or
(vii) the Guarantee with respect to such series ceases to be in full
force and effect or is declared null and void, or the Guarantor denies that
it has any further liability under the Guarantee with respect to such
series or gives notice to such effect (other than by reason of the
termination of the Indenture or the release of the Guarantee with respect
to such series in accordance with the Indenture) and such condition shall
have continued for a period of 60 days after written notice of such failure
(which notice shall specify the Default, demand that it be remedied and
state that it is a "Notice of Default") requiring the Guarantor and LGII to
remedy the same shall have been given (x) to the Guarantor and LGII by the
Trustee or (y) to the Guarantor, LGII and the Trustee by holders of at
least 25% in aggregate principal amount of the Senior Notes of any series
then outstanding; or
(viii) certain events of bankruptcy, insolvency or reorganization with
respect to the Guarantor or any Significant Subsidiary of the Guarantor
(including without limitation LGII) shall have occurred.
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If an Event of Default (other than as specified in clause (viii) above)
shall occur and be continuing with respect to the Notes of any series, the
Trustee, by notice to the Guarantor and LGII, or the holders of at least 25%
in aggregate principal amount of the Senior Notes of such series then
outstanding, by notice to the Trustee, the Guarantor and LGII, may declare the
principal of, premium, if any, and accrued and unpaid interest, if any, on all
of the outstanding Senior Notes of such series due and payable immediately,
upon which declaration, all amounts payable in respect of the Senior Notes of
such series shall be immediately due and payable. If an Event of Default
specified in clause (viii) above occurs and is continuing, then the principal
of, premium, if any, and accrued and unpaid interest, if any, on all of the
outstanding Senior Notes of such series shall ipso facto become and be
immediately due and payable without any declaration or other act on the part
of the Trustee or any holder of Senior Notes.
After a declaration of acceleration under the Indenture with respect to the
Senior Notes of any series, but before a judgment or decree for payment of the
money due has been obtained by the Trustee, the holders of a majority in
aggregate principal amount of the outstanding Senior Notes of such series, by
written notice to the Guarantor, LGII and the Trustee, may rescind such
declaration if (a) the Guarantor or LGII has paid or deposited with the
Trustee a sum sufficient to pay (i) all sums paid or advanced by the Trustee
under the Indenture and the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, (ii) all overdue interest
on all Senior Notes of such series, (iii) the principal of and premium, if
any, on any Senior Notes of such series which have become due otherwise than
by such declaration of acceleration and interest thereon at the rate borne by
the Senior Notes of such series, and (iv) to the extent that payment of such
interest is lawful, interest upon overdue interest and overdue principal at
the rate borne by the Senior Notes of such series which has become due
otherwise than by such declaration of acceleration; (b) the rescission would
not conflict with any judgment or decree of a court of competent jurisdiction;
and (c) all Events of Default, other than the non-payment of principal of,
premium, if any, and interest on the Senior Notes of such series that have
become due solely by such declaration of acceleration, have been cured or
waived.
Prior to the declaration of acceleration of the Senior Notes of any series,
the holders of not less than a majority in aggregate principal amount of the
outstanding Senior Notes of such series may on behalf of the holders of all
the Notes of such series waive any past defaults under the Indenture, except a
default in the payment of the principal of, premium, if any, or interest on
any Senior Note of such series, or in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each Senior Note of such series outstanding.
No holder of any of the Notes of any series has any right to institute any
proceeding with respect to the Indenture or the Notes of such series or any
remedy thereunder, unless the holders of at least 25% in aggregate principal
amount of the outstanding Senior Notes of such series have made written
request, and offered reasonable indemnity, to the Trustee to institute such
proceeding as Trustee under the Senior Notes of such series and the Indenture,
the Trustee has failed to institute such proceeding within 30 days after
receipt of such notice and the Trustee, within such 30-day period, has not
received directions inconsistent with such written request by holders of a
majority in aggregate principal amount of the outstanding Senior Notes of such
series. Such limitations do not apply, however, to a suit instituted by a
holder of a Senior Note of such series for the enforcement of the payment of
the principal of, premium, if any, or interest on such Note on or after the
respective due dates expressed in such Senior Note.
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise thereof as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs. Subject to the provisions of the Indenture relating to the duties of
the Trustee, whether or not an Event of Default shall occur and be continuing,
the Trustee under the Indenture is not under any obligation to exercise any of
its rights or powers under the Indenture at the request or direction of any of
the holders unless such holders shall have offered to the Trustee reasonable
security or indemnity. Subject to certain provisions concerning the rights of
the Trustee, the holders of not less than a majority in aggregate principal
amount of the outstanding Senior Notes of any
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series 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 under the Indenture with respect to the Notes
of such series.
If an Event of Default occurs and is continuing and is known to the Trustee,
the Trustee shall mail to each holder of the Notes notice of the Event of
Default within 30 days after obtaining knowledge thereof. Except in the case
of an Event of Default in payment of principal of, premium, if any, or
interest on any Senior Notes, the Trustee may withhold the notice to the
holders of such Notes if a committee of its trust officers in good faith
determines that withholding the notice is in the interest of the holders of
the Notes.
LGII is required to furnish to the Trustee annual and quarterly statements
as to the performance by LGII of its obligations under the Indenture and as to
any default in such performance. LGII is also required to notify the Trustee
within ten days of any event which is, or after notice or lapse of time or
both would become, an Event of Default.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
Each of the Guarantor and LGII may, at its option and at any time, terminate
the obligations of the Guarantor and LGII with respect to the outstanding
Senior Notes of any series ("defeasance"). Such defeasance means that the
Guarantor and LGII shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Senior Notes of such series,
except for (i) the rights of holders of outstanding Notes of such series to
receive payment in respect of the principal of, premium, if any, and interest
on such Notes when such payments are due, (ii) LGII's obligations to issue
temporary Senior Notes of such series, register the transfer or exchange of
any Notes of such series, replace mutilated, destroyed, lost or stolen Notes
of such series and maintain an office or agency for payments in respect of the
Notes of such series, (iii) the rights, powers, trusts, duties and immunities
of the Trustee, and (iv) the defeasance provisions of the Indenture. In
addition, each of the Guarantor and LGII may, at its option and at any time,
elect to terminate the obligations of the Guarantor and LGII with respect to
certain covenants that are set forth in the Indenture, some of which are
described under "--Certain Covenants" above (including the covenant described
under "--Certain Covenants--Change of Control" above) and any subsequent
failure to comply with such obligations shall not constitute a Default or
Event of Default with respect to the Notes of such series ("covenant
defeasance").
In order to exercise either defeasance or covenant defeasance, (i) LGII must
irrevocably deposit with the Trustee, in trust, for the benefit of the holders
of the Notes of such series, cash in United States dollars, U.S. Government
Obligations (as defined in the Indenture), or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay the principal of, premium, if any,
and interest on the outstanding Notes of such series to maturity (except lost,
stolen or destroyed Senior Notes of such series which have been replaced or
paid); (ii) the Guarantor or LGII shall have delivered to the Trustee an
opinion of counsel to the effect that the holders of the outstanding Notes of
such series will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance or covenant
defeasance had not occurred (in the case of defeasance, such opinion must
refer to and be based upon a ruling of the Internal Revenue Service or a
change in applicable federal income tax laws); (iii) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit;
(iv) such defeasance or covenant defeasance shall not cause the Trustee to
have a conflicting interest with respect to any securities of LGII; (v) such
defeasance or covenant defeasance shall not result in a breach or violation
of, or constitute a default under, any material agreement or instrument to
which the Guarantor or LGII is a party or by which it is bound; (vi) the
Guarantor or LGII shall have delivered to the Trustee an opinion of counsel to
the effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; and
(vii) the Guarantor or LGII shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent under the Indenture to either defeasance or covenant defeasance, as
the case may be, have been complied with.
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SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
of any series when (i) either (a) all the Notes of such series theretofore
authenticated and delivered (except lost, stolen or destroyed Notes of such
series which have been replaced or repaid and Notes of such series for whose
payment money has theretofore been deposited in trust or segregated and held
in trust by LGII and thereafter repaid to LGII or discharged from such trust)
have been delivered to the Trustee for cancellation or (b) all Notes of such
series have otherwise become due and payable and the Guarantor or LGII has
irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on the Notes of
such series not theretofore delivered to the Trustee for cancellation, for
principal of, premium, if any, and interest on the Senior Notes of such series
to the date of deposit together with irrevocable instructions from the
Guarantor or LGII directing the Trustee to apply such funds to the payment
thereof at maturity; (ii) the Guarantor and LGII have paid all other sums
payable under the Indenture by LGII; (iii) there exists no Default or Event of
Default under the Indenture; and (iv) the Guarantor or LGII has delivered to
the Trustee an officers' certificate and an opinion of counsel stating that
all conditions precedent under the Indenture relating to the satisfaction and
discharge of the Indenture have been complied with.
AMENDMENTS AND WAIVERS
The Indenture will provide that the Guarantor and LGII, when authorized by a
Board Resolution, and the Trustee may amend, waive or supplement the Indenture
or the Notes without notice to or consent of any Holder: (a) to cure any
ambiguity, defect or inconsistency; (b) to comply with the provisions
described under "Merger, Sale of Assets, Etc." above; (c) to provide for
uncertificated Senior Notes in addition to certificated Notes; (d) to comply
with any requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the TIA; or (e) to make any change that
would provide any additional benefit or rights to the Holders or that does not
adversely affect the rights of any Holder. Notwithstanding the foregoing, the
Guarantor, the Trustee and LGII may not make any change that adversely affects
the rights of any Holder under the Indenture. Other modifications and
amendments of the Indenture may be made with the consent of the holders of not
less than a majority in aggregate principal amount of each series of the then
outstanding Notes, except that, without the consent of each holder of the
Notes affected thereby, no amendment may, directly or indirectly: (i) reduce
the amount of Notes whose holders must consent to any amendment; (ii) reduce
the rate of or change the time for payment of interest, including defaulted
interest, on any Notes; (iii) change the currency in which the Notes are
payable; (iv) reduce the principal of or change the fixed maturity of any
Notes, or change the date on which any Notes may be subject to repurchase, or
reduce the repurchase price therefor; (v) make any Notes payable in money
other than that stated in the Senior Notes; (vi) make any change in provisions
of the Indenture protecting the right of each holder of a Note to receive
payment of principal of and interest on such Note on or after the date thereof
or to bring suit to enforce such payment or permitting holders of a majority
in principal amount of the Notes of such series to waive Defaults or Events of
Default; (vii) subordinate in right of payment, or otherwise subordinate, the
Notes of such series to any other Indebtedness or obligation of the Guarantor
or LGII; or (viii) amend, alter, change or modify the obligation of LGII to
make and consummate a Change of Control Offer in the event of a Change of
Control or make and consummate an Asset Sale Offer or waive any Default in the
performance of any such offers or modify any of the provisions or definitions
with respect to any such offers.
REGISTRATION RIGHTS AGREEMENT
In the event that (i) due to a change in current interpretations by the
Commission, LGII determines that consummation of the Exchange Offer as
contemplated by the Registration Rights Agreement would violate applicable law
or applicable interpretations by the Commission, (ii) the Exchange Offer is
not for any other reason consummated within 150 days after the date on which
LGII delivered the Outstanding Notes to the Initial Purchasers (the "Closing
Date") or (iii) any holder or holders of $5,000,000 aggregate principal amount
of Outstanding Notes, within 30 days after consummation of the Exchange Offer,
notify LGII that such holders (x) are prohibited by applicable law or
Commission policy from participating in the Exchange Offer, (y) may
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not resell Exchange Notes acquired by them in the Exchange Offer to the public
without delivering a prospectus and that the prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such holders or (z) are broker-dealers and hold Outstanding Notes
acquired directly from LGII or an "affiliate" of LGII or Loewen, within the
meaning of Rule 405 under the Securities Act, it is contemplated that the
Guarantor and LGII will file a registration statement (a "Shelf Registration
Statement") covering resales (a) by all holders of Outstanding Notes in the
event LGII determines that the consummation of the Exchange Offer would
violate applicable law or interpretations by the Commission pursuant to the
foregoing clause (i) or the Exchange Offer is not consummated within 150 days
after the Closing Date pursuant to the foregoing clause (ii), or (b) by the
Initial Purchasers after consummation of the Exchange Offer, if a Shelf
Registration Statement is required solely pursuant to the foregoing clause
(iii), and will use their best efforts to cause any such Shelf Registration
Statement to become effective and to keep such Shelf Registration Statement
effective for 180 days from the effective date thereof. The Guarantor and LGII
shall, if they file a Shelf Registration Statement, provide to each holder of
Outstanding Notes copies of the prospectus and notify each such holder when
the Shelf Registration Statement has become effective. A holder that sells
Outstanding Notes pursuant to a Shelf Registration Statement generally will be
required to be named as a selling security holder in the related prospectus
and to deliver a current prospectus to purchasers, and will be subject to
certain of the civil liability provisions under the Securities Act in
connection with such sales.
Under the Registration Rights Agreement, the Guarantor and LGII agreed to
use their best efforts to: (i) file the Exchange Offer Registration Statement
or a Shelf Registration Statement with the Commission within 45 days after the
Closing Date, (ii) have such Exchange Offer Registration Statement or Shelf
Registration Statement declared effective by the Commission, and (iii)
commence the Exchange Offer and issue the Exchange Notes in exchange for all
Outstanding Notes validly tendered in accordance with the terms of the
Exchange Offer prior to the close of the Exchange Offer, or, in the
alternative, cause such Shelf Registration Statement to remain effective for
180 days from the effective date thereof. Although the Guarantor and LGII
intend to file a Shelf Registration Statement, if applicable, as described
above, there can be no assurance that a Shelf Registration Statement will be
filed or, if filed, that it will become effective. Each holder of Notes, by
virtue of being or becoming so, is bound by the provisions of the Registration
Rights Agreement that may require the holder to furnish notice or other
information to the Guarantor and LGII as a condition to certain obligations of
the Guarantor and LGII to file a Shelf Registration Statement by a particular
date or to maintain its effectiveness for the prescribed 180-day period.
If the Guarantor and LGII fail to comply with the above provisions,
additional interest ("Penalty Interest") shall be assessed on the Notes as
follows:
(i) (A) if the Exchange Offer Registration Statement or, in the event
that due to a change in current interpretations by the Commission the
Guarantor and LGII are not permitted to effect the Exchange Offer, a Shelf
Registration Statement is not filed within 45 days following the Closing
Date or (B) in the event that within 30 days after the consummation of the
Exchange Offer (the "prescribed time period"), any holder or holders of
$5,000,000 aggregate principal amount of Outstanding Notes shall notify
LGII that such holders (x) are prohibited by applicable law or Commission
policy from participating in the Exchange Offer, (y) may not resell
Exchange Notes acquired by them in the Exchange Offer to the public without
delivering a prospectus and that the prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such
resales by such holders or (z) are broker-dealers and hold Outstanding
Notes acquired directly from LGII or an "affiliate" of LGII or Loewen,
within the meaning of Rule 405 under the Securities Act, if a Shelf
Registration Statement is not filed within 45 days after expiration of the
prescribed time period, then commencing on the 46th day after either the
Closing Date or the expiration of the prescribed time period, as the case
may be, Penalty Interest shall be accrued on the Notes over and above the
accrued interest at a rate of .50% per annum for the first 90 days
immediately following the 46th day after either the Closing Date or the
expiration of the prescribed time period, as the case may be, such Penalty
Interest rate increasing by an additional .25% per annum at the beginning
of each subsequent 90-day period;
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(ii) if the Exchange Offer Registration Statement or a Shelf Registration
Statement is filed pursuant to clause (i) of the preceding paragraph and is
not declared effective within 120 days following either the Closing Date or
the expiration of the prescribed time period, as the case may be, then
commencing on the 121st day after either the Closing Date or the expiration
of the prescribed time period, as the case may be, Penalty Interest shall
be accrued on the Outstanding Notes over and above the accrued interest at
a rate of .50% per annum for the first 90 days immediately following the
121st day after either the Closing Date or the expiration of the prescribed
time period, as the case may be, such Penalty Interest rate increasing by
an additional .25% per annum at the beginning of each subsequent 90-day
period; and
(iii) if either (A) the Guarantor and LGII have not exchanged Exchange
Notes for all Outstanding Notes validly tendered in accordance with the
terms of the Exchange Offer on or prior to 30 days after the date on which
the Exchange Offer Registration Statement was declared effective, or (B) if
applicable, a Shelf Registration Statement has been declared effective and
such Shelf Registration Statement ceases to be effective prior to 180 days
from its original effective date, then, subject to certain exceptions,
Penalty Interest shall be accrued on the Outstanding Notes over and above
the accrued interest at a rate of .50% per annum for the first 60 days
immediately following the (x) 31st day after such effective date, in the
case of (A) above, or (y) the day such Shelf Registration Statement ceases
to be effective in the case of (B) above, such Penalty Interest rate
increasing by an additional .25% per annum at the beginning of each
subsequent 60-day period;
provided, however, that the Penalty Interest rate on the Outstanding Notes may
not exceed 1.5% per annum; and provided further that (1) upon the filing of
the Exchange Offer Registration Statement or a Shelf Registration Statement
(in the case of (i) above), (2) upon the effectiveness of the Exchange Offer
Registration Statement or a Shelf Registration Statement (in the case of (ii)
above), or (3) upon the exchange of Exchange Notes for all Outstanding Notes
validly tendered in the Exchange Offer or upon the effectiveness of the Shelf
Registration Statement which had ceased to remain effective prior to 180 days
from its original effective date (in the case of (iii) above), Penalty
Interest on the Outstanding Notes as a result of such clause (i), (ii) or
(iii) shall cease to accrue.
Any amounts of Penalty Interest due pursuant to clause (i), (ii) or (iii)
above will be payable in cash on the interest payment dates of the Outstanding
Notes. The amount of Penalty Interest will be determined by multiplying the
applicable Penalty Interest rate by the principal amount of the Outstanding
Notes, multiplied by a fraction, the numerator of which is the number of days
such Penalty Interest rate was applicable during such period (determined on
the basis of a 360-day year composed of twelve 30-day months), and the
denominator of which is 360.
The foregoing summary of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the provisions of the Registration Rights
Agreement. A copy of the Registration Rights Agreement has been filed with the
Commission as an exhibit to the Exchange Offer Registration Statement.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee thereunder will perform only such duties as are
specifically set forth in the Indenture. If an Event of Default has occurred
and is continuing, the Trustee will exercise such rights and powers vested in
it under the Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
The Indenture and provisions of the TIA incorporated by reference therein
contain limitations on the rights of the Trustee thereunder, should it become
a creditor of the Guarantor or LGII, to obtain payment of claims in certain
cases or to realize on certain property received by it in respect of any such
claims, as security or otherwise. The Trustee is permitted to engage in other
transactions; provided, however, that if it acquires any conflicting interest
(as defined in the TIA) it must eliminate such conflict or resign.
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GOVERNING LAW
The Indenture and the Notes will be governed by the laws of the State of New
York, without regard to the principles of conflicts of law.
CONSENT TO SERVICE AND JURISDICTION
Each of LGII and Loewen has appointed Thelen, Marrin, Johnson & Bridges, 330
Madison Avenue, New York, New York 10017, Attention: David P. Graybeal, Esq.,
as its authorized agent upon whom process may be served in any suit, action or
proceeding arising out of or based on this Indenture which may be instituted
in any federal or state court located in the City of New York, expressly
consents to the jurisdiction of any such court in respect of any such suit,
action or proceeding, and waives other requirements of or objections to
personal jurisdiction with respect thereto.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a person (a) assumed or
created in connection with an Asset Acquisition from such person or (b)
existing at the time such person becomes a Restricted Subsidiary of any other
person.
"Affiliate" means, with respect to any specified person, any other person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person.
"Asset Acquisition" means (a) an Investment by the Guarantor or any
Restricted Subsidiary of the Guarantor (including without limitation LGII) in
any other person pursuant to which such person shall become a Restricted
Subsidiary of the Guarantor, or shall be merged with or into the Guarantor or
any Restricted Subsidiary of the Guarantor, (b) the acquisition by the
Guarantor or any Restricted Subsidiary of the Guarantor of the assets of any
person (other than a Restricted Subsidiary of the Guarantor) which constitute
all or substantially all of the assets of such person or (c) the acquisition
by the Guarantor or any Restricted Subsidiary of the Guarantor of any division
or line of business of any person (other than a Restricted Subsidiary of the
Guarantor).
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease or other disposition to any person other than the Guarantor or
a Restricted Subsidiary of the Guarantor (including without limitation LGII),
in one or a series of related transactions, of (a) any Capital Stock of any
Restricted Subsidiary of the Guarantor (other than in respect of director's
qualifying shares or investments by foreign nationals mandated by applicable
law) or of First Capital Life Insurance Company of Louisiana, National Capital
Life Insurance Company or a Subsidiary holding the insurance company assets
acquired from S.I. Acquisition Associates, L.P.; (b) all or substantially all
of the properties and assets of any division or line of business of the
Guarantor or any Restricted Subsidiary of the Guarantor; or (c) any other
properties or assets of the Guarantor or any Restricted Subsidiary of the
Guarantor other than in the ordinary course of business. For the purposes of
this definition, the term "Asset Sale" shall not include (i) any sale,
transfer or other disposition of equipment, tools or other assets (including
Capital Stock of any Restricted Subsidiary of the Guarantor) by the Guarantor
or any of its Restricted Subsidiaries in one or a series of related
transactions in respect of which the Guarantor or such Restricted Subsidiary
receives cash or property with an aggregate Fair Market Value of $2,000,000 or
less; and (ii) any sale, issuance, conveyance, transfer, lease or other
disposition of properties or assets that is governed by the provisions
described under "--Merger, Sale of Assets, Etc." above.
"Attributable Value" means, as to any particular lease under which any
person is at the time liable other than a Capitalized Lease Obligation, and at
any date as at which the amount thereof is to be determined, the total net
amount of rent required to be paid by such person under such lease during the
initial term thereof as determined in accordance with GAAP, discounted from
the last date of such initial term to the date of determination at a rate per
annum equal to the discount rate which would be applicable to a Capitalized
Lease Obligation with a like term in accordance with GAAP. The net amount of
rent required to be paid under any such lease for any such period shall be the
aggregate amount of rent payable by the lessee with respect to such period
after excluding amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labor costs and similar charges. In the
case of any lease which is terminable by the lessee upon the payment
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of a penalty, such net amount shall also include the amount of such penalty,
but no rent shall be considered as required to be paid under such lease
subsequent to the first date upon which it may be so terminated. "Attributable
Value" means, as to a Capitalized Lease Obligation under which any person is
at the time liable and at any date as at which the amount thereof is to be
determined, the capitalized amount thereof that would appear on the face of a
balance sheet of such person in accordance with GAAP.
"Capital Stock" means, with respect to any person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
"Capitalized Lease Obligation" means any obligation under a lease of (or
other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as
a capital lease obligation under GAAP, and, for the purpose of the Indenture,
the amount of such obligation at any date shall be the capitalized amount
thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means, at any time, (i) any evidence of Indebtedness with
a maturity of 180 days or less issued or directly and fully guaranteed or
insured by the Untied States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of
America is pledged in support thereof); (ii) certificates of deposit or
acceptances with a maturity of 180 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $500,000,000; (iii)
certificates of deposit with a maturity of 180 days or less of any financial
institution that is not organized under the laws of the United States, any
state thereof or the District of Columbia that are rated at least A-1 by S&P
or at least P-1 by Moody's or at least an equivalent rating category of
another nationally recognized securities rating agency; (iv) repurchase
agreements and reverse repurchase agreements relating to marketable direct
obligations issued or unconditionally guaranteed by the government of the
United States of America or issued by any agency thereof and backed by the
full faith and credit of the United States of America, in each case maturing
within 180 days from the date of acquisition; provided that the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions With Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985; and (v) notes
held by the Guarantor or any Restricted Subsidiary (including without
limitation LGII) which were obtained by the Guarantor or such Restricted
Subsidiary in connection with Asset Sales (x) in the ordinary course of its
funeral home, cemetery or cremation businesses or (y) which were required to
be made pursuant to applicable federal or state law.
"Change of Control" means the occurrence of any of the following events: (a)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act), excluding Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a person shall be deemed to have "beneficial ownership" of all securities
that such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time, upon the happening of an event
or otherwise), directly or indirectly, of more than 35% of the total Voting
Stock of the Guarantor or LGII, under circumstances where the Permitted
Holders (i) "beneficially own" (as so defined) a lower percentage of the
Voting Stock than such other "person" or "group" and (ii) do not have the
right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors of the Guarantor or LGII;
(b) the Guarantor or LGII consolidates with, or merges with or into, another
person or sells, assigns, conveys, transfers, leases or otherwise disposes of
all or substantially all of its assets to another person, or another person
consolidates with, or merges with or into, the Guarantor or LGII, in any such
event pursuant to a transaction in which the outstanding Voting Stock of the
Guarantor or LGII is converted into or exchanged for cash, securities or other
property, other than any such transaction where (i) the outstanding Voting
Stock of the Guarantor or LGII is converted into or exchanged for (1) Voting
Stock (other than Redeemable Capital Stock) of the surviving or transferee
corporation or (2) cash, securities and other property in an amount which
could then be paid by the Guarantor or LGII as a Restricted Payment under the
Indenture, or a combination thereof, and (ii) immediately after such
transaction no "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), excluding Permitted Holders, is the
"beneficial owner" (as defined in
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Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time, upon the happening of an event or otherwise),
directly or indirectly, of more than 50% of the total Voting Stock of the
surviving or transferee corporation; (c) at any time during any consecutive
two-year period, individuals who at the beginning of such period constituted
the Board of Directors of the Guarantor or LGII (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the stockholders of the Guarantor or LGII was approved by a vote
of 66 2/3% of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Guarantor or LGII then in office; or (d) the
Guarantor or LGII is liquidated or dissolved or adopts a plan of liquidation
other than a liquidation of LGII into the Guarantor.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted.
"Common Stock" means, with respect to any person, any and all shares,
interests or other participations in, and other equivalents (however
designated and whether voting or nonvoting) of, such person's common stock,
whether outstanding at the Issue Date or issued after the Issue Date, and
includes, without limitation, all series and classes of such common stock.
"Consolidated Cash Flow Available for Fixed Charges" means, with respect to
any person for any period, (A) the sum of, without duplication, the amounts
for such period, taken as a single accounting period, of (a) Consolidated Net
Income, (b) Consolidated Non-cash Charges, (c) Consolidated Interest Expense
and (d) Consolidated Income Tax Expense less (B) any non-cash items increasing
Consolidated Net Income for such period.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
person, the ratio of the aggregate amount of Consolidated Cash Flow Available
for Fixed Charges of such person for the full fiscal quarter immediately
preceding the date of the transaction (the "Transaction Date") giving rise to
the need to calculate the Consolidated Fixed Charge Coverage Ratio (such full
fiscal quarter being referred to herein as the "Prior Quarter") to the
aggregate amount of Consolidated Fixed Charges of such person for the Prior
Quarter. In addition to and without limitation of the foregoing, for purposes
of this definition, "Consolidated Cash Flow Available for Fixed Charges" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to, without duplication, (a)
the incurrence of any Indebtedness of such person or any of its Restricted
Subsidiaries (and the application of the net proceeds thereof) during the
period commencing on the first day of the Prior Quarter to and including the
Transaction Date (the "Reference Period"), including, without limitation, the
incurrence of the Indebtedness giving rise to the need to make such
calculation (and the application of the net proceeds thereof), as if such
incurrence (and application) occurred on the first day of the Reference
Period, and (b) any Material Asset Sales or Material Asset Acquisitions
(including, without limitation, any Material Asset Acquisition giving rise to
the need to make such calculation as a result of such person or one of its
Restricted Subsidiaries (including any person who becomes a Restricted
Subsidiary as a result of the Material Asset Acquisition) incurring, assuming
or otherwise being liable for Acquired Indebtedness) occurring during the
Reference Period, as if such Material Asset Sale or Material Asset Acquisition
occurred on the first day of the Reference Period. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (i)
interest on outstanding Indebtedness determined on a fluctuating basis as at
the Transaction Date and which will continue to be so determined thereafter
shall be deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness in effect on the Transaction Date; and (ii) if
interest on any Indebtedness actually incurred on the Transaction Date may
optionally be determined at an interest rate based upon a factor of a prime or
similar rate, a eurocurrency interbank offered rate, or other rates, then the
interest rate in effect on the Transaction Date will be deemed to have been in
effect during the Reference Period. If such person or any of its Restricted
Subsidiaries directly or indirectly guarantees Indebtedness of a third person,
the above clause shall give effect to the incurrence of such guaranteed
Indebtedness as if such
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person or such Restricted Subsidiary had directly incurred or otherwise
assumed such guaranteed Indebtedness. For purposes of this calculation, a
Material Asset Acquisition is an Asset Acquisition which is deemed by such
person to be material for such purposes or which has a purchase price of
$30,000,000 or more and a Material Asset Sale is one or more Asset Sales which
relate to assets with an aggregate value of more than $30,000,000.
"Consolidated Fixed Charges" means, with respect to any person for any
period, the sum of, without duplication, the amounts for such period of (i)
Consolidated Interest Expense and (ii) the product of (a) the aggregate amount
of dividends and other distributions paid or accrued during such period in
respect of Preferred Stock and Redeemable Capital Stock of such person and its
Restricted Subsidiaries on a consolidated basis and (b) a multiplier, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such person,
expressed as a decimal; provided, however, that the multiplier in clause (b)
shall be one if such dividend or other distribution is fully tax deductible.
"Consolidated Income Tax Expense" means, with respect to any person for any
period, the provision for federal, state, local and foreign income taxes of
such person and its Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any person for any
period, without duplication, the sum of (i) the interest expense of such
person and its Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, including, without limitation, (a)
any amortization of debt discount, (b) the net cost under Interest Rate
Protection Obligations, (c) the interest portion of any deferred payment
obligation, (d) all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing and (e)
all accrued interest and (ii) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such
person and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any person, for any period,
the consolidated net income (or loss) of such person and its Restricted
Subsidiaries for such period as determined in accordance with GAAP, adjusted,
to the extent included in calculating such net income, by excluding, without
duplication, (i) all extraordinary gains or losses, (ii) the portion of net
income (but not losses) of such person and its Restricted Subsidiaries
allocable to minority interests in unconsolidated persons to the extent that
cash dividends or distributions have not actually been received by such person
or one of its Restricted Subsidiaries, (iii) net income (or loss) of any
person combined with such person or one of its Restricted Subsidiaries on a
"pooling of interests" basis attributable to any period prior to the date of
combination, (iv) any gain or loss realized upon the termination of any
employee pension benefit plan, on an after-tax basis, (v) gains or losses in
respect of any Asset Sales by such person or one of its Restricted
Subsidiaries, (vi) the net income of any Restricted Subsidiary of such person
to the extent that the declaration of dividends or similar distributions by
that Restricted Subsidiary of that income is not at the time permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders and
(vii) in the case of the year ended December 31, 1995, losses in respect of
the Gulf National and Provident Litigation Expenses.
"Consolidated Net Tangible Assets" of the Guarantor as at any date means the
total amount of assets of the Guarantor and its Restricted Subsidiaries, less
applicable reserves, on a consolidated basis as the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less:
(i) Intangible Assets and (ii) appropriate adjustments on account of minority
interests of other persons holding equity investments in Restricted
Subsidiaries, in the case of each of clauses (i) and (ii) above as reflected
on the consolidated balance sheet of the Guarantor and its Restricted
Subsidiaries as at the end of the fiscal quarter immediately preceding such
date.
"Consolidated Net Worth" means, with respect to any person at any date, the
consolidated stockholders' equity of such person less the amount of such
stockholders' equity attributable to Redeemable Capital Stock of such person
and its Restricted Subsidiaries, as determined in accordance with GAAP.
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"Credit Agreements" means (i) until repaid with the proceeds of the Proposed
Bank Facility, the Multi-Currency Revolver, the Canadian Revolver and the MEIP
Facility, and thereafter the Proposed Bank Facility, as discussed under
"Description of Certain Indebtedness--Other Indebtedness" and (ii) the
Canadian five-year term credit facility described thereunder; in each case as
any such instrument may be amended, supplemented or otherwise modified from
time to time, and any successor or replacement facility.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Guarantor or any of its Restricted Subsidiaries against fluctuations in
currency values.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Event of Default" has the meaning set forth under "Events of Default"
herein.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any assets, the price which could
be negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of which is under pressure or
compulsion to complete the transaction; provided, however, that, with respect
to any transaction which involves an asset or assets in excess of $5,000,000,
such determination shall be evidenced by resolutions of the Board of Directors
of the Guarantor delivered to the Trustee.
"Final Maturity Date" means April 15, 2001, with respect to the Series 1
Senior Notes, and April 15, 2003, with respect to the Series 2 Senior Notes.
"GAAP" means Canadian GAAP consistently applied until such time as the
Guarantor or LGII shall prepare their respective books of record in accordance
with U.S. GAAP at which time and all times thereafter GAAP shall mean U.S.
GAAP consistently applied.
"Guarantees" means the guarantees of the Notes created pursuant to the
Indenture.
"guarantee" means, as applied to any obligation, (i) a guarantee (other than
by endorsement of negotiable instruments for collection in the ordinary course
of business), direct or indirect, in any manner, of any part or all of such
obligation and (ii) an agreement, direct or indirect, contingent or otherwise,
the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantor" shall mean The Loewen Group Inc., and shall include any
successor replacing such Guarantor pursuant to the Indenture, and thereafter
means such successor.
"Gulf National and Provident Litigation Expenses" means expenses of up to
$200,000,000 recorded by the Guarantor in its consolidated financial
statements for the year ended December 31, 1995 in connection with the conduct
and settlement of lawsuits brought against the Guarantor by (i) J.J. O'Keefe,
Sr., Gulf National Insurance Company and certain affiliates thereof before the
courts of the State of Mississippi and (ii) Provident American Corporation and
a subsidiary thereof before the United States District Court for the Eastern
District of Pennsylvania.
"Indebtedness" means, with respect to any person, without duplication, (a)
all liabilities of such person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables and other accrued
current liabilities incurred in the ordinary course of business and which are
not overdue by more than 90 days, but excluding, without limitation, all
obligations, contingent or otherwise, of such person in connection with any
undrawn letters of credit, banker's acceptance or other similar credit
transaction, (b) all obligations of such person evidenced by bonds, notes,
debentures or other similar instruments, (c) all
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indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such person (even if
the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), but
excluding trade accounts payable arising in the ordinary course of business,
(d) all Capitalized Lease Obligations of such person, (e) all Indebtedness
referred to in the preceding clauses of other persons and all dividends of
other persons, the payment of which is secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon property (including, without limitation, accounts
and contract rights) owned by such person, even though such person has not
assumed or become liable for the payment of such Indebtedness (the amount of
such obligation being deemed to be the lesser of the value of such property or
asset or the amount of the obligation so secured), (f) all guarantees of
Indebtedness referred to in this definition by such person, (g) all Redeemable
Capital Stock of such person valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued dividends, (h) all
obligations under or in respect of Currency Agreements and Interest Rate
Protection Obligations of such person, (i) any Preferred Stock of any
Restricted Subsidiary of such person valued at the sum of (without
duplication) (A) the liquidation preference thereof, (B) any mandatory
redemption payment obligations in respect thereof and (C) accrued dividends
thereon, and (j) any amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of the types referred to in clauses
(a) through (i) above. For purposes hereof, the "maximum fixed repurchase
price" of any Redeemable Capital Stock which does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Redeemable
Capital Stock as if such Redeemable Capital Stock were purchased on any date
on which Indebtedness shall be required to be determined pursuant to this
Indenture, and if such price is based upon, or measured by, the fair market
value of such Redeemable Capital Stock, such fair market value shall be
determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock. For purposes of this definition, the term
"Indebtedness" shall not include (i) Indebtedness of a Wholly-Owned Subsidiary
owed to and held by the Guarantor, LGII or another Wholly-Owned Subsidiary, in
each case which is not subordinate in right of payment to any Indebtedness of
such Subsidiary, except that (a) any transfer of such Indebtedness by the
Guarantor, LGII or a Wholly-Owned Subsidiary (other than to the Guarantor,
LGII or to a Wholly-Owned Subsidiary) and (b) the sale, transfer or other
disposition by the Guarantor, LGII or any Restricted Subsidiary of the
Guarantor or LGII of Capital Stock of a Wholly-Owned Subsidiary which is owed
Indebtedness of another Wholly-Owned Subsidiary such that it ceases to be a
Wholly-Owned Subsidiary of the Guarantor or LGII shall, in each case, be an
incurrence of Indebtedness by such Restricted Subsidiary subject to the other
provisions of the Indenture; and (ii) Indebtedness of the Guarantor or LGII
owed to and held by a Wholly-Owned Subsidiary of the Guarantor or LGII which
is unsecured and subordinate in right of payment to the payment and
performance of the Guarantor's or LGII's obligations under the Indenture and
the Senior Notes except that (a) any transfer of such Indebtedness by a
Wholly-Owned Subsidiary of the Guarantor or LGII (other than to another
Wholly-Owned Subsidiary of the Guarantor or LGII) and (b) the sale, transfer
or other disposition by the Guarantor or LGII or any Restricted Subsidiary of
the Guarantor or LGII of Capital Stock of a Wholly-Owned Subsidiary which
holds Indebtedness of the Guarantor or LGII such that it ceases to be a
Wholly-Owned Subsidiary shall, in each case, be an incurrence of Indebtedness
by the Guarantor or LGII, as the case may be, subject to the other provisions
of the Indenture.
"Independent Financial Advisor" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Guarantor or LGII and (ii) which, in the
judgment of the Board of Directors of the Guarantor, is otherwise independent
and qualified to perform the task for which it is to be engaged.
"Interest Rate Protection Agreement" means any arrangement with any other
person whereby, directly or indirectly, such person is entitled to receive
from time to time periodic payments calculated by applying either a floating
or a fixed rate of interest on a stated notional amount in exchange for
periodic payments made by such person calculated by applying a fixed or a
floating rate of interest on the same notional amount and shall include,
without limitation, interest rate swaps, caps, floors, collars and similar
agreements.
"Interest Rate Protection Obligations" means the obligations of any person
pursuant to an Interest Rate Protection Agreement.
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"Investment" means, with respect to any person, any direct or indirect loan
or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such person of any Capital Stock, bonds, notes, debentures or other securities
or evidences of Indebtedness issued by, any other person. "Investments" shall
exclude extensions of trade credit by the Guarantor and its Restricted
Subsidiaries (including without limitation LGII) in the ordinary course of
business in accordance with normal trade practices of the Guarantor or such
Restricted Subsidiary, as the case may be.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim, or
preference or priority or other encumbrance upon or with respect to any
property of any kind. A person shall be deemed to own subject to a Lien any
property which such person has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement.
"Maturity Date" means, with respect to any Security, the date on which any
principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity with respect to such principal or by
declaration of acceleration, purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to the Guarantor or any Restricted Subsidiary of the Guarantor
(including without limitation LGII) net of (i) brokerage commissions and other
fees and expenses (including, without limitation, fees and expenses of legal
counsel and investment bankers) related to such Asset Sale, (ii) provisions
for all taxes payable as a result of such Asset Sale, (iii) amounts required
to be paid to any person (other than the Guarantor or any Restricted
Subsidiary of the Guarantor) owning a beneficial interest in the assets
subject to the Asset Sale and (iv) appropriate amounts to be provided by the
Guarantor or any Restricted Subsidiary of the Guarantor, as the case may be,
as a reserve required in accordance with GAAP against any liabilities
associated with such Asset Sale and retained by the Guarantor or any
Restricted Subsidiary of the Guarantor, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset Sale, all as
reflected in an officers' certificate delivered to the Trustee.
"Pari Passu Indebtedness" means Indebtedness of LGII or the Guarantor which
ranks pari passu in right of payment with the Notes or the Guarantees, as the
case may be.
"Permitted Holders" mean (i) Raymond Loewen and Anne Loewen, taken together
and (ii) in the case of LGII, the Guarantor.
"Permitted Indebtedness" means, without duplication, each of the following:
(a) The Notes and Indebtedness of the Guarantor evidenced by the
Guarantees;
(b) Indebtedness of the Guarantor and its Restricted Subsidiaries
(including without limitation LGII) outstanding on the Issue Date (other
than Indebtedness under the Credit Agreements);
(c) Indebtedness of the Guarantor under the Credit Agreements in an
aggregate principal amount at any one time outstanding not to exceed
$750,000,000 less the Net Proceeds of any Asset Sale that are applied to
repay, and permanently reduce the commitments under, the Credit Agreements
(as required by the terms thereof);
(d) (i) Interest Rate Protection Obligations of the Guarantor covering
Indebtedness of the Guarantor and its Restricted Subsidiaries (including
without limitation LGII); (ii) Interest Rate Protection Obligations of any
Restricted Subsidiary of the Guarantor covering Indebtedness of such
Restricted Subsidiary;
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provided, however, that, in the case of either clause (i) or (ii), (x) any
Indebtedness to which any such Interest Rate Protection Obligations relate
bears interest at fluctuating interest rates and is otherwise permitted to
be incurred under this covenant and (y) the notional principal amount of
any such Interest Rate Protection Obligations does not exceed the principal
amount of the Indebtedness to which such Interest Rate Protection
Obligations relate;
(e) Indebtedness under Currency Agreements; provided, however, that in
the case of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Guarantor and its
Restricted Subsidiaries (including without limitation LGII) outstanding
other than as a result of fluctuations in foreign currency exchange rates
or by reason of fees, indemnities and compensation payable thereunder;
(f) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except
in the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business; provided, however, that such Indebtedness is
extinguished within two business days of incurrence;
(g) Indebtedness incurred in respect of performance bonds or letters of
credit in lieu thereof provided in the ordinary course of business;
(h) Indebtedness of the Guarantor and its Restricted Subsidiaries
(including without limitation LGII) represented by letters of credit for
the account of the Guarantor and its Restricted Subsidiaries in order to
provide security for workers' compensation claims, payment obligations in
connection with self-insurance or similar requirements in the ordinary
course of business;
(i) Indebtedness of the Guarantor and its Restricted Subsidiaries
(including without limitation LGII) in addition to that described in
clauses (a) through (h) above, in an aggregate principal amount outstanding
at any time not exceeding $5,000,000; and
(j) (i) Indebtedness of the Guarantor the proceeds of which are used
solely to refinance (whether by amendment, renewal, extension or refunding)
Indebtedness of the Guarantor and its Restricted Subsidiaries (including
without limitation LGII) and (ii) Indebtedness of any Restricted Subsidiary
of the Guarantor the proceeds of which are used solely to refinance
(whether by amendment, renewal, extension or refunding) Indebtedness of
such Restricted Subsidiary, in each case other than the Indebtedness
refinanced, redeemed or retired as described under "Use of Proceeds" herein
or incurred under clause (c), (d), (e), (f), (g), (h), or (i) of this
covenant; provided, however, that (x) the principal amount of Indebtedness
incurred pursuant to this clause (j) (or, if such Indebtedness provides for
an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the maturity thereof, the original issue
price of such Indebtedness) shall not exceed the sum of the principal
amount of Indebtedness so refinanced, plus the amount of any premium
required to be paid in connection with such refinancing pursuant to the
terms of such Indebtedness or the amount of any premium reasonably
determined by the Board of Directors of the Guarantor as necessary to
accomplish such refinancing by means of a tender offer or privately
negotiated purchase, plus the amount of expenses in connection therewith,
(y) in the case of Indebtedness incurred by the Guarantor pursuant to this
clause (j) to refinance Pari Passu Indebtedness, such Indebtedness
constitutes Pari Passu Indebtedness.
"Permitted Investments" means any of the following: (i) Investments in any
Wholly-Owned Subsidiary of the Guarantor (including (a) LGII and (b) any
person that pursuant to such Investment becomes a Wholly-Owned Subsidiary of
the Guarantor) and any person that is merged or consolidated with or into, or
transfers or conveys all or substantially all of its assets to, the Guarantor
or any Wholly-Owned Subsidiary of the Guarantor at the time such Investment is
made; (ii) Investments in Cash Equivalents; (iii) Investments in Currency
Agreements on commercially reasonable terms entered into by the Guarantor or
any of its Restricted Subsidiaries in the ordinary course of business in
connection with the operations of the business of the Guarantor or its
Restricted Subsidiaries to hedge against fluctuations in foreign exchange
rates; (iv) loans or advances to officers, employees or consultants of the
Guarantor and its Restricted Subsidiaries for travel and moving expenses in
the ordinary course of business for bona fide business purposes of the
Guarantor and its Restricted Subsidiaries; (v) other
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loans or advances to officers, employees or consultants of the Guarantor and
its Restricted Subsidiaries in the ordinary course of business for bona fide
business purposes of the Guarantor and its Restricted Subsidiaries not in
excess of $10,000,000 in the aggregate at any one time outstanding; (vi)
Investments in evidences of Indebtedness, securities or other property
received from another person by the Guarantor or any of its Restricted
Subsidiaries in connection with any bankruptcy proceeding or by reason of a
composition or readjustment of debt or a reorganization of such person or as a
result of foreclosure, perfection or enforcement of any Lien in exchange for
evidences of Indebtedness, securities or other property of such person held by
the Guarantor or any of its Restricted Subsidiaries, or for other liabilities
or obligations of such other person to the Guarantor or any of its Restricted
Subsidiaries that were created, in accordance with the terms of the Indenture;
(vii) Investments in Interest Rate Protection Agreements on commercially
reasonably terms entered into by the Guarantor or any of its Restricted
Subsidiaries in the ordinary course of business in connection with the
operations of the Guarantor and its Restricted Subsidiaries to hedge against
fluctuations in interest rates; (viii) Investments of funds received by the
Guarantor or its Restricted Subsidiaries (including without limitation LGII)
in the ordinary course of business, which funds are required to be held in
trust for the benefit of others by the Guarantor or such Restricted
Subsidiary, as the case may be, and which funds do not constitute assets or
liabilities of the Guarantor or such Restricted Subsidiary; (ix) the
acquisition of insurance company assets from S.I. Acquisition Associates,
L.P., and Investments not in excess of $50,000,000 in the aggregate in other
Unrestricted Subsidiaries which are engaged in the insurance business; and (x)
Investments not in excess of $50,000,000 in persons (other than Wholly-Owned
Subsidiaries) engaged in businesses incidental to the funeral home, cemetery
and cremation businesses of the Guarantor and its Restricted Subsidiaries.
"Permitted Liens" means the following types of Liens:
(a) Liens for taxes, assessments or governmental charges or claims either
(a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Guarantor or any of its Restricted
Subsidiaries (including without limitation LGII) shall have set aside on
its books such reserves as may be required pursuant to GAAP;
(b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(c) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, governmental
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(d) judgment Liens not giving rise to an Event of Default so long as such
Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(e) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Guarantor
or any of its Restricted Subsidiaries (including without limitation LGII);
(f) any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;
(g) any Lien existing on any asset of any corporation at the time such
corporation becomes a Restricted Subsidiary and not created in
contemplation of such event;
(h) any Lien on any asset securing Indebtedness incurred or assumed for
the purpose of financing all or any part of the cost of acquiring or
constructing such asset; provided, that such Lien attaches to such asset
concurrently with or within 18 months after the acquisition or completion
thereof;
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(i) any Lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into the Guarantor or a
Restricted Subsidiary and not created in contemplation of such event;
(j) any Lien existing on any asset prior to the acquisition thereof by
the Guarantor or a Restricted Subsidiary and not created in contemplation
of such acquisition; and
(k) Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the
importation of goods; and
(l) any extension, renewal or replacement of any Lien permitted by the
preceding clauses (g), (h), (i) or (j) hereof in respect of the same
property or assets theretofore subject to such Lien in connection with the
extension, renewal or refunding of the Indebtedness secured thereby;
provided that (1) such Lien shall attach solely to the same such property
or assets and (2) such extension, renewal or refunding of such Indebtedness
shall be without increase in the principal remaining unpaid as at the date
of such extension, renewal or refunding.
"Person" means any individual, corporation, limited liability company
partnership, joint venture, association, joint-stock company, trust,
charitable foundation, unincorporated organization, government or any agency
or political subdivision thereof.
"Preferred Securities" means, with respect to a Special Finance Subsidiary,
any securities of such Subsidiary treated for accounting purposes as an equity
security that has preferential rights to any other security of such person
with respect to dividends or redemptions or upon liquidation.
"Preferred Stock" means, with respect to any person, any Capital Stock of
such person that has preferential rights to any other Capital Stock of such
person with respect to dividends or redemptions or upon liquidation and any
Preferred Securities.
"Redeemable Capital Stock" means any shares of any class or series of
Capital Stock, that, either by the terms thereof, by the terms of any security
into which it is convertible or exchangeable or by contract or otherwise, is
or upon the happening of an event or passage of time would be, required to be
redeemed prior to the Stated Maturity with respect to the principal of any
Note or is redeemable at the option of the holder thereof at any time prior to
any such Stated Maturity Date, or is convertible into or exchangeable for debt
securities at any time prior to any such Stated Maturity.
"Restricted Subsidiary" means any Subsidiary of the Guarantor other than an
Unrestricted Subsidiary.
"Sale-Leaseback Transaction" of any person means an arrangement with any
lender or investor or to which such lender or investor is a party providing
for the leasing by such person of any property or asset of such person which
has been or is being sold or transferred by such person after the acquisition
thereof or the completion of construction or commencement of operation thereof
to such lender or investor or to any person to whom funds have been or are to
be advanced by such lender or investor on the security of such property or
asset. The stated maturity of such arrangement shall be the date of the last
payment of rent or any other amount due under such arrangement prior to the
first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"S&P" means Standard & Poor's Corporation, and its successors.
"Seller Financing Indebtedness" means a purchase money Indebtedness issued
to the seller of a business or other assets for, and not in excess of, the
purchase price thereof.
"Significant Subsidiary" shall mean a Restricted Subsidiary which is a
"Significant Subsidiary" as defined in Rule 1.02(v) of Regulation S-X under
the Securities Act.
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"Special Finance Subsidiary" means a Restricted Subsidiary whose sole assets
are debt obligations of LGII or the Guarantor and whose sole liabilities are
Preferred Securities the proceeds from the sale of which are or have been
advanced to LGII or the Guarantor.
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is
due and payable, and when used with respect to any other Indebtedness, means
the date specified in the instrument governing such Indebtedness as the fixed
date on which the principal of such Indebtedness, or any installment of
interest thereon, is due and payable.
"Subsidiary" means, with respect to any person, (i) a corporation a majority
of whose Voting Stock is at the time, directly or indirectly, owned by such
person, by one or more Subsidiaries of such person or by such person and one
or more Subsidiaries thereof and (ii) any other person (other than a
corporation), including, without limitation, a joint venture, in which such
person, one or more Subsidiaries thereof or such person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, has at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other person
performing similar functions). For purposes of this definition, any directors'
qualifying shares or investments by foreign nationals mandated by applicable
law shall be disregarded in determining the ownership of a Subsidiary.
"Unrestricted Subsidiary" means (i) First Capital Life Insurance Company of
Louisiana, National Capital Life Insurance Company or a Subsidiary that has
acquired insurance company assets from S.I. Acquisition Associates, L.P. or
(ii) a Subsidiary of the Guarantor declared by the Board of Directors of the
Guarantor to be an Unrestricted Subsidiary; provided, that no such Subsidiary
shall be declared to be an Unrestricted Subsidiary unless (x) none of its
properties or assets were owned by the Guarantor or any of its Subsidiaries
prior to the Issue Date, other than any such assets as are transferred to such
Unrestricted Subsidiary in accordance with the covenant described under "--
Certain Covenants; Limitation on Restricted Payments" above, (y) its
properties and assets, to the extent that they secure Indebtedness, secure
only Non-Recourse Indebtedness and (z) it has no Indebtedness other than Non-
Recourse Indebtedness. As used above, "Non-Recourse Indebtedness" means
Indebtedness as to which (i) neither the Guarantor nor any of its Subsidiaries
(other than the relevant Unrestricted Subsidiary or another Unrestricted
Subsidiary) (1) provides credit support (including any undertaking, agreement
or instrument which would constitute Indebtedness), (2) guarantees or is
otherwise directly or indirectly liable or (3) constitutes the lender (in each
case, other than pursuant to and in compliance with the covenant described
under "--Certain Covenants; Limitation on Restricted Payments") and (ii) no
default with respect to such Indebtedness (including any rights which the
holders thereof may have to take enforcement action against the relevant
Unrestricted Subsidiary or its assets) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness of the Guarantor or its
Subsidiaries (other than Unrestricted Subsidiaries) to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity.
"Voting Stock" means any class or classes of Capital Stock pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect a least a majority of the board of directors, managers or trustees of
any person (irrespective of whether or not, at the time, Capital Stock of any
other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
"Wholly-Owned Subsidiary" means (i) any Restricted Subsidiary of the
Guarantor of which 100% of the outstanding Capital Stock is owned by the
Guarantor or one or more Wholly-Owned Subsidiaries of the Guarantor or by the
Guarantor and one or more Wholly-Owned Subsidiaries of the Guarantor,
including LGII, or (ii) any Subsidiary, at least 66 2/3% of the outstanding
voting securities of which, and all of the outstanding shares entitled to
receive dividends or other distributions of which, shall at the time be owned
or controlled, directly or indirectly, by the Guarantor or one or more Wholly-
Owned Subsidiaries of the Guarantor or by the Guarantor and one or more
Wholly-Owned Subsidiaries of the Guarantor, including LGII. For purposes of
this definition, any directors' qualifying shares or investments by foreign
nationals mandated by applicable law shall be disregarded in determining the
ownership of a Subsidiary.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
As a result of the Gulf National award and the Gulf National settlement, the
Company's ability to borrow further under its current credit facilities is
restricted. A number of waivers have been granted under the current credit
facilities. The waivers have principally been obtained in connection with the
Gulf National award and settlement. In February 1996, the lenders under the
Company's credit facilities granted waivers and amendments to take into
account the effect of the Gulf National and Provident settlements on the
Company's financial results for the year ended December 31, 1995. The waivers
and amendments of the Multi-Currency Revolver and the MEIP Facility (described
below) also provide that the Company will grant security over all of the
assets of the Company by May 31, 1996 and the Company's consolidated debt
shall be limited to $1,100 million. The Company intends to retire the Multi-
Currency Revolver in full by drawing down on the New Bank Facility.
LGII has a $400.0 million unsecured multi-currency revolving credit facility
with a bank syndicate which matures in May 2000 and a $100.0 million 364-day
unsecured multi-currency revolving credit facility with the same syndicate of
banks which matures in May 1996. On March 20, 1996, $450 million of the
approximately $534 million aggregate net proceeds from the 1996 Senior Note
Offering and the 1996 Equity Offering was used to pay in full the balance
outstanding under the Multi-Currency Revolver. As at April 26, 1996, LGII had
an outstanding balance of $95 million under the Multi-Currency Revolver. No
further borrowings are available under the Multi-Currency Revolver without the
consent of the lenders thereunder.
Loewen has a Cdn.$50.0 million unsecured revolving credit facility which
matures in April 1997 (the "Canadian Revolver"). At December 31, 1995 and
April 26, 1996, Loewen had borrowed Cdn.$43.0 million and Cdn.$40.3 million,
respectively, under the Canadian Revolver. The lender has capped the Canadian
Revolver at Cdn.$45.0 million as a result of the Gulf National award and
settlement. A subsidiary of Loewen has a $121.3 million secured term credit
facility implemented in connection with the 1994 Management Equity Investment
Plan that will terminate in July 2000 (the "MEIP Facility"). No further
borrowings are available under this facility. Loewen has a Cdn.$35.0 million
five-year unsecured term credit facility with a bank syndicate that will
terminate in January 2000 (the "Canadian Term Loan"). LGII provided an
unsecured guarantee of the obligations under such credit facility. No further
borrowings are available under this facility.
Certain of the above loan agreements contain various restrictive provisions,
including restricting payment of dividends on Common and Preferred Shares,
limiting redemption or repurchase of shares, limiting disposition of assets,
limiting the amount of additional debt, limiting the amount of capital
expenditures and maintaining specified financial ratios.
NEW BANK FACILITY
On February 14, 1996, LGII signed a commitment letter with a Canadian bank
in respect of a new five-year $750 million secured revolving credit facility,
which is expected to close by May 31, 1996. Under the terms of the New Bank
Facility, LGII will be required to comply with certain financial covenants,
including without limitation, maintenance of net worth, limitations on
indebtedness, debt to cash flow ratios and fixed charges coverage. In
connection with the pledge of the Collateral, LGII and Loewen also will enter
into an intercreditor arrangement with the holders of the Pari Passu
Indebtedness. This arrangement, in the form of a trust deed, will describe and
provide for the rights of each holder of Pari Passu Indebtedness with respect
to the Collateral. The Collateral will be held by a trustee for the benefit of
the various holders of the Pari Passu Indebtedness under a Collateral Trust
Agreement to be executed by Loewen, LGII and a trustee.
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PLAN OF DISTRIBUTION
Based on interpretations by the staff of the Commission set forth in no
action letters issued to third parties, LGII believes that Exchange Notes
issued pursuant to the Exchange Offer in exchange for Outstanding Notes may be
offered for resale, resold and otherwise transferred by holders thereof (other
than any holder which is (i) an "affiliate" of LGII or Loewen, within the
meaning of Rule 405 under the Securities Act, (ii) a broker-dealer who
acquired Notes directly from LGII or (iii) a broker-dealer who acquired Notes
as a result of market-making or other trading activities) without compliance
with the registration and prospectus delivery provisions of the Securities Act
provided that such Exchange Notes are acquired in the ordinary course of such
holders' business, and such holders are not engaged in, and do not intend to
engage in, and have no arrangement or understanding with any person to
participate in, a distribution of such Exchange Notes; provided that broker-
dealers ("Participating Broker-Dealers") receiving Exchange Notes in the
Exchange Offer will be subject to a prospectus delivery requirement with
respect to resales of such Exchange Notes. To date, the staff of the
Commission has taken the position that Participating Broker-Dealers may
fulfill their prospectus delivery requirements with respect to transactions
involving an exchange of securities such as the exchange pursuant to the
Exchange Offer (other than a result of an unsold allotment from the sale of
the Outstanding Notes to the Initial Purchasers) with the prospectus contained
in an exchange offer registration statement. Pursuant to the Registration
Rights Agreement, LGII has agreed to permit Participating Broker-Dealers and
other persons, if any, subject to similar prospectus delivery requirements to
use this Prospectus in connection with the resale of such Exchange Notes. LGII
and Loewen have agreed that, for a period of 180 days after the Expiration
Date, they will make this Prospectus, and any amendment or supplement to this
Prospectus, available to any broker-dealer that requests such documents in the
Letter of Transmittal.
Each holder of Outstanding Notes who wishes to exchange its Outstanding
Notes for Exchange Notes in the Exchange Offer will be required to make
certain representations to LGII as set forth in "The Exchange Offer--Terms and
Conditions of the Letter of Transmittal." In addition, each holder who is a
broker-dealer and who receives Exchange Notes for its own account in exchange
for Outstanding Notes that were acquired by it as a result of market-making
activities or other trading activities, will be required to acknowledge that
it will deliver a prospectus in connection with any resale by its of such
Exchange Notes.
Neither LGII nor Loewen will receive any proceeds from any sale of Exchange
Notes by broker-dealers. Exchange Notes received by broker-dealers for their
own account pursuant to the Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices. Any such resale may
be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. The Letter of
Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
LGII has agreed to pay all expenses incidental to the Exchange Offer other
than commissions and concessions of any brokers or dealers and will indemnify
holders of the Outstanding Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act, as set
forth in the Registration Rights Agreement.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In the opinion of Thelen, Marrin, Johnson & Bridges, United States counsel
to LGII and Loewen, the following section accurately summarizes the material
United States federal income tax considerations that may be relevant to the
acquisition, holding and disposition of the Exchange Notes by an individual
citizen or resident of the United States.
This section is a summary of certain United States federal income tax
considerations that may be relevant to prospective holders of Exchange Notes
and represents the opinion of Thelen, Marrin, Johnson & Bridges insofar as it
relates to matters of law and legal conclusions. This section is based upon
current provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), existing and proposed regulations thereunder and current
administrative rulings and court decisions, all of which are subject to
change, possibly with retroactive effect. Subsequent changes may cause tax
consequences to vary substantially from the consequences described below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting holders of Exchange Notes.
Moreover, the discussion focuses on individual citizens or residents of the
United States who are holders of Exchange Notes for United States federal tax
purposes and has only limited application to corporations, estates and trusts.
Accordingly, each holder of Outstanding Notes should consult, and should
depend on, his or her own tax adviser in analyzing the federal, state, local
and foreign tax consequences of the acquisition, ownership or disposition of
Exchange Notes.
As used in the discussion which follows, the term "U.S. Holder" means a
beneficial owner of Notes that, for United States federal income tax purposes,
is (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source. The term "Non-U.S. Holder" means a beneficial owner
of Notes that, for United States federal income tax purposes, is not a U.S.
Holder.
TAX CONSEQUENCES TO U.S. HOLDERS
Exchange Offer
The exchange of the Outstanding Notes for Exchange Notes pursuant to the
Exchange Offer will not be treated as an "exchange" because the Exchange Notes
will not be considered to differ materially in kind or extent from the
Outstanding Notes. Rather, the Exchange Notes received by a holder of the
Outstanding Notes will be treated as a continuation of the Outstanding Notes
in the hands of such holder. As a result, there will be no federal income tax
consequences to holders exchanging the Outstanding Notes for the Exchange
Notes pursuant to the Exchange Offer.
Interest
Except as provided below in respect of certain Additional Interest (as
described below), a holder of a Note will be required to report stated
interest on the Note as interest income in accordance with the holder's method
of accounting for tax purposes.
61
<PAGE>
The Treasury Regulations relating to original issue discount ("OID") permit
the accrual of OID to be determined, in the case of a debt instrument with
alternative payment schedules, based upon the payment schedule most likely to
occur, as determined by the issuer of the debt, so long as the timing and
amounts of each payment schedule are known as of the issue date. Under the OID
rules, holders may be required to recognize income prior to receipt of cash.
Under certain circumstances, including failure of the Company to register the
Notes pursuant to an effective registration statement, additional interest
(the "Additional Interest") will accrue on the Notes in the manner described
in "Description of Exchange Notes--Registration Rights Agreement." The Company
does not intend to treat the possibility of Additional Interest as affecting
the computation of OID or the yield to maturity. If a holder of a Note becomes
entitled to Additional Interest, then, solely for purposes of determining the
accrual of OID, the yield to maturity on the Notes will be determined by
treating the Notes as reissued on the date that it is determined that such
Additional Interest will be required to be paid, for an amount equal to its
adjusted issue price on such date. The foregoing position taken by the Company
will be binding on all holders, unless a holder explicitly discloses that its
determination of the yield to maturity is different from the Company's
determination on a statement attached to the holder's timely filed federal
income tax return for the year that includes the acquisition date of the
Notes.
Tax Basis in Outstanding Notes and Exchange Notes
A holder's tax basis in a Note will be the holder's purchase price for the
Note, increased for OID, if any, previously included in income by the holder
with respect to the Notes and not yet paid. If a holder of an Outstanding Note
exchanges the Outstanding Note for an Exchange Note pursuant to the Exchange
Offer, the tax basis of the Exchange Note immediately after such exchange
should equal the holder's tax basis in the Outstanding Note immediately prior
to the Exchange.
Disposition of Outstanding Notes or Exchange Notes
The sale, exchange, redemption or other disposition of a Note will be a
taxable event, except in the case of an exchange pursuant to the Exchange
Offer (see the above discussion), or certain exchanges in which gain or loss
is not recognized under the Code. A holder will recognize gain or loss equal
to the difference between (i) the amount of cash (plus the fair market value
of any property) received upon such sale, exchange, redemption or other
taxable disposition of the Outstanding Note or the Exchange Note (except to
the extent attributable to accrued interest) and (ii) the holder's adjusted
tax basis in such Outstanding Note or Exchange Note. Such gain or loss will be
capital gain or loss, and will be long term if the Note has been held for more
than one year at the time of the sale or other disposition.
Purchasers of Notes at Other then Original Issuance Price
The foregoing does not discuss special rules that may affect the treatment
of purchasers that acquire Notes other than at par, including those provisions
of the Internal Revenue Code relating to the treatment of "market discount,"
"bond premium" and "amortizable bond premium." Any such purchaser should
consult its tax advisor as to the consequences to it of the acquisition,
ownership, and disposition of Notes.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
In the case of a Non-U.S. Holder, such Non-U.S. Holder will not be subject
to U.S. federal income tax, including U.S. withholding tax, on interest paid
or OID (if any) on the Notes under the "portfolio interest" exception,
provided that (i) the Non-U.S. Holder does not actually or constructively own
10% or more of the total combined voting power of all classes of stock of the
Company entitled to vote, (ii) the Non-U.S. Holder is not (a) a bank receiving
interest or OID pursuant to a loan agreement entered into in the ordinary
course of its trade or business or (b) a controlled foreign corporation that
is related to the Company through stock ownership, (iii) such interest or OID
is not effectively connected with a United States trade or business, and (iv)
either (a) the beneficial owner of the Notes certifies to the Company or its
agent, under penalties of perjury, that the beneficial owner is a foreign
person and provides a completed IRS Form W-8 ("Certificate of Foreign Status")
or (b) a
62
<PAGE>
securities clearing organization, bank or other financial institution which
holds customers' securities in the ordinary course of its trade or business (a
"financial institution") and holds the Notes, certifies to the Company or its
agency, under penalties of perjury, that it has received Form W-8 from the
beneficial owner or that it has received from another financial institution a
Form W-8 and furnishes the payor with a copy thereof. If any of the situations
described in proviso (i), (ii) or (iv) of the preceding sentence do not exist,
then, except as described below for effectively connected income, interest
paid and OID, if any, on the Notes would be subject to U.S. withholding tax at
a 30% rate (or lower tax treaty rate as evidenced by an IRS Form 1001
(Ownership Exemption or Reduced Rate Certificate)). If the income on the Notes
is effectively connected with a Non-U.S. Holder's conduct of a trade or
business within the United States, then, absent tax treaty protection, the
Non-U.S. Holder will be subject to U.S. federal income tax on such income in
essentially the same manner as a United States person and, in the case of a
foreign corporation, may also be subject to the U.S. branch profits tax.
On April 15, 1996, the Internal Revenue Service issued proposed Treasury
regulations setting forth revised procedures for claiming the benefit of the
portfolio interest exemption and treaty withholding rate reductions. If these
rules, which are proposed to take effect in 1998, are adopted in their current
form, non-U.S. holders of the Notes could continue to claim the benefit of the
portfolio debt exemption by filing a Form W-8 with the issuer. Form W-8 would
also be used to claim the benefit of applicable tax treaty provisions. In
addition, the existing procedures under which financial institutions are
permitted to provide certifications of foreign status on behalf of their non-
U.S. customers would be continued and expanded.
BACKUP WITHHOLDING
Unless a holder provides its correct taxpayer identification number
(employer identification number or social security number) to the Company and
certifies that such number is correct, under the federal income tax backup
withholding rules, 31% of (i) the interest paid on the Notes, and (ii)
proceeds of sale of the Notes, must be withheld and remitted to the United
States Treasury. However, certain holders (including, among others, certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. For a foreign individual to qualify as an exempt foreign
recipient, that holder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt foreign status.
Backup withholding is not an additional federal income tax. Rather, the
federal income tax liability of a person subject to withholding will be
reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the IRS.
LEGAL MATTERS
The validity of the Exchange Notes, certain matters of New York law relating
to the Guarantees and certain statements as to United States taxation in the
Prospectus will be passed upon for LGII and Loewen by Thelen, Marrin, Johnson
& Bridges, San Francisco, California. The validilty of the Guarantees will be
passed upon for Loewen by Russell & DuMoulin, Vancouver, Canada.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in this Prospectus have been audited by KPMG Peat Marwick Thorne,
Chartered Accountants, for the periods indicated in its report thereon, which
is incorporated herein by reference. Such financial statements have been so
incorporated in reliance on such report given on the authority of KPMG Peat
Marwick Thorne as experts in accounting and auditing.
63
<PAGE>
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES AGAINST GUARANTOR
Loewen is a corporation organized under and governed by the laws of the
Province of British Columbia, Canada. Certain of its directors, controlling
persons, and officers are residents of Canada, and all or a portion of the
assets of such persons and of Loewen are located outside the United States. As
a result, it may be difficult or impossible for United States holders of the
Notes seeking to enforce the Guarantor's obligations under the Guarantees to
effect service within the United States upon Loewen (although it may be
possible to effect service upon direct or indirect United States subsidiaries
of Loewen) and those directors or officers who are not residents of the United
States, or to realize in the United States upon judgments of courts of the
United States predicated upon the civil liability of such persons under the
Securities Act or the Exchange Act, to the extent such judgments exceed such
person's United States assets. Loewen has been advised by Russell & DuMoulin,
its Canadian counsel, that there is doubt as to the enforceability in Canada
against any of these persons, in original actions or in actions for
enforcement of judgments of United States courts, of liabilities predicated
solely on the Securities Act or the Exchange Act.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents heretofore filed by Loewen with the Commission are
hereby incorporated herein by reference: (i) Loewen's Annual Report on Form
10-K for the fiscal year ended December 31, 1995; and (ii) all reports filed
by Loewen pursuant to Section 13(a) or 15(d) of the Exchange Act since
December 31, 1995. All documents filed by Loewen pursuant to Section 13(a),
13(c), 14, or 15(d) of the Exchange Act after the date of this Prospectus and
prior to 180 days after the Expiration Date shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of
filing of such documents.
Any statement 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 which also is incorporated
or deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
64
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR 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 EXCHANGE OFFER MADE HEREBY, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THOSE TO WHICH IT RELATES OR AN OFFER OR A SOLICITATION IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS, NOR ANY DISTRIBUTION
OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS NOT BEEN A CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 3
Financial Information...................................................... 3
Prospectus Summary......................................................... 4
Risk Factors............................................................... 13
Recent Developments........................................................ 14
Use of Proceeds............................................................ 17
Consolidated Capitalization................................................ 17
The Exchange Offer......................................................... 18
Business................................................................... 26
Legal Proceedings.......................................................... 31
Description of Exchange Notes.............................................. 34
Description of Certain Indebtedness........................................ 59
New Bank Facility.......................................................... 59
Plan of Distribution....................................................... 60
Certain Federal Income Tax Considerations.................................. 61
Legal Matters.............................................................. 63
Experts.................................................................... 63
Enforceability of Certain Civil Liabilities Against Guarantor.............. 64
Incorporation of Certain Information by Reference.......................... 64
</TABLE>
- --------------------------------------------------------------------------------
================================================================================
LOEWEN GROUP INTERNATIONAL, INC.
$225,000,000 7 1/2% SERIES 3
SENIOR GUARANTEED NOTES DUE 2001 FOR
ALL OUTSTANDING 7 1/2% SERIES 1
SENIOR GUARANTEED NOTES DUE 2001 AND
$125,000,000 8 1/4% SERIES 4
SENIOR GUARANTEED NOTES DUE 2003 FOR
ALL OUTSTANDING 8 1/4% SERIES 2
SENIOR GUARANTEED NOTES DUE 2003
GUARANTEED BY
THE LOEWEN GROUP INC.
[LOGO OF THE LOEWEN GROUP INC APPEARS HERE]
--------
PROSPECTUS
--------
June , 1996
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
LGII
Section 145 of the Delaware General Corporation Law ("Delaware Law")
permits, subject to certain conditions, a corporation to indemnify its
directors, officers, employees and agents against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such director, officer, employee or agent in connection
with threatened, pending or completed actions, suits and proceedings (other
than actions by or in the right of the corporation ) in or to which any of
such persons is a party or is threatened to be made a party.
Section 5.01 of the By-laws of LGII provides that LGII may indemnify its
directors, officers, employees and agents to the fullest extent permitted by
Delaware Law, including the advancement of funds, provided that such person
acted in good faith and in a manner such person reasonably believed to be in
or not opposed to the best interests of LGII and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such person's conduct
was unlawful.
The Board of Directors of LGII has determined that the expenses of the
officers named in the Shareholder Suits incurred in defending the Shareholder
Suits should be paid by LGII from time to time in advance of the final
disposition of such proceedings, subject to each such individual entering into
an undertaking to repay all amounts paid by LGII if it is ultimately
determined that such individual is not entitled to be indemnified by LGII
under the Delaware General Corporation Law.
LOEWEN
Section 152 of the Company Act of British Columbia provides in part that:
A company may, with the approval of the court, indemnify a director or
former director of the company or a director or former director of a
corporation of which it is or was a shareholder, and his heirs and personal
representatives, against all costs, charges and expenses, including any amount
paid to settle an action or satisfy a judgment, actually and reasonably
incurred by him, including an amount paid to settle an action or satisfy a
judgment in a civil, criminal or administrative action or proceeding to which
he is made a party by reason of being or having been a director, including an
action brought by the company or corporation, if
(a) he acted honestly and in good faith with a view to the best interests of
the corporation of which his is or was a director; and
(b) in the case of a criminal or administrative action or proceeding, he had
reasonable grounds for believing that his conduct was lawful.
Part 19 of Loewen's Articles provides that Loewen shall indemnify its
directors generally in accordance with the provisions of Section 152 and that
Loewen shall indemnify its Secretary and any Assistant Secretary against all
costs, charges and expenses incurred that have arisen as a result of serving
Loewen in such capacity. The Articles further provide that Loewen may
indemnify any of its officers, employees or agents against all costs, charges
and expenses incurred as a result of acting as an officer, employee and agent
of Loewen.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
Exhibit
Number Description
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY-HOLDERS, INCLUDING
INDENTURES
4.1 Indenture, dated as of March 20, 1996, by and between LGII,
Loewen, as guarantor of the obligations of LGII under the
Indenture, and Fleet National Bank of Connecticut, as Trustee,
with respect to 7 1/2% Series 1 Senior Guaranteed Notes due 2001
and 8 1/4% Series 2 Senior Guaranteed Notes due 2003 (4)
4.2 Purchase Agreement, dated as of March 13, 1996, by and between
LGII, Loewen and the Initial Purchasers
4.3 Receipt Agreement, dated as of January 3, 1996, for the
Cumulative Redeemable Convertible First Preferred Shares
Series C of Loewen (4)
4.4 Shareholder Protection Rights Plan, dated as of April 20,
1990, as amended on May 24, 1990 and April 7, 1994 and
reconfirmed on May 17, 1995 (2)
4.5 Amended and Restated Multicurrency Credit Agreement, dated
as of May 11, 1995, by and between LGII, as borrower,
Loewen, as guarantor, the banks named therein as lenders and
The First National Bank of Chicago, as agent for the banks
named therein as lenders (3)
4.6 Multicurrency Credit Agreement, dated as of May 11, 1995, by
and between LGII, as borrower, Loewen, as guarantor, the
banks named therein as lenders and The First National Bank
of Chicago, as agent for the banks named therein as lenders
(3)
4.7 Zero Coupon Loan Agreement, dated as of November 1, 1994, by
and between WLSP Investment Partners I, Neweol Finance B.V.,
Electrolux Holdings B.V., Man Producten Rotterdam B.V.,
Adinvest A.G., and Wachovia Bank of Georgia, N.A. (2)
4.8 MIPS Guarantee Agreement, dated August 15, 1994 (1)
4.9 Indenture, dated as of August 15, 1994, by and between LGII,
as issuer, Loewen, as guarantor, and State Street Bank and
Trust Company, as trustee with respect to 9.45% Junior
Subordinated Debentures, Series A, due 2024, issued by LGII
and guaranteed by Loewen (1)
4.10 Exchange Acknowledgment by Loewen, with respect to the 1994
Exchangeable Floating Rate Debentures due July 15, 2001
issued by LGII, dated June 15, 1994 (2)
4.11 1994 MEIP Credit Agreement, dated as of June 14, 1994, by
and between Loewen Management Investment Corporation, in its
capacity as agent for LGII ("LMIC"), Loewen and the banks
listed therein (the "MEIP Banks") and Wachovia Bank of
Georgia, N.A., as agent for the MEIP Banks ("MEIP Agent")
(2)
4.12 Guaranty dated as of June 14, 1994 by Loewen in favor of the
MEIP Agent for the ratable benefit of the MEIP Banks (2)
4.13 Guaranty dated as of June 14, 1994 by LGII in favor of the
MEIP Agent for the ratable benefit of the MEIP Banks (2)
4.14 Security Agreement, dated as of June 14, 1994, by and
between LMIC and the MEIP Agent (2)
4.15 Note Agreement, dated for reference September 1, 1993, by
and between Loewen and LGII re 9.62% Senior Guaranteed
Notes, Series D, due September 11, 2003, issued by Loewen
("Series D Notes"), as amended on June 10, 1994 (2)
II-2
<PAGE>
Exhibit
Number Description
------- -----------
4.16 Note Agreement by LGII and Loewen re 6.49% Senior Guaranteed
Notes, Series E, due February 25, 2004, issued by LGII
("Series E Notes"), dated for reference February 1, 1994 (2)
4.17 Guaranty Agreement by Loewen re Series E Notes, dated for
reference February 1, 1994 (2)
4.18 Guaranty Agreement by LGII re Series D Notes, dated for
reference April 1, 1993 (2)
4.19 Note Agreement by Loewen and LGII re 9.70% Senior Guaranteed
Notes, Series A, due November 1, 1998, issued by LGII
("Series A Notes"), 9.93% Senior Guaranteed Notes, Series B,
due November 1, 2001, issued by LGII ("Series B Notes"), and
9.70 Senior Guaranteed Notes, Series C, due November 1,
1998, issued Loewen ("Series C Notes"), dated for reference
October 1, 1991 (2)
4.20 Guaranty Agreement by Loewen re Series A Notes and Series B
Notes, dated for reference October 1, 1991 (2)
4.21 Guaranty Agreement by LGII re Series C Notes, dated for
reference October 1, 1991 (2)
4.22 Form of Senior Guarantee of the Notes (included in Exhibit
4.1)
4.23 Form of Global Outstanding Note (included in Exhibit 4.1)
4.24 Form of Physical Outstanding Note (included in Exhibit 4.1)
4.25 Form of Global Exchange Note*
4.26 Form of Physical Exchange Note*
4.27 Loewen and LGII hereby agree to furnish to the Commission,
upon request, a copy of the instruments which define the
rights of holders of long-term debt of the Company. None of
such instruments not included as exhibits herein
collectively represents long-term debt in excess of 10% of
the consolidated total assets of the Company.
5 OPINIONS RE LEGALITY
5.1 Opinion of Thelen, Marrin, Johnson & Bridges as to the
legality of the Exchange Notes*
5.2 Opinion of Russell & DuMoulin as to the legality of the
Guarantees with respect to the Exchange Notes*
8 OPINION OF THELEN, MARRIN, JOHNSON & BRIDGES AS TO TAX MATTERS*
12 STATEMENT RE COMPUTATION OF EARNINGS TO FIXED CHARGES RATIO (4)
23 CONSENTS
23.1 Consent of Thelen, Marrin, Johnson & Bridges (included in
Exhibits 5.1 and 8)*
23.2 Consent of Russell & DuMoulin (included in Exhibit 5.2)*
23.3 Consent of KPMG Peat Marwick Thorne
23.4 Consent of Price Waterhouse LLP*
23.5 Consent of Richter, Usher & Vineberg*
23.6 Consent of Altschuler, Melvion and Glasser LLP*
23.7 Consent of Keith J. Schulte Accountancy Corporation*
23.8 Consent of Hirsch, Oelbaum, Bram & Hanover*
23.9 Consent of The Dun & Bradstreet Corporation
II-3
<PAGE>
Exhibit
Number Description
------- -----------
24 POWERS OF ATTORNEY
24.1 Loewen Group International, Inc. Powers of Attorney
(included on the signature pages to this Registration
Statement)
24.2 The Loewen Group Inc. Powers of Attorney (included on the
signature pages to this Registration Statement)
25 STATEMENT OF ELIGIBILITY OF TRUSTEE
99 ADDITIONAL EXHIBITS
99.1 Form of Transmittal Letter*
99.2 Form of Notice of Guaranteed Delivery*
- --------
* To be filed by amendment
(1) Incorporated by reference from the combined Form F-9/F-3 Registration
Statements filed by Loewen and LGII, respectively, (Nos. 33-81032 and 33-
81034) with the Commission on July 1, 1994, as amended on July 11, 1994,
July 22, 1994 and August 2, 1994
(2) Incorporated by reference from Loewen's Annual Report on Form 10-K for the
year ended December 31, 1994, filed on March 31, 1995
(3) Incorporated by reference from Loewen's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1995, filed on May 11, 1995
(4) Incorporated by reference from Loewen's Annual Report on Form 10-K for the
year ended December 31, 1995, filed on March 28, 1996
(b) Financial Statement Schedules
None.
II-4
<PAGE>
ITEM 22. UNDERTAKINGS
(a) Undertakings required by Item 512 of Regulation S-K
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) Loewen hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of Loewen's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange
Act 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.
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 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.
(b) The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(c) The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
registrants certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Burnaby, Province of British
Columbia, on this 2nd day of May, 1996.
Loewen Group International, Inc., a
Delaware corporation
By: /s/ Peter S. Hyndman
---------------------------------
Name: Peter S. Hyndman
-------------------------------
Title: Vice-President, Law
-------------------------------
The Loewen Group Inc., a corporation
under the laws of British Columbia
By: /s/ Peter S. Hyndman
---------------------------------
Name: Peter S. Hyndman
-------------------------------
Title: Vice-President, Law
-------------------------------
II-6
<PAGE>
LOEWEN GROUP INTERNATIONAL, INC. POWERS OF ATTORNEY
Each person whose signature appears below hereby appoints Raymond L. Loewen,
Peter W. Roberts and Dwight K. Hawes, and each of them severally, acting alone
and without the other, his true and lawful attorney-in-fact with authority to
execute in the name of each such person, and to file with the Securities and
Exchange Commission, together with any exhibits thereto and other documents
therewith, any and all amendments (including without limitation post-effective
amendments) to this registration statement, and to sign any registration
statement for the same offering covered by this registration statement that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act,
necessary or advisable to enable the Registrant to comply with the Securities
Act and any rules, regulations and requirements of the Securities and Exchange
Commission in respect thereof, which amendments may make such changes in this
registration statement as the aforesaid attorney-in-fact deems appropriate.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on
the date indicated.
May 2, 1996 /s/ Raymond L. Loewen
- ------------ --------------------------------------------
Date Raymond L. Loewen
Chairman of the Board, Chief Executive
Officer and Director
(Principal Executive Officer)
May 2, 1996 /s/ Timothy R. Hogenkamp
- ------------ --------------------------------------------
Date Timothy R. Hogenkamp
President and Chief Operating Officer and
Director (Principal Executive Officer)
May 2, 1996 /s/ A.M. Bruce Watson
- ------------ --------------------------------------------
Date A.M. Bruce Watson
Executive Vice-President and Director
(Principal Financial Officer)
May 2, 1996 /s/ Peter W. Roberts
- ------------ --------------------------------------------
Date Peter W. Roberts
Vice-President, Financial Information
Services and Corporate Controller
(Principal Accounting Officer)
May 2, 1996 /s/ George M. Amato
- ------------ --------------------------------------------
Date George M. Amato
Director
May 2, 1996 /s/ Gordon S. Bigelow
- ------------ --------------------------------------------
Date Gordon S. Bigelow
Director
II-7
<PAGE>
April 29, 1996 /s/ J.C. Carothers, Jr.
- --------------- --------------------------------------------
Date J.C. Carothers, Jr.
Director
- --------------- --------------------------------------------
Date H. Steven Childress
Director
May 2, 1996 /s/ Bruce E. Earthman
- --------------- --------------------------------------------
Date Bruce E. Earthman
Director
May 2, 1996 /s/ Edward J. Fitzgerald
- --------------- --------------------------------------------
Date Edward J. Fitzgerald
Director
May 2, 1996 /s/ Honorine T. Flanagan
- --------------- --------------------------------------------
Date Director
May 2, 1996 /s/ Thomas F. Glodek
- --------------- --------------------------------------------
Date Thomas F. Glodek
Director
May 2, 1996 /s/ Earl A. Grollman
- --------------- --------------------------------------------
Date Earl A. Grollman
Director
May 2, 1996 /s/ Mary M. Howard
- --------------- --------------------------------------------
Date Mary M. Howard
Director
May 2, 1996 /s/ Peter S. Hyndman
- --------------- --------------------------------------------
Date Peter S. Hyndman
Director
II-8
<PAGE>
May 2, 1996 /s/ Albert S. Lineberry, Jr.
- ------------ --------------------------------------------
Date Albert S. Lineberry, Jr.
Director
May 2, 1996 /s/ Michael L. Loudon
- ------------ --------------------------------------------
Date Michael L. Loudon
Director
May 2, 1996 /s/ John E. Malletta, Sr.
- ------------ --------------------------------------------
Date John E. Malletta, Sr.
Director
May 2, 1996 /s/ Hoyt Mayes
- ------------ --------------------------------------------
Date Hoyt Mayes
Director
May 2, 1996 /s/ Lawrence Miller
- ------------ --------------------------------------------
Date Lawrence Miller
Director
May 2, 1996 /s/ J. David Mullins
- ------------ --------------------------------------------
Date J. David Mullins
Director
May 2, 1996 /s/ David F. Riemann
- ------------ --------------------------------------------
Date David F. Riemann
Director
May 2, 1996 /s/ Robert D. Russell
- ------------ --------------------------------------------
Date Robert D. Russell
Director
May 2, 1996 /s/ Michael L. Schweer
- ------------ --------------------------------------------
Date Michael L. Schweer
Director
II-9
<PAGE>
May 2, 1996 /s/ Bill Seale
- ------------ --------------------------------------------
Date Bill Seale
Director
May 2, 1996 /s/ William R. Shane
- ------------ --------------------------------------------
Date William R. Shane
Director
May 2, 1996 /s/ David J. Shipper
- ------------ --------------------------------------------
Date David J. Shipper
Director
May 2, 1996 /s/ Sandra C. Strong
- ------------ --------------------------------------------
Date Sandra C. Strong
Director
May 2, 1996 /s/ Robert L. Studley
- ------------ --------------------------------------------
Date Robert L. Studley
Director
May 2, 1996 /s/ Paul Wagler
- ------------ --------------------------------------------
Date Paul Wagler
Director
May 2, 1996 /s/ Robert A. Weinstein
- ------------ --------------------------------------------
Date Robert A. Weinstein
Director
- ------------ --------------------------------------------
Date Robert O. Wienke
Director
May 2, 1996 /s/ John R. Wright, Sr.
- ------------ --------------------------------------------
Date John R. Wright, Sr.
Director
II-10
<PAGE>
THE LOEWEN GROUP INC. POWERS OF ATTORNEY
Each person whose signature appears below hereby appoints Raymond L. Loewen,
Peter W. Roberts and Dwight K. Hawes, and each of them severally, acting alone
and without the other, his true and lawful attorney-in-fact with authority to
execute in the name of each such person, and to file with the Securities and
Exchange Commission, together with any exhibits thereto and other documents
therewith, any and all amendments (including without limitation post-effective
amendments) to this registration statement, and to sign any registration
statement for the same offering covered by this registration statement that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act,
necessary or advisable to enable the Registrant to comply with the Securities
Act and any rules, regulations and requirements of the Securities and Exchange
Commission in respect thereof, which amendments may make such changes in this
registration statement as the aforesaid attorney-in-fact deems appropriate.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on
the date indicated.
May 2, 1996 /s/ Raymond L. Loewen
- ------------ --------------------------------------------
Date Raymond L. Loewen
Chairman of the Board and Chief Executive
Officer and Director (Principal Executive
Officer)
May 2, 1996 /s/ Timothy R. Hogenkamp
- ------------ --------------------------------------------
Date Timothy R. Hogenkamp
President and Chief Operating Officer and
Director (Principal Executive Officer)
May 2, 1996 /s/ A.M. Bruce Watson
- ------------ --------------------------------------------
Date A.M. Bruce Watson
Executive Vice-President and Director
(Principal Financial Officer)
May 2, 1996 /s/ Peter W. Roberts
- ------------ --------------------------------------------
Date Peter W. Roberts
Vice-President, Financial Information
Services and Corporate Controller
(Principal Accounting Officer)
May 2, 1996 /s/ Kenneth S. Bagnell
- ------------ --------------------------------------------
Date Kenneth S. Bagnell
Director
May 2, 1996 /s/ The Honorable J. Carter Beese, Jr.
- ------------ --------------------------------------------
Date The Honorable J. Carter Beese, Jr.
Director
II-11
<PAGE>
May 2, 1996 /s/ Earl A. Grollman
- ------------ --------------------------------------------
Date Earl A. Grollman
Director
May 2, 1996 /s/ Harold E. Hughes
- ------------ --------------------------------------------
Date Harold E. Hughes
Director
May 2, 1996 /s/ Peter S. Hyndman
- ------------ --------------------------------------------
Date Peter S. Hyndman
Director
May 2, 1996 /s/ Albert S. Lineberry, Sr.
- ------------ --------------------------------------------
Date Albert S. Lineberry, Sr.
Director
May 2, 1996 /s/ Charles B. Loewen
- ------------ --------------------------------------------
Date Charles B. Loewen
Director
May 2, 1996 /s/ Robert B. Lundgren
- ------------ --------------------------------------------
Date Robert B. Lundgren
Director
May 2, 1996 /s/ James D. McLennan
- ------------ --------------------------------------------
Date James D. McLennan
Director
May 2, 1996 /s/ Ernest G. Penner
- ------------ --------------------------------------------
Date Ernest G. Penner
Director
May 2, 1996 /s/ The Right Honorable John N. Turner, P.C.,
- ------------ --------------------------------------------
Date C.C., Q.C.
----------
The Right Honourable John N. Turner, P.C.,
C.C., Q.C.
Director
May 2, 1996 /s/ Paul Wagler
- ------------ --------------------------------------------
Date Paul Wagler
Director
II-12
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ----
<S> <C>
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY-HOLDERS, INCLUDING
INDENTURES
4.1 Indenture, dated as of March 20, 1996, by and
between LGII, Loewen, as guarantor of the
obligations of LGII under the Indenture, and Fleet
National Bank of Connecticut, as Trustee, with
respect to 7 1/2% Series 1 Senior Guaranteed Notes
due 2001 and 8 1/4% Series 2 Senior Guaranteed
Notes due 2003 (4)
4.2 Purchase Agreement, dated as of March 13, 1996, by
and between LGII, Loewen and the Initial Purchasers
4.3 Receipt Agreement, dated as of January 3, 1996, for
the Cumulative Redeemable Convertible First
Preferred Shares Series C of Loewen (4)
4.4 Shareholder Protection Rights Plan, dated as of
April 20, 1990, as amended on May 24, 1990 and
April 7, 1994 and reconfirmed on May 17, 1995 (2)
4.5 Amended and Restated Multicurrency Credit
Agreement, dated as of May 11, 1995, by and between
LGII, as borrower, Loewen, as guarantor, the banks
named therein as lenders and The First National
Bank of Chicago, as agent for the banks named
therein as lenders (3)
4.6 Multicurrency Credit Agreement, dated as of May 11,
1995, by and between LGII, as borrower, Loewen, as
guarantor, the banks named therein as lenders and
The First National Bank of Chicago, as agent for
the banks named therein as lenders (3)
4.7 Zero Coupon Loan Agreement, dated as of November 1,
1994, by and between WLSP Investment Partners I,
Neweol Finance B.V., Electrolux Holdings B.V., Man
Producten Rotterdam B.V., Adinvest A.G., and
Wachovia Bank of Georgia, N.A. (2)
4.8 MIPS Guarantee Agreement, dated August 15, 1994 (1)
4.9 Indenture, dated as of August 15, 1994, by and
between LGII, as issuer, Loewen, as guarantor, and
State Street Bank and Trust Company, as trustee
with respect to 9.45% Junior Subordinated
Debentures, Series A, due 2024, issued by LGII and
guaranteed by Loewen (1)
4.10 Exchange Acknowledgment by Loewen, with respect to
the 1994 Exchangeable Floating Rate Debentures due
July 15, 2001 issued by LGII, dated June 15, 1994 (2)
4.11 1994 MEIP Credit Agreement, dated as of June 14,
1994, by and between Loewen Management Investment
Corporation, in its capacity as agent for LGII
("LMIC"), Loewen and the banks listed therein (the
"MEIP Banks") and Wachovia Bank of Georgia, N.A.,
as agent for the MEIP Banks ("MEIP Agent") (2)
4.12 Guaranty dated as of June 14, 1994 by Loewen in
favor of the MEIP Agent for the ratable benefit of
the MEIP Banks (2)
4.13 Guaranty dated as of June 14, 1994 by LGII in favor
of the MEIP Agent for the ratable benefit of the
MEIP Banks (2)
</TABLE>
<PAGE>
Sequentially
Exhibit Numbered
Number Description Page
------ ----------- ----
4.14 Security Agreement, dated as of June 14, 1994, by
and between LMIC and the MEIP Agent (2)
4.15 Note Agreement, dated for reference September 1,
1993, by and between Loewen and LGII re 9.62%
Senior Guaranteed Notes, Series D, due September
11, 2003, issued by Loewen ("Series D Notes"), as
amended on June 10, 1994 (2)
4.16 Note Agreement by LGII and Loewen re 6.49% Senior
Guaranteed Notes, Series E, due February 25, 2004,
issued by LGII ("Series E Notes"), dated for
reference February 1, 1994 (2)
4.17 Guaranty Agreement by Loewen re Series E Notes,
dated for reference February 1, 1994 (2)
4.18 Guaranty Agreement by LGII re Series D Notes, dated
for reference April 1, 1993 (2)
4.19 Note Agreement by Loewen and LGII re 9.70% Senior
Guaranteed Notes, Series A, due November 1, 1998,
issued by LGII ("Series A Notes"), 9.93% Senior
Guaranteed Notes, Series B, due November 1, 2001,
issued by LGII ("Series B Notes"), and 9.70 Senior
Guaranteed Notes, Series C, due November 1, 1998,
issued Loewen ("Series C Notes"), dated for
reference October 1, 1991 (2)
4.20 Guaranty Agreement by Loewen re Series A Notes and
Series B Notes, dated for reference October 1, 1991 (2)
4.21 Guaranty Agreement by LGII re Series C Notes, dated
for reference October 1, 1991 (2)
4.22 Form of Senior Guarantee of the Notes (included in
Exhibit 4.1)
4.23 Form of Global Outstanding Note (included in
Exhibit 4.1)
4.24 Form of Physical Outstanding Note (included in
Exhibit 4.1)
4.25 Form of Global Exchange Note*
4.26 Form of Physical Exchange Note*
4.27 Loewen and LGII hereby agree to furnish to the
Commission, upon request, a copy of the instruments
which define the rights of holders of long-term
debt of the Company. None of such instruments not
included as exhibits herein collectively represents
long-term debt in excess of 10% of the consolidated
total assets of the Company.
5 OPINIONS RE LEGALITY
5.1 Opinion of Thelen, Marrin, Johnson & Bridges as to
the legality of the Exchange Notes*
5.2 Opinion of Russell & DuMoulin as to the legality of
the Guarantees with respect to the Exchange Notes*
8 OPINION OF THELEN, MARRIN, JOHNSON & BRIDGES AS TO TAX MATTERS*
12 STATEMENT RE COMPUTATION OF EARNINGS TO FIXED CHARGES RATIO (4)
<PAGE>
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
------ ----------- ----
<C> <S> <C>
23 CONSENTS
23.1 Consent of Thelen, Marrin, Johnson & Bridges
(included in Exhibits 5.1 and 8)*
23.2 Consent of Russell & DuMoulin (included in Exhibit
5.2)*
23.3 Consent of KPMG Peat Marwick Thorne
23.4 Consent of Price Waterhouse LLP*
23.5 Consent of Richter, Usher & Vineberg*
23.6 Consent of Altschuler, Melvion and Glasser LLP*
23.7 Consent of Keith J. Schulte Accountancy Corporation*
23.8 Consent of Hirsch, Oelbaum, Bram & Hanover*
23.9 Consent of The Dun & Bradstreet Corporation
24 POWERS OF ATTORNEY
24.1 Loewen Group International, Inc. Powers of Attorney
(included on the signature pages to this
Registration Statement)
24.2 The Loewen Group Inc. Powers of Attorney (included
on the signature pages to this Registration
Statement)
25 STATEMENT OF ELIGIBILITY OF TRUSTEE
99 ADDITIONAL EXHIBITS
99.1 Form of Transmittal Letter*
99.2 Form of Notice of Guaranteed Delivery*
- --------
</TABLE>
* To be filed by amendment
(1) Incorporated by reference from the Form F-9 Registration Statement filed by
Loewen with the Commission on July 1, 1994, as amended on July 11, 1994,
July 22, 1994 and August 2, 1994
(2) Incorporated by reference from Loewen's Annual Report on Form 10-K, filed on
March 31, 1995
(3) Incorporated by reference from Loewen's Quarterly Report on Form 10-Q, filed
on May 11, 1995
(4) Incorporated by reference from Loewen's Annual Report on Form 10-K, filed on
March 28, 1996
<PAGE>
Exhibit 4.2
$350,000,000
LOEWEN GROUP INTERNATIONAL, INC.
Senior Guaranteed Notes
$225,000,000 7 1/2 % Series 1 Senior Guaranteed Notes due 2001
$125,000,000 8 1/4 % Series 2 Senior Guaranteed Notes due 2003
Payment of Principal and Interest
Unconditionally Guaranteed by
THE LOEWEN GROUP INC.
Purchase Agreement
March 13, 1996
Smith Barney Inc.
Alex. Brown & Sons Incorporated
Morgan Stanley & Co. Incorporated
Nesbitt Burns Securities Inc.
RBC Dominion Securities Corporation
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Loewen Group International, Inc., a Delaware corporation ("LGII"),
proposes to issue and sell to the several purchasers listed in Schedule I hereto
(the "Initial Purchasers") $350,000,000 aggregate principal amount of its Senior
Guaranteed Notes, consisting of $225,000,000 7 1/2 % Series 1 Senior Guaranteed
Notes due 2001 (the "Series 1 Notes") and $125,000,000 8 1/4 % Series 2 Senior
Guaranteed Notes due 2003 (the "Series 2 Notes", together with the Series 1
Notes, the "Senior Notes"). The Senior Notes will be unconditionally guaranteed
as to principal and interest on a senior basis (the "Guarantee", and together
with the Senior Notes, the "Securities") by The Loewen Group Inc., a corporation
under the laws of British Columbia, Canada (the "Guarantor" and, together with
its subsidiaries and associated entities, the "Company"). The Senior Notes will
be issued pursuant to the provisions of an Indenture to be
<PAGE>
dated as of March 20, 1996 (the "Indenture") among LGII, the Guarantor and Fleet
National Bank of Connecticut, as trustee (the "Trustee").
The sale of the Senior Notes to the Initial Purchasers will be made
without registration under the Securities Act of 1933, as amended (the "Act"),
in reliance on the exemption provided by Section 4(2) of the Act. Initial
Purchasers of the Senior Notes and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement, to be dated as of
March 19, 1996 (the "Registration Rights Agreement") and to be substantially in
the form attached hereto as Exhibit A.
In connection with the sale of the Senior Notes, LGII and the
Guarantor have prepared a preliminary offering memorandum dated March 7, 1996
(the "Preliminary Memorandum") and a final offering memorandum dated the date of
this Agreement (the "Final Memorandum" and, with the Preliminary Memorandum,
each a "Memorandum") for the information of the Initial Purchasers and for
delivery to the prospective purchasers of the Senior Notes. Each Memorandum
includes a description of the Senior Notes, the Guarantee, the terms of the
offering, the business of LGII and the Guarantor and certain material
developments relating to LGII and the Guarantor.
It is understood that the Guarantor has entered into a Canadian
Underwriting Agreement, dated March 12, 1996 (the "Canadian Underwriting
Agreement"), providing for the sale of up to 7,700,000 Common shares without par
value of the Guarantor through arrangements with certain underwriters in Canada.
Section 1. Representations and Warranties.
------------------------------
Each of LGII and the Guarantor represents and warrants to each of the
Initial Purchasers that:
(a) Each Memorandum with respect to the Senior Notes has been
prepared by LGII and the Guarantor for use by the Initial Purchasers in
connection with resales exempt from registration under the Act. No order
or decree preventing the use of the Preliminary Memorandum or the Final
Memorandum or any amendment or supplement thereto, or any order asserting
that the transactions contemplated by this Agreement are subject to the
registration requirements of the Act has been issued and no proceeding for
that purpose has commenced or is pending or, to the knowledge of LGII or
the Guarantor, is contemplated.
2
<PAGE>
(b) The Preliminary Memorandum did not, as of its date, and the Final
Memorandum will not, in the form used by the Initial Purchasers to confirm
sales of the Senior Notes and as of the Closing Date (as defined herein),
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
---------
however, that this representation and warranty shall not apply to any
-------
statements or omissions in either Memorandum made in reliance on and in
conformity with information furnished to LGII or to the Guarantor in
writing by or on behalf of an Initial Purchaser expressly for use therein.
(c) The documents incorporated by reference in each Memorandum (the
"Incorporated Documents"), when they were filed (or, if any amendment with
respect to any such document was filed, when such document was filed),
conformed in all material respects to the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and did not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and any further Incorporated
Documents will, when so filed, conform in all material respects to the
requirements of the Exchange Act and will not contain an untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(d) The financial statements, and the related notes thereto, included
in the Final Memorandum present fairly the consolidated financial position
of LGII and the Guarantor and their respective consolidated subsidiaries as
of the dates indicated and the results of their operations and the changes
in their consolidated cash flows for the periods specified; and, except as
may be noted therein, said financial statements have been prepared in
compliance with accounting principles generally accepted in Canada, applied
on a consistent basis.
(e) Since the respective dates as of which information is given in
the Final Memorandum, there has not occurred any change, or any development
involving a prospective change, that would have a material adverse effect
on the condition (financial or other), business, properties, net worth or
results of operations of the
3
<PAGE>
Company as a whole (a "Material Adverse Effect") otherwise than as set
forth or contemplated in the Final Memorandum.
(f) The Guarantor is a corporation duly organized, validly existing,
and in good standing under the laws of the Province of British Columbia,
Canada with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Final
Memorandum; LGII is a corporation duly organized, validly existing, and in
good standing under the laws of the state of Delaware with full corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Final Memorandum; each of LGII and the
Guarantor is duly registered or qualified to conduct its business and is in
good standing in each jurisdiction where the nature of its properties or
the conduct of its business requires such registration or qualification,
except where the failure so to register or qualify would not have a
Material Adverse Effect.
(g) Osiris Holding Corporation is a corporation duly organized,
validly existing and in good standing in the jurisdiction of its
incorporation; Loewen (Texas) L.P. is a limited partnership, duly formed,
validly existing and in good standing in the jurisdiction of its
organization; each of Osiris Holding Corporation and Loewen (Texas) L.P.
(each a "Significant Subsidiary" and collectively, the "Significant
Subsidiaries") has full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Final Memorandum, and is duly registered or qualified to conduct its
business and is in good standing in each jurisdiction where the nature of
its properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify would not
have a Material Adverse Effect; all the outstanding shares of capital stock
of Osiris Holding Corporation and all of the issued partnership interests
of Loewen (Texas) L.P. have been duly authorized and validly issued and,
with respect to Osiris Holding Corporation, are fully paid and
nonassessable and, with respect to the limited partnership interests of
Loewen (Texas) L.P., not subject to assessment by Loewen (Texas) L.P. for
additional capital contributions, and are owned by LGII or the Guarantor,
directly or indirectly, free and clear of any lien, adverse claim, security
interest, equity or encumbrance.
4
<PAGE>
(h) Other than as set forth or contemplated in the Final Memorandum,
there are no legal or governmental proceedings pending or, to the knowledge
of LGII or the Guarantor, contemplated by governmental authorities or
threatened by others, to which LGII, the Guarantor or any of their
respective subsidiaries is or may be a party or to which any property of
LGII, the Guarantor or any of their respective subsidiaries is or may be
the subject which, if determined adversely to LGII, the Guarantor or any of
their respective subsidiaries, would individually or in the aggregate have
a Material Adverse Effect, and there are no agreements, contracts,
indentures, leases or other instruments relating to LGII or the Guarantor
that are required to be described in each Memorandum that are not described
therein. The descriptions of the terms of any such contracts or documents
contained in the Final Memorandum are correct in all material respects.
(i) The Securities have been duly authorized by each of LGII and,
when executed by LGII and the Guarantor, and authenticated by the Trustee
in accordance with the Indenture and delivered to the Initial Purchasers
against payment therefor in accordance with the terms hereof, will have
been validly issued and delivered and will constitute valid and binding
obligations of each of LGII and the Guarantor entitled to the benefits of
the Indenture and enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights generally and equitable principles.
(j) The Indenture has been duly authorized by LGII and the Guarantor
and, when executed and delivered by LGII and the Guarantor, will (assuming
due authorization, execution and delivery by the Trustee) constitute a
valid and binding agreement of LGII and the Guarantor, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally and equitable principles.
(k) This Agreement has been duly authorized, executed and delivered
by each of LGII and the Guarantor and constitutes a valid and binding
agreement of each of LGII and the Guarantor, except as rights to indemnity
and contribution hereunder may be limited by applicable law.
5
<PAGE>
(l) The Registration Rights Agreement has been duly authorized by
LGII and the Guarantor, and, upon execution and delivery by LGII and the
Guarantor, will be a valid and binding agreement of LGII and the Guarantor,
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
creditors' rights generally and equitable principles of and except as any
rights to indemnity and contribution may be limited by applicable law.
(m) Other than as set forth or contemplated in each Memorandum, none
of LGII, the Guarantor or any of the Significant Subsidiaries is (i) in
violation of its certificate or articles of incorporation or by-laws, or
other organizational documents, (ii) in violation of any law, ordinance,
administrative or governmental rule or regulation applicable to LGII, the
Guarantor or any of the Significant Subsidiaries or of any decree of any
court or governmental agency or body having jurisdiction over LGII, the
Guarantor or any of the Significant Subsidiaries or any of their respective
properties (except where any such violation or violations in the aggregate
would not have a Material Adverse Effect), or (iii) in default in any
material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any material agreement, indenture, lease or other
instrument to which LGII, the Guarantor or any of the Significant
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, and no condition or state of facts exists, which
with the passage of time or the giving of notice or both, would constitute
such a default (except where any such default or defaults in the aggregate
would not have a Material Adverse Effect).
(n) Neither the issuance and sale of the Securities nor the
performance by each of LGII and the Guarantor of its obligations under the
Securities, the Indenture, this Agreement and the Registration Rights
Agreement, nor the consummation of the transactions herein and therein
contemplated, (i) requires any consent, approval, authorization or other
order of or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official
(except such as may be required for compliance with state securities or
Blue Sky laws of various jurisdictions) or (ii) conflicts or will conflict
with or constitutes or will constitute a
6
<PAGE>
breach of, or a default under, the certificate or articles of incorporation
or bylaws, or other organizational documents, of LGII, the Guarantor or any
of the Significant Subsidiaries or (iii) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, any
agreement, indenture, mortgage, deed of trust, loan agreement, lease or
other instrument to which LGII or the Guarantor or any of the Significant
Subsidiaries is a party or by which LGII or the Guarantor or any of the
Significant Subsidiaries is bound or to which any of their respective
properties is subject, nor will any such action result in any violation of
any law, ordinance, administrative or governmental rule or regulation
applicable to LGII, the Guarantor or any of the Significant Subsidiaries or
of any decree of any court or governmental agency or body having
jurisdiction over LGII, the Guarantor or any of the Significant
Subsidiaries or any of their respective properties.
(o) Except as set forth in each Memorandum (or any amendment or
supplement thereto), subsequent to the respective dates as to which such
information is given in each Memorandum (or any amendment or supplement
thereto), neither LGII nor the Guarantor nor any of the Significant
Subsidiaries has incurred any liability or obligation, direct or
contingent, or entered into any transaction not in the ordinary course of
business, that is material to the Company, and there has not been any
change in the capital stock of LGII, or material increase in the short-term
debt or long-term debt of LGII, the Guarantor or any of the Significant
Subsidiaries, or any development having, or which may reasonably be
expected to have, a Material Adverse Effect.
(p) The accountants, KPMG Peat Marwick Thorne, who have certified or
shall certify the financial statements of the Guarantor included in the
Final Memorandum, are independent public accountants.
(q) None of LGII, the Guarantor and any affiliate (as defined in Rule
501(b) of Regulation D under the Act, an "Affiliate") of LGII or the
Guarantor has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security
(as defined in the Act) which is or will be integrated with the sale of the
Senior Notes in a manner that would require the registration under the Act
of the Senior Notes, or (ii)
7
<PAGE>
engaged in any form of general solicitation or general advertising in
connection with the offering of such Senior Notes (as those terms are used
in Regulation D under the Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Act, it being understood that,
for purposes of this representation only, the Initial Purchasers shall not
be deemed Affiliates or agents of LGII or the Guarantor.
(r) LGII, the Guarantor and the Significant Subsidiaries have filed
all tax returns required to be filed, which are material to the Company,
which returns are true and correct in all material respects, and neither
LGII, the Guarantor nor any Significant Subsidiary is in default in the
payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto.
(s) None of LGII, the Guarantor and the Significant Subsidiaries is
an "investment company" or an entity "controlled" by an investment
company," as such terms are defined in the Investment Company Act of 1940,
as amended.
(t) Assuming compliance by the Initial Purchasers with their
representations and agreements under Section 3 hereof, it is not necessary
in connection with the offer, sale and delivery of the Senior Notes in the
manner contemplated by this Agreement to register the Senior Notes under
the Act or to qualify the Indenture under the Trust Indenture Act of 1939,
as amended.
(u) Each of LGII and the Guarantor has complied with all applicable
provisions of Section 517.075, Florida Statutes relating to doing business
with the Government of Cuba or with any person or affiliate located in
Cuba.
Section 2. Purchase and Delivery.
---------------------
Upon the basis of the representations and warranties herein contained
and subject to the conditions hereinafter stated, LGII agrees to issue and sell
the Senior Notes to the several Initial Purchasers as hereinafter provided, and
each Initial Purchaser agrees to purchase, severally and not jointly, from LGII
the respective principal amount of Senior Notes set forth opposite such
Purchaser's name in Schedule I hereto at a price (the "Purchase Price") equal to
(i) in the case of the Series 1 Notes, 97.701% of their principal amount and
(ii) in the
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case of the Series 2 Notes, 99.885% of their principal amount plus, in each
case, accrued interest, if any, from March 20, 1996 to the date of payment and
delivery.
Payment for the Senior Notes shall be made to LGII by wire transfer in
immediately available funds to the account of LGII specified to Smith Barney
Inc. on the Business Day prior to the time of closing, such payment to be made
at 9:00 A.M., New York City time on March 20, 1996, or at such other time on the
same or such other date, not later than the fifth Business Day thereafter, as
the Initial Purchasers and LGII may agree upon in writing. The time and date of
such payment are referred to herein as the "Closing Date". As used herein, the
term "Business Day" means any day other than a day on which banks are permitted
or required to be closed in New York City.
Payment for the Senior Notes shall be made against delivery to the
Initial Purchasers for their respective accounts of the Senior Notes. The
Senior Notes will be evidenced by a single global note in definitive form (the
"Global Note") and/or by additional definitive notes, and will be registered, in
the case of the Global Note, in the name of Cede & Co. as nominee of The
Depository Trust Company ("DTC"), and in the other cases, in such names and in
such denominations as the Initial Purchasers shall request in writing not later
than two full Business Days prior to the Closing Date with any transfer taxes
payable in connection with the transfer to the Initial Purchasers of the Senior
Notes duly paid by LGII. The certificates for the Senior Notes will be made
available for inspection by the Initial Purchasers at the office of the Trustee,
777 Main Street, Hartford, Connecticut 06115, not later than 1:00 P.M., New York
City time, on the Business Day prior to the Closing Date.
Section 3. Offering of the Senior Notes;
Restrictions on Transfer
-----------------------------
LGII understands that the Initial Purchasers intend (i) to offer
privately their respective portions of the Senior Notes as soon after this
Agreement has become effective as in the judgment of the Initial Purchasers is
advisable and (ii) initially to offer the Senior Notes upon the terms and
conditions set forth in the Final Memorandum.
Each of LGII and the Guarantor confirm that it has authorized the
Initial Purchasers, subject to the restrictions set forth below, to distribute
copies of the Final Memorandum in connection with the offering of the
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Senior Notes. Each Initial Purchaser hereby makes to LGII the following
representations and agreements:
(i) it is a qualified institutional buyer within the meaning of Rule
144A under the Act; and
(ii) (A) it will not solicit offers for, or offer to sell, the Senior
Notes by any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act and (B) it
will solicit offers for the Senior Notes only from, and will offer the
Securities only to, persons who it reasonably believes to be (1) "qualified
institutional buyers" within the meaning of Rule 144A under the Act or (2)
institutional "accredited investors" as defined in Rule 501(a)(1), (2), (3)
or (7) of Regulation D under the Act, who provide it a letter in the form
of Annex A to the Final Memorandum.
Section 4. Covenants of LGII and the Guarantor.
-----------------------------------
Each of LGII and the Guarantor covenants and agrees with the several
Initial Purchasers as follows:
(a) To furnish to the Initial Purchasers, without charge, during the
period mentioned in paragraph (c) below, as many copies of the Final
Memorandum and the Incorporated Documents (including any supplements and
amendments thereto) as the Initial Purchasers may reasonably request.
(b) During the period mentioned in paragraph (c) below, before
distributing any amendment or supplement to the Final Memorandum, to
furnish to the Initial Purchasers a copy of the proposed amendment or
supplement for review and not to distribute any such proposed amendment or
supplement to which the Initial Purchasers reasonably object.
(c) If, at any time prior to the completion of the initial placement
of the Senior Notes, any event shall occur as a result of which it is
necessary to amend or supplement the Final Memorandum in order to make the
statements therein, in the light of the circumstances when the Final
Memorandum is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Final Memorandum to comply with law,
forthwith to prepare and furnish, at the expense of LGII, to the Initial
Purchasers and to the dealers
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(whose names and addresses the Initial Purchasers will furnish to LGII) to
which Senior Notes may have been sold by the Initial Purchasers and to any
other dealers upon request, such amendments or supplements to the Final
Memorandum as may be necessary so that the statements in the Final
Memorandum as so amended or supplemented will not, in the light of the
circumstances when the Final Memorandum is delivered to a purchaser, be
misleading or so that the Final Memorandum will comply with law.
(d) To endeavor to qualify the Senior Notes for offer and sale under
the state securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers shall reasonably request and to continue such qualification in
effect so long as reasonably required for distribution of the Senior Notes
and to pay all fees and expenses (including fees and disbursements of
counsel to the Initial Purchasers) reasonably incurred in connection with
such qualification and in connection with the determination of the
eligibility of the Senior Notes for investment under the laws of such
jurisdictions as the Initial Purchasers may designate.
(e) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate, and to cause any Affiliate not to sell, offer for sale, or
solicit offers to buy or otherwise negotiate, in respect of any security
(as defined in the Act) which could be integrated with the sale of the
Senior Notes in a manner which would require the registration under the Act
of such Senior Notes.
(f) Not to solicit any offer to buy or offer or sell the Senior Notes
by means of any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Act.
(g) While the Senior Notes remain outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Act, during any
period in which LGII is not subject to Section 13 or 15(d) under the
Exchange Act and its securities are not exempt from Section 12(g) thereof
pursuant to Rule 12g3-2(b) thereunder, to make available to the Initial
Purchasers and any holder of Senior Notes in connection with any sale
thereof and any prospective purchaser of Senior Notes, in each case upon
request, information with respect to LGII, as specified in, and meeting the
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requirements of, Rule 144A(d)(4) under the Act (or any successor thereto).
(h) Not to be or become at any time prior to the expiration of three
years after the Closing Date, an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the Investment Company Act of 1940, as
amended.
(i) Not to sell or to cause any of LGII's "affiliates" (as defined in
Rule 144(a)(1) under the Act) to sell, any Senior Notes acquired by LGII or
any such affiliate except (i) to LGII, a subsidiary of LGII or any employee
pension, benefit or welfare plan of LGII or (ii) pursuant to an effective
registration statement under the Act.
(j) To include information substantially in the form set forth in
Exhibit B hereto in the Final Memorandum.
(k) Without the prior written consent of Smith Barney Inc., during
the period beginning from the date hereof and continuing to and including
the date 90 days after this Agreement (the "Lock-up Period"), not to,
directly or indirectly, offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase or otherwise transfer or
dispose of any debt securities of or guaranteed by LGII or the Guarantor
which are substantially similar to the Senior Notes, or any debt securities
of LGII or the Guarantor which are convertible into or exchangeable for
securities of LGII or the Guarantor which are substantially similar to the
Senior Notes, except for securities issued in exchange for the Senior Notes
pursuant to the Registration Rights Agreement.
(l) Whether or not the sale of Senior Notes is consummated, to pay
all costs and expenses incident to the performance of its obligations
hereunder, including without limiting the generality of the foregoing, all
costs and expenses (i) incident to the preparation, issuance, execution,
authentication and delivery of the Securities, including any fees and
expenses of the Trustee, (ii) incident to the preparation, printing and
distribution of each Memorandum (including in each case all exhibits,
amendments and supplements thereto), (iii) incurred in connection with the
registration or qualification and determination of eligibility for
investment of the Senior Notes under the laws of such
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<PAGE>
jurisdictions as the Initial Purchasers may designate, including the fees
and disbursements of counsel for the Initial Purchasers in connection with
such qualification), (iv) in connection with any listing of the Senior
Notes, (v) in connection with the printing (including word processing and
duplication costs) and delivery of this Agreement, the Indenture, the
Preliminary and Supplemental Blue Sky Memoranda and the furnishing to
Initial Purchasers and dealers of copies of each Memorandum, including
mailing and shipping, as herein provided, (vi) payable to rating agencies
in connection with the rating of the Senior Notes and (vii) payable to
counsel for LGII and the Guarantor for their fees and disbursements
incurred in connection with the offering and sale of the Senior Notes,
including any opinions required to be rendered by such counsel hereunder.
It is understood, however, that except as provided in this Section and
Section 6 hereof or as otherwise agreed, the Initial Purchasers will pay
all of their own costs and expenses, including the fees of their counsel
and transfer taxes on resale of any of the Senior Notes by them.
(m) Except as stated in this Agreement and in each Memorandum, not to
take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation
of the price of the Senior Notes to facilitate the sale or resale of the
Senior Notes. Except as permitted by the Act, LGII and the Guarantor will
not distribute any offering material in connection with resales of the
Senior Notes exempt from registration under the Act.
(n) To comply with all of the terms and conditions of the Registration
Rights Agreement, and all agreements set forth in the representations
letter of LGII to DTC relating to the approval of the Senior Notes by DTC
for `book entry' transfer.
(o) Prior to any registration of the Senior Notes pursuant to the
Registration Rights Agreement, or at such earlier time as may be so
required, to qualify the Indenture under the Trust Indenture Act of 1939,
as amended, and to enter into any necessary supplemental indentures in
connection therewith.
(p) To use its best efforts to permit the Senior Notes to be
designated PORTAL securities in accordance with the rules and regulations
adopted by the National
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Association of Securities Dealers, Inc. relating to trading in the PORTAL
Market.
Section 5. Conditions to Closing.
---------------------
The several obligations of the Initial Purchasers hereunder are
subject the performance by each of LGII and the Guarantor of its obligations
hereunder and to the following additional conditions:
(a) The closing under the Canadian Underwriting Agreement shall have
occurred concurrently with the closing hereunder on the Closing Date.
(b) The representations and warranties of each of LGII and the
Guarantor contained herein shall be true and correct on and as of the
Closing Date as if made on and as of the Closing Date and each of LGII and
the Guarantor shall have complied with all agreements and all conditions on
its part to be performed or satisfied hereunder at or prior to the Closing
Date.
(c) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any downgrading,
nor shall any notice have been given of (i) any intended or potential
downgrading or (ii) any review or possible change that does not indicate an
improvement, in the rating accorded any securities of or guaranteed by LGII
or the Guarantor by any "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule 436(g)(2) under
the Act.
(d) Since the respective dates as of which information is given in
the Final Memorandum, there shall not have occurred (i) any change, or any
development involving a prospective change, that would have a Material
Adverse Effect otherwise than as set forth or contemplated in each
Memorandum, the effect of which in the judgment of the Initial Purchasers
makes it impracticable or inadvisable to proceed with the offering or the
delivery of the Senior Notes on the terms and in the manner contemplated in
each Memorandum, or (ii) any material change in the capital stock of LGII
or the Guarantor or any material increase in the short-term or long-term
debt of the Company (other than in the ordinary course of business) from
that set forth or contemplated in the Final Memorandum.
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<PAGE>
(e) The Initial Purchasers shall have received on and as of the
Closing Date certificates of LGII and the Guarantor signed by the chief
executive officer and the chief financial officer of each of LGII and the
Guarantor (or such other officers as are acceptable to you) satisfactory to
the Initial Purchasers to the effect set forth in subsections (b), (c) and
(d)(ii) of this Section and to the further effect that there has not
occurred any change, or any development involving a prospective change,
that would have a Material Adverse Effect otherwise than as set forth or
contemplated in each Memorandum.
(f) You shall have received on the Closing Date an opinion of Davis
Polk & Wardwell, counsel for the Initial Purchasers, with respect to this
Agreement, the Securities being delivered on the Closing Date, each
Memorandum, and other related matters as you may reasonably request, and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters.
(g) You shall have received on the Closing Date an opinion of Russell
& DuMoulin, Canadian counsel for the Guarantor, dated the Closing Date, in
form and substance satisfactory to the Initial Purchasers, to the effect
that:
(i) the Guarantor has been duly incorporated and is validly
existing as a corporation under the Company Act of British Columbia
and is in good standing with respect to the filing of its annual
returns with the office of the Registrar of Companies for the Province
of British Columbia, with full corporate power and authority to own,
lease and operate its properties and conduct its business as described
in each Memorandum;
(ii) with such exceptions as are not material, the Guarantor has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each jurisdiction
in Canada in which it owns or leases properties, or conducts any
business, so as to require such qualification and in which the failure
to so qualify would have a Material Adverse Effect (such counsel being
entitled to rely in respect of the opinion in this subparagraph (ii)
upon opinions of other counsel and upon certificates of public
officials or
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<PAGE>
officers of the Guarantor, provided that such counsel shall state that
he believes that both you and he are justified in so relying upon such
opinions and certificates);
(iii) to the best of such counsel's knowledge and other than as
set forth in each Memorandum, there are no legal or governmental
proceedings pending or contemplated by governmental authorities or
threatened by others to which the Guarantor or any of its subsidiaries
is or may be a party or to which any property of the Guarantor or any
of its subsidiaries is or may be the subject which, if determined
adversely to the Guarantor or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect; and
such counsel has not received notice that any such proceeding or
investigations are contemplated by governmental authorities or
threatened by others;
(iv) the Guarantor has the corporate power and authority to
enter into this Agreement, the Registration Rights Agreement and the
Indenture and each of this Agreement, the Registration Rights
Agreement and the Indenture has been duly authorized, executed and
delivered by the Guarantor (to the extent execution and delivery is
governed by the laws of British Columbia);
(v) the Guarantor has the corporate power and authority to
execute the Guarantee and the Guarantee has been duly authorized,
executed and delivered by the Guarantor (to the extent execution and
delivery is governed by the laws of British Columbia);
(vi) other than as set forth in each Memorandum, the Guarantor
is not in violation of its organizational documents or, to the best of
such counsel's knowledge, in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which the Guarantor is a party or by which
it or any of its properties is bound that is material to the Company
or to the holders of the Senior Notes; neither the issuance, sale and
delivery of the Securities nor the performance by the Guarantor of its
obligations under the Securities,
16
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the Indenture, this Agreement and the Registration Rights Agreement
nor the consummation of the transactions herein and therein
contemplated, conflicts or will conflict with or constitutes or will
constitute a breach of or a default under, any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument
known to such counsel to which the Guarantor is a party or by which
the Guarantor is bound or to which any of the property or assets of
the Guarantor is subject, nor will any such action result in any
violation of the provisions of the organizational documents of the
Guarantor or any statute or any order, rule or regulation of any
court or governmental agency or body of the Province of British
Columbia or Canada applicable therein having jurisdiction over the
Guarantor or its properties;
(vii) no consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body of the Province of British Columbia or Canada applicable therein
is required for the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement and
the Indenture except as have been obtained;
(viii) no stamp duty, registration or documentary taxes, duties
or similar charges are payable under the laws of the Province of
British Columbia or the laws of Canada applicable therein in
connection with the authorization, execution and delivery of this
Agreement and the Indenture;
(ix) under the laws of the Province of British Columbia and the
laws of Canada applicable therein and under the practice of the courts
of the Province of British Columbia, all as at the date hereof, such
courts would give effect to the choice by the Guarantor of New York
law as the law governing this Agreement, the Indenture or the
Securities subject to proof of such laws as a question of fact,
provided that a court of British Columbia will not recognize or apply
any law of the State of New York to the extent, if any, that such law
is found by the court:
A. to be procedural in nature;
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B. to be of a revenue, expropriatory or penal nature; or
C. to be inconsistent with public policy in British Columbia;
(x) the Initial Purchasers are each entitled to sue as
plaintiff in the courts of the Province of British Columbia for the
enforcement of their rights against the Guarantor in respect of this
Agreement, provided that, in the case of any Initial Purchaser which
--------
is a corporation that carries on business in British Columbia, such
corporation is duly registered to carry on such business under the
Company Act (British Columbia). Subject to the foregoing, access to
the courts of the Province of British Columbia will not be subject to
any conditions which are not applicable to nationals or residents of
Canada or domestic corporations, except that the furnishing of
security for costs in such proceedings may be required; and
(xi) a court of competent jurisdiction in British Columbia will
entertain suit upon a final and conclusive judgment in personam on the
merits respecting the enforcement of this Agreement or the Indenture,
against the Guarantor for a sum certain in money by any federal or
state court located in the City of New York that is not impeachable as
void or voidable under the internal laws of the State of New York, and
will enforce such judgment in such suit without reconsideration of the
merits, provided that:
--------
A. service of process is made in compliance with the
provisions of this Agreement or the Indenture, as
applicable;
B. such judgment is not obtained by fraud or in violation of
the rules of natural justice and that the enforcement
thereof would not be inconsistent with public policy, as
such term is understood under the laws of British Columbia;
C. the enforcement of such judgment does not constitute,
directly or indirectly, the enforcement of foreign revenue,
expropriatory or penal laws;
18
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D. no new admissible evidence relevant to the action is
discovered prior to the rendering of judgment by such court
in British Columbia;
E. an action to enforce the judgment is commenced within six
years of the date of the judgment;
F. such judgment, if a default judgment, does not contain any
manifest error on the face of such judgment; and
G. enforcement would not be contrary to any order made by the
Attorney-General of Canada under the Foreign
Extraterritorial Measures Act (Canada) or any order made by
the Competition Tribunal under the Competition Act (Canada)
in respect of certain judgments (as therein defined). At
the date thereof, no such orders are outstanding which
would affect the enforcement of any such judgment.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of the federal laws of the United States
or the laws of the State of New York, upon the opinion of Thelen, Marrin,
Johnson & Bridges described below, and (B) as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible officers
of the Guarantor and LGII and certificates or other written statements of
officials of jurisdictions having custody of documents respecting the
corporate existence or good standing of the Guarantor.
(h) You shall have received on the Closing Date an opinion of Thelen,
Marrin, Johnson & Bridges, U.S. counsel for LGII and the Guarantor, in form
and substance satisfactory to the Initial Purchasers, to the effect that:
(i) LGII has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to own its
properties and conduct its business as described in each Memorandum;
19
<PAGE>
(ii) LGII has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not
have a Material Adverse Effect;
(iii) Osiris Holding Corporation has been duly incorporated and
is validly existing as a corporation under the laws of its
jurisdiction of incorporation; Loewen (Texas) L.P. is a limited
partnership duly formed and validly existing under the laws of its
jurisdiction of organization; each Significant Subsidiary has full
corporate power and authority to own its properties and conduct its
business as described in each Memorandum and has been duly qualified
as a foreign corporation or limited partnership for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the
failure to be so qualified and in good standing would not have a
Material Adverse Effect; and all of the outstanding shares of capital
stock of Osiris Holding Corporation and all of the issued partnership
interests of Loewen (Texas) L.P. have been duly and validly authorized
and issued, are fully paid and, with respect to Osiris Holding
Corporation, are non-assessable and, with respect to the limited
partnership interests of Loewen (Texas), L.P., not subject to
assessment by Loewen (Texas), L.P. for additional contributions, and
(except for any directors' qualifying shares in the case of Osiris
Holding Corporation) are owned directly or indirectly by the
Guarantor, free and clear of all liens, encumbrances, equities or
claims;
(iv) to the best of such counsel's knowledge and other than as
set forth or contemplated in each Memorandum, there are no legal or
governmental proceedings pending or contemplated by governmental
authorities or threatened by others to which the Guarantor, LGII or
any of the Significant Subsidiaries is or may be a party or to which
any property of the Guarantor, LGII or any of the Significant
Subsidiaries is or may be the subject which, if determined adversely
to the
20
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Guarantor, LGII or any of the Significant Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect; and
such counsel has not received notice that any such proceeding or
investigations are contemplated by governmental authorities or
threatened by others;
(v) this Agreement has been duly authorized, executed and
delivered by LGII and (assuming that the Guarantor has the corporate
power and authority to enter into this Agreement and that this
Agreement has been duly authorized, executed and delivered by the
Guarantor) is a valid and binding agreement of LGII and the Guarantor,
except as rights to indemnity and contribution hereunder may be
limited by applicable law;
(vi) the Registration Rights Agreement has been duly authorized
by LGII and (assuming that the Guarantor has the corporate power and
authority to enter into the Registration Rights Agreement and that the
Registration Rights Agreement has been duly authorized, executed and
delivered by the Guarantor) will, upon execution and delivery by LGII
and the Guarantor, be a valid and binding agreement of LGII and the
Guarantor, enforceable in accordance with its terms subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights generally and equitable
principles and except as any rights to indemnity and contribution may
be limited by applicable law;
(vii) the Senior Notes have been duly authorized, executed and
delivered by LGII and (assuming that the Guarantor has the corporate
power and authority to execute the Guarantee and that the Guarantee
has been duly authorized, executed and delivered by the Guarantor) the
Securities, when duly authenticated in accordance with the terms of
the Indenture and delivered to and paid for by the Initial Purchasers
in accordance with the terms of this Agreement, will constitute valid
and binding obligations of LGII and the Guarantor entitled to the
benefits of the Indenture, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally and
equitable principles;
21
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(viii) the Indenture has been duly authorized, executed and
delivered by LGII and (assuming the Guarantor has the corporate power
and authority to enter into the Indenture and that the Indenture has
been duly authorized, executed and delivered by the Guarantor)
constitutes a valid and binding agreement of LGII and the Guarantor,
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally and equitable principles;
(ix) neither LGII nor any of the Significant Subsidiaries is in
violation of or in default under its organizational documents or, to
the best of such counsel's knowledge, in default in the performance of
any material obligation, agreement or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
instrument known to such counsel to which LGII or any of the
Significant Subsidiaries is a party or by which it or any of them or
any of their respective properties is bound, except as may be
disclosed in each Memorandum or where such violations and defaults
individually and in the aggregate would not have a Material Adverse
Effect; neither the issuance and sale of the Senior Notes nor the
performance by LGII and the Guarantor of their obligations under the
Securities, the Indenture and this Agreement nor the consummation of
the transactions herein and therein contemplated, to the best of such
counsel's knowledge, conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the organizational
documents or any material agreement, indenture, mortgage, deed of
trust, loan agreement, lease or other instrument known to such counsel
to which the Guarantor, LGII or any of the Significant Subsidiaries is
a party or by which the Guarantor, LGII or any of the Significant
Subsidiaries is bound or to which any of the property or assets of the
Guarantor, LGII or any of the Significant Subsidiaries is subject,
which conflict, breach or default would have a Material Adverse Effect
or, except as disclosed in each Memorandum, will result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Guarantor, LGII or the Significant
Subsidiaries under any such agreement, indenture,
22
<PAGE>
lease or other instrument; nor will any such action result in any
violation of any existing law, regulation, ruling (assuming compliance
with all applicable state securities and Blue Sky laws, as to which
counsel need not express any opinion), judgment, injunction, order or
decree known to such counsel, and applicable to LGII, the Guarantor or
any of the Significant Subsidiaries or any of their respective
properties, which violation would have a Material Adverse Effect, nor
will any such action, to the best of such counsel's knowledge, result
in any violation of any order, rule or regulation of any court or
governmental agency or body having jurisdiction over LGII or any of
its subsidiaries or any of their respective properties;
(x) no consent, approval, authorization or other order, or
registration or filing with any court, regulatory body, administrative
agency or other governmental body, agency or official in the United
States is required for the issuance and sale of the Securities or the
consummation of the other transactions contemplated by this Agreement
or the Indenture, except (i) as have been obtained and (ii) such
consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Senior Notes by
the Initial Purchasers, as to which such counsel need not express any
opinion;
(xi) based upon the representations, warranties and agreements
of LGII and the Guarantor in Sections 1(q), 4(e), 4(f) and 4(g)
hereof, and of the Initial Purchasers in Section 3 hereof, it is not
necessary in connection with the offer, sale and delivery of the
Senior Notes to the Initial Purchasers under this Agreement or in
connection with the initial resale of such Senior Notes by the Initial
Purchasers in accordance with Section 2 of this Agreement to register
the Securities under the Act or to qualify the Indenture under the
Trust Indenture Act of 1939, as amended;
(xii) the Senior Notes satisfy the requirements set forth in
Rule 144A(d)(3) under the Act;
23
<PAGE>
(xiii) none of LGII, the Guarantor or any Significant Subsidiary
is, and, after the issuance and sale of the Senior Notes none of LGII,
the Guarantor or any of the Significant Subsidiaries will be, an
"investment company" or an entity "controlled" by an "investment
company" required to register under the Investment Company Act of
1940, as amended;
(xiv) the Incorporated Documents (except for financial
statements and the notes thereto and the schedules and other financial
and statistical data included therein, as to which such counsel need
not express any opinion), when filed with the Securities and Exchange
Commission, conformed in all material respects to the requirements of
the Exchange Act and the rules and regulations thereunder; such
counsel has no reason to believe that any of the Incorporated
Documents (except as aforesaid), when such documents were so filed,
contained any untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(xv) the statements in each Memorandum, insofar as they are
descriptions of contracts, agreements or other legal documents, or
refer to statements of law or legal conclusions, are accurate in all
material respects and present fairly the information required to be
shown; and
(xvi) such counsel believes that (except for the financial
statements included therein as to which such counsel need express no
belief) each Memorandum did not, as of its date of issuance, and that
(except as aforesaid) the Final Memorandum does not, as amended or
supplemented, if applicable, as of the Closing Date, contain 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.
In rendering their opinions as aforesaid, counsel may, as to factual
matters, rely upon written certificates or statements of officers of LGII
and the Guarantor and, as to matters of law, may rely upon an opinion or
opinions, each dated the Closing Date, of
24
<PAGE>
other counsel retained by LGII or the Guarantor as to the laws of any
jurisdiction other than the United States or the State of New York,
provided that (1) each such other counsel is reasonably acceptable to the
--------
Initial Purchasers, (2) such reliance is expressly authorized by each
opinion so relied upon and a copy of each such opinion is delivered to the
Initial Purchasers and is, in form and substance, reasonably satisfactory
to them and their counsel, and (3) counsel shall state in their opinion
that they believe that they and the Initial Purchasers are justified in
relying thereon.
(i) You shall have received letters addressed to you dated the date
hereof and the Closing Date from KPMG Peat Marwick Thorne in form and
substance satisfactory to you, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and the financial and statistical
information contained in each Memorandum.
(j) You shall have received the Registration Rights Agreement executed
by LGII and the Guarantor.
(k) The Senior Notes shall have been designated PORTAL securities in
accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. relating to trading in the PORTAL
Market.
(l) No order or decree preventing the use of the Final Memorandum or
any amendment or supplement thereto, or any order asserting that the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act shall have been issued and no proceeding for that
purpose shall have commenced or be pending or, to the knowledge of LGII or
the Guarantor, contemplated.
(m) LGII and the Guarantor shall have furnished or caused to be
furnished to the Initial Purchasers such further certificates and documents
as the Initial Purchasers shall have requested. All such opinions,
certificates, letters and other documents will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and
substance to the Initial Purchasers and counsel for the Initial Purchasers.
Any certificate or document signed by any officer of LGII or the Guarantor
and delivered to the
25
<PAGE>
Initial Purchasers, or to counsel for the Initial Purchasers, shall be
deemed a representation and warranty by LGII and the Guarantor to the
Initial Purchasers as to the statements made therein.
Section 6. Indemnification and Contribution.
--------------------------------
(a) Each of LGII and the Guarantor agrees to indemnify and hold
harmless you and each person, if any, who controls you within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act from and
against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon
any untrue statement or alleged untrue statement of a material fact
contained in each Memorandum or in any amendment or supplement thereto, or
arising out of or based upon any omissions or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in
conformity with the information relating to such Initial Purchaser
furnished in writing to LGII by or on behalf of any Initial Purchaser
expressly for use in connection therewith; provided, however, that the
--------
indemnification contained in this paragraph (a) with respect to any
Preliminary Memorandum shall not inure to the benefit of any Initial
Purchaser (or to the benefit of any person controlling such Initial
Purchaser) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Senior Notes by such Initial Purchaser to any
person if a copy of the Final Memorandum shall not have been delivered or
sent to such person and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in the
Preliminary Memorandum was corrected in the Final Memorandum provided that
LGII has delivered the Final Memorandum to the several Initial Purchasers
in requisite quantity on a timely basis to permit such delivery or sending.
(b) If any action, suit or proceeding shall be brought against any
Initial Purchaser or any person controlling any Initial Purchaser in
respect of which indemnity may be sought against LGII or the Guarantor,
such Initial Purchaser or such controlling person shall
26
<PAGE>
promptly notify LGII and/or the Guarantor, and LGII and/or the Guarantor,
as the case may be, shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. Such Initial
Purchaser or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate
in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Initial Purchaser or such controlling person unless
(i) LGII and/or the Guarantor, as the case may be, has agreed in writing to
pay such fees and expenses, (ii) both LGII and the Guarantor have failed to
assume the defense and employ counsel, or (iii) the named parties to any
such action, suit or proceeding (including any impleaded parties) include
both such Initial Purchaser or such controlling person and LGII and/or the
Guarantor, as the case may be, and such Initial Purchaser or such
controlling person shall have been advised by its counsel in writing that
representation of such indemnified party and LGII and/or the Guarantor, as
the case may be, by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case LGII or the
Guarantor shall not have the right to assume the defense of such action,
suit or proceeding on behalf of such Initial Purchaser or such controlling
person). It is understood, however, that LGII and/or the Guarantor, as the
case may be, shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits
or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Initial Purchasers and controlling
persons not having actual or potential differing interests with you or
among themselves, which firm shall be designated in writing by Smith Barney
Inc., and that all such fees and expenses shall be reimbursed as they are
incurred. LGII and/or the Guarantor, as the case may be, shall not be
liable for any settlement of any such action, suit or proceeding effected
without its written consent, but if settled with such written consent, or
if there be a final judgment for the plaintiff in any such action, suit or
proceeding, LGII and/or the Guarantor, as the case may be, agree to
indemnify and hold harmless any Initial Purchaser, to the extent provided
in the preceding
27
<PAGE>
paragraph, and any such controlling person from and against any loss,
claim, damage, liability or expense by reason of settlement or judgment.
(c) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless LGII and/or the Guarantor, each of their
respective directors and officers, and any person who controls LGII or the
Guarantor within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, to the same extent as the foregoing indemnity from LGII
and the Guarantor to each Initial Purchaser, but only with respect to
information relating to such Initial Purchaser furnished in writing by or
on behalf of such Initial Purchaser expressly for use in either Memorandum,
or any amendment or supplement thereto. If any action, suit or proceeding
shall be brought against LGII, the Guarantor, any of their respective
directors or officers, or any such controlling persons based on either
Memorandum, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Initial Purchaser pursuant to this
paragraph (c), such Initial Purchaser shall have the rights and duties
given to LGII and the Guarantor by paragraph (b) above (except that if LGII
and/or the Guarantor, as the case may be, shall have assumed the defense
thereof such Initial Purchaser shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but
the fees and expenses of such counsel shall be at such Purchaser's
expense), and LGII, the Guarantor, their respective directors and officers,
and any such controlling persons shall have the rights and duties given to
the Initial Purchasers by paragraph (b) above.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities
or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by LGII and/or the Guarantor on the one hand and
the Initial Purchasers on the other hand from offering of the Senior Notes,
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above
28
<PAGE>
but also the relative fault of LGII and/or the Guarantor on the one hand
and the Initial Purchasers on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by LGII and/or the
Guarantor on the one hand and the Initial Purchasers on the other hand
shall be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses and without duplication) received
by LGII and/or the Guarantor bear to the total discounts and commissions
received by the Initial Purchasers, in each case as set forth in the table
on the cover page of the Final Memorandum. The relative fault of LGII
and/or the Guarantor on the one hand and the Initial Purchasers on the
other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information
supplied by LGII and/or the Guarantor on the one hand or by the Initial
Purchasers on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.
(e) LGII, the Guarantor and the Initial Purchasers agree that it would
not be just and equitable if contribution pursuant to this Section 6 were
determined by a pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities
and expenses referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 6, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which
the total price of the Senior Notes offered and distributed by it exceeds
the amount of any damages which such Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any
29
<PAGE>
person who was not guilty of such fraudulent misrepresentation. The
Initial Purchasers' obligations to contribute pursuant to this Section 6
are several in proportion to the respective numbers of Senior Notes set
forth opposite their names in Schedule I hereto and not joint.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of LGII and the Guarantor set forth in this
Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Initial Purchaser or
any person controlling any Initial Purchaser, LGII, the Guarantor, each of
LGII's and the Guarantors respective directors or officers or any person
controlling LGII or the Guarantor, (ii) acceptance of any Senior Notes and
payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Initial Purchaser or any person controlling any Initial
Purchaser, LGII, the Guarantor, each of LGII's and the Guarantor's
respective directors or officers, or any person controlling LGII or the
Guarantor, shall be entitled to the benefits of the indemnity, contribution
and reimbursement agreements contained in this Section 6.
Section 7. Termination. This Agreement shall be subject to
-----------
termination in your absolute discretion, without liability on the part of any
Initial Purchaser to LGII or the Guarantor, by notice to LGII, if prior to the
Closing Date, (i) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange, The Toronto Stock Exchange, The Montreal
Exchange or the Nasdaq National Market shall have been suspended or materially
limited, (ii)
30
<PAGE>
a general moratorium on commercial banking activities in New York or Canada
shall have been declared by either federal, state or provincial authorities, or
(iii) there shall have occurred any outbreak or escalation of hostilities or
other international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial markets
of the United States or Canada is such as to make it, in your judgment,
impracticable or inadvisable to commence or continue the offering of the Senior
Notes.
Notice of such termination may given by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
Section 8. Miscellaneous.
-------------
(a)(i) If any Initial Purchaser shall default in its obligation to
purchase the Senior Notes which it has agreed to purchase hereunder on the
Closing Date, you may in your discretion arrange for you or another party
or other parties to purchase such Senior Notes on the terms contained
herein. If within thirty-six hours after such default by any Initial
Purchaser you do not arrange for the purchase of such Senior Notes, then
LGII shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to you to purchase
such Senior Notes on such terms. In the event that, within the respective
prescribed periods, you notify LGII that you have so arranged for the
purchase of such Senior Notes, LGII notifies you that it has so arranged
for the purchase of such Senior Notes, you or LGII shall have the right to
postpone the Closing for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Final
Memorandum, or in any other documents or arrangements, and LGII agrees to
prepare promptly any amendments or supplements to the Final Memorandum
which in your opinion may thereby be made necessary. The term "Purchaser"
as used in this Agreement shall include any person substituted under this
Section with like effect as if such person had originally been a party to
this Agreement with respect to such Senior Notes.
(ii) If, after giving effect to any arrangements for the purchase of
the Senior Notes of a defaulting Initial Purchaser or Purchasers by you and
LGII as provided in subsection (i) above, the aggregate number of such
Senior Notes which remains unpurchased does not exceed 11% of the aggregate
number of all the Senior
31
<PAGE>
Notes to be purchased at the Closing, then LGII shall have the right to
require each non-defaulting Initial Purchaser to purchase the number of
Senior Notes which such Initial Purchaser agreed to purchase hereunder at
the Closing and, in addition, to require each non-defaulting Initial
Purchaser to purchase its pro rata share (based on the number of Senior
Notes which such Initial Purchaser agreed to purchase hereunder) of the
Senior Notes of such defaulting Initial Purchaser or Purchasers for which
such arrangements have not been made; but nothing herein shall relieve a
defaulting Initial Purchaser from liability for its default.
(iii) If, after giving effect to any arrangements for the purchase of
the Senior Notes of a defaulting Initial Purchaser or Purchasers by you and
LGII as provided in subsection (i) above, the aggregate number of such
Senior Notes which remains unpurchased exceeds 11% of the aggregate number
of all the Senior Notes to be purchased at the Closing, or if LGII shall
not exercise the right described in subsection (ii) above to require non-
defaulting Initial Purchasers to purchase Senior Notes of a defaulting
Initial Purchaser or Purchasers, then this Agreement shall thereupon
terminate, without liability on the part of any non-defaulting Initial
Purchaser or LGII, except for the expenses to be borne as provided in
Section 4(l) hereof and the indemnity and contribution agreements in
Section 6 hereof; but nothing herein shall relieve a defaulting Initial
Purchaser from liability for its default.
(b) If this Agreement shall be terminated pursuant to Section 8(a)
hereof, neither LGII nor the Guarantor shall be under any liability to any
Initial Purchaser except as provided in Section 4(l) and Section 6 hereof;
but, if for any other reason any Senior Notes are not delivered by or on
behalf of LGII as provided herein, LGII or the Guarantor will reimburse the
Initial Purchasers through you for all out-of-pocket expenses approved in
writing by you, including fees and disbursements of counsel, reasonably
incurred by the Initial Purchasers in making preparations for the purchase,
sale and delivery of the Senior Notes not so delivered but LGII and the
Guarantor shall then be under no further liability to any Initial Purchaser
in respect of the Senior Notes not so delivered except as provided in
Section 4(l) and Section 6 hereof.
32
<PAGE>
(c) In all dealings hereunder, Smith Barney Inc. may act on behalf of
each of the Initial Purchasers, and the parties hereto shall be entitled to
act and rely upon any statement, request, notice or agreement on behalf of
any Initial Purchaser made or given by Smith Barney Inc.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Initial Purchasers shall be delivered to Smith
Barney Inc., 388 Greenwich Street, New York, New York 10013, Attention:
Syndicate Department; if to LGII shall be delivered to Loewen Group
International, Inc., 50 East RiverCenter Boulevard, Suite 800, Covington,
KY 41011, Attention: Chairman; and if to the Guarantor shall be delivered
to The Loewen Group Inc., 4126 Norland Avenue, Burnaby, British Columbia,
Canada, Attention: Chairman.
(d) This Agreement shall be binding upon, and inure solely to the
benefit of, the Initial Purchasers, LGII, the Guarantor and, to the extent
provided in Section 6, each person who controls LGII, the Guarantor or any
Initial Purchaser, and their respective heirs, executors, administrators,
successors and assigns, and, solely to the extent permitted in Section
4(g), to the holders from time to time of the Senior Notes, and no other
person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Senior Notes from any Initial
Purchaser shall be deemed a successor or assign by reason merely of such
purchase.
(e) Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when banks in New York City are
open for business.
Section 9. Consent to Service of Process. Each of LGII and the
-----------------------------
Guarantor irrevocably (a) agrees that any legal suit, action or proceeding
arising out of or based upon this Agreement and the Indenture or the
transactions contemplated hereby may be instituted in any federal or state court
located in the City of New York, (b) waives, to the fullest extent it may
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such proceeding, and (c) submits to the nonexclusive
jurisdiction of such courts in any such suit, action or proceeding. Each of
LGII and the Guarantor has appointed Thelen, Marrin, Johnson & Bridges, 330
Madison Avenue, New York, NY 10017, Attention: David P. Graybeal, Esq., as its
authorized agent (the "Authorized Agent") upon whom process
33
<PAGE>
may be served in any such action arising out of or based on this Agreement or
the transactions contemplated hereby which may be instituted in any federal or
state court located in the City of New York by any Initial Purchaser or by any
person who controls any Initial Purchaser, expressly consents to the
jurisdiction of any such court in respect of any such action, and waives any
other requirements of or objections to personal jurisdiction with respect
thereto. Such appointment shall be irrevocable. Each of LGII and the Guarantor
agrees to take any and all action, including the filing of any and all documents
and instruments, that may be necessary to continue such appointment in full
force and effect as aforesaid. Service of process upon the Authorized Agent and
written notice of such service to LGII and the Guarantor shall be deemed, in
every respect, effective service of process upon LGII and the Guarantor.
Notwithstanding the foregoing, designation of an authorized agent does not
constitute submission to jurisdiction or consent to service of process in any
legal action or proceeding predicated on United States federal or state
securities laws.
Section 10. Applicable Law; Counterparts. This Agreement shall be
----------------------------
governed by and construed in accordance with the laws of the State of New York.
This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
34
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
among each of the Initial Purchasers, LGII and the Guarantor.
Very truly yours,
LOEWEN GROUP INTERNATIONAL, INC.
By:/s/ D. Hawes
------------------------------
Name: Dwight Hawes
Title: Vice-President, Finance
THE LOEWEN GROUP INC.
By:/s/ D. Hawes
------------------------------
Name: Dwight Hawes
Title: Vice-President, Finance
Accepted as of the date hereof:
SMITH BARNEY INC.
ALEX. BROWN & SONS INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
NESBITT BURNS SECURITIES INC.
RBC DOMINION SECURITIES CORPORATION
By: SMITH BARNEY INC.
By:/s/ Michael Del Giudice
--------------------------
Name: Michael Del Giudice
Title: Vice President
On behalf of each of the Initial Purchasers
<PAGE>
SCHEDULE I
Principal Amount Principal Amount
of Series I of Series 2
Notes Notes
Initial Purchaser to be Purchased to be Purchased
----------------- ---------------- ----------------
<TABLE>
<CAPTION>
<S> <C> <C>
Smith Barney Inc..................... $126,000,000 $ 70,000,000
Alex. Brown & Sons Incorporated...... 24,750,000 13,750,000
Morgan Stanley & Co. Incorporated.... 24,750,000 13,750,000
Nesbitt Burns Securities Inc......... 24,750,000 13,750,000
RBC Dominion Securities Corporation.. 24,750,000 13,750,000
------------ ------------
TOTAL.......... $225,000,000 $125,000,000
============ ============
</TABLE>
<PAGE>
EXHIBIT B
The Senior Notes have not been registered under the Securities Act,
and they may not be offered or sold within the United States or to or for the
account or benefit of, U.S. persons except pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act. Accordingly, the Senior Notes are being offered and sold only to
"qualified institutional buyers" (as defined in Rule 144A) ("QIBs") in
compliance with Rule 144A and to a limited number of other institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) ("Accredited Investors") that, prior to their purchase of any
Senior Notes, deliver to the Initial Purchasers and to LGII a letter containing
certain representations and agreements substantially to the following effect:
Each purchaser of Senior Notes from the Initial Purchasers, by its
acceptance thereof, will be deemed to have acknowledged, represented to and
agreed with LGII and the Initial Purchasers as follow:
(1) It is purchasing the Senior Notes for its own account or an
account with respect to which it exercises sole investment discretion and
that it or such account is (i) a QIB, and is aware that the sale to it is
being made in reliance on Rule 144A or (ii) an Accredited Investor.
(2) It acknowledges that the Senior Notes have not been registered
under the Securities Act and that none of the Senior Notes may be offered
or sold within the United States, except as set forth below.
(3) It will not resell or otherwise transfer any of such Senior Notes
within three years after the original issuance of the Senior Notes except
(i) to LGII or any of its subsidiaries, (ii) inside the United States to a
QIB in compliance with Rule 144A, (iii) inside the United States to an
Accredited Investor that, prior to such transfer, furnishes to the Trustee
a signed letter containing certain representations and agreements (the form
of which letter can be obtained from such Trustee), (iv) pursuant to the
exemption form registration provided by Rule 144 under the Securities Act
(if available), or (v) pursuant to an effective registration statement
under the Securities Act.
B-1
<PAGE>
(4) It agrees that it will give to each person to whom it transfers
the Senior Notes notice of any restrictions on transfer of such Senior
Notes.
(5) It understand that all of the Senior Notes will bear a legend
substantially to the following effect unless otherwise agreed by LGII, the
Trustee and the holder thereof:
THIS SECURITY HAS NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR"), (2) AGREES
THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE
ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE), (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
6. It acknowledges that the Trustee will not be required to accept
for registration of transfer any Senior Notes acquired by it, except upon
presentation of evidence satisfactory to LGII and the Trustee that the
restrictions set forth herein have been complied with.
7. It acknowledges that LGII, the Trustee, the Initial Purchasers and
others will rely upon the truth and accuracy of the foregoing
acknowledgments, representations or agreements deemed to have been made by
its purchase of the Senior Notes and agrees that if the foregoing
acknowledgements, representations or agreements are no longer accurate, it
will promptly notify LGII, the Trustee and the Initial Purchasers.
B-2
<PAGE>
If it is acquiring the Senior Notes as a fiduciary or agent for one or more
investor accounts, it represents that it has sole investment discretion
with respect to each such account and it has full power to make the
foregoing Acknowledgments, representations and agreements on behalf of each
account.
B-3
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
The Loewen Group Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick Thorne
Chartered Accountants
Vancouver, Canada
May 3, 1996
<PAGE>
Exhibit 23.9
[LOGO OF DUN AND BRADSTREET CORPORATION]
Joseph W. Duncan 187 Danbury Road, CT 06897
Vice president Tel. 203-834-4710
Corporate Economist and Chief Statistician Fax 203-834-4713
April 23, 1996
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Ladies and Gentlemen:
The undersigned hereby consents to the reference to The Dun and
Bradstreet Corporation in the Registration Statement on Form S-4 of the
Loewen Group International, Inc. and the Loewen Group, Inc.
Sincerely,
/s/ Joseph W. Duncan
Joseph W. Duncan
Vice President, Corporate Economist
& Chief Statistician
The Dun & Bradstreet Corporation
<PAGE>
Exhibit 25
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)
FLEET NATIONAL BANK OF CONNECTICUT
---------------------------------------------------------
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
Not applicable 06-0850628
- ------------------------------- -----------------------------
(State of incorporation (I.R.S. Employer
if not a national bank) Identification No.)
777 Main Street, Hartford, Connecticut 06115
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Patricia Beaudry, 777 Main Street, Hartford, CT 860-728-2065
--------------------------------------------------------------
(Name, address and telephone number of agent for service)
Loewen Group International, Inc.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 61-1264590
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 East RiverCenter Boulevard
Suite 800
Covington, Kentucky 41011
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
7 1/2% Series 3 Senior Guaranteed Notes due 2001
8 1/4% Series 4 Senior Guaranteed Notes due 2003
------------------------------------------------------------------
(Title of the indenture securities)
<PAGE>
Item 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,
The Comptroller of the Currency,
Washington, D.C.
Federal Reserve Bank of Boston
Boston, Massachusetts
Federal Deposit Insurance Corporation
Washington, D.C.
(b) Whether it is authorized to exercise
corporate trust powers:
The trustee is so authorized.
Item 2. Affiliations with obligor and underwriter. If the obligor or
any underwriter for the obligor is an affiliate of the trustee,
describe each such affiliation.
None with respect to the trustee.
Item 16. List of exhibits.
List below all exhibits filed as a part of this statement of
eligibility and qualification.
(1) A copy of the Articles of Association of the trustee as
now in effect.
(2) A copy of the Certificate of Authority of the trustee
to do business.
(3) A copy of the Certification of Fiduciary Powers of the
trustee.
(4) A copy of the By-Laws of the trustee as now in effect.
(5) Consent of the trustee required by Section 321(b)
of the Act.
(6) A copy of the latest Consolidated Reports of Condition
and Income of the trustee published pursuant to law or
the requirements of its supervising or examining authority.
<PAGE>
NOTES
In as much as this Form T-1 is filed prior to the ascertainment by the trustee
of all facts on which to base answers to Item 2, the answers to said Items are
based upon imcomplete information. Said Items may, however, be considered
correct unless amended by an amendment to this Form T-1.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
the trustee, Fleet National Bank of Connecticut, a national banking
association organized and existing under the laws of the United States, has
duly caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Hartford, and State of Connecticut, on the 9th day of June, 1995.
FLEET NATIONAL BANK OF CONNECTICUT,
AS TRUSTEE
By: /s/ Michael M. Hopkins
-------------------------
Its Vice President
<PAGE>
EXHIBIT 1
ARTICLES OF ASSOCIATION
FLEET NATIONAL BANK OF CONNECTICUT
FIRST. The title of this Association, which shall carry on the business of
banking under the laws of the United States, shall be "Shawmut Bank
Connecticut, National Association".
SECOND. The main office of the Association shall be in Hartford, County of
Hartford, State of Connecticut. The general business of the Association shall
be conducted at its main office and its branches.
THIRD. The board of directors of this Association shall consist of not less
than five (5) nor more than twenty-five (25) shareholders, the exact number of
directors within such minimum and maximum limits to be fixed and determined
from time to time by resolution of a majority of the full board of directors or
by resolution of the shareholders at any annual or special meeting thereof.
Unless otherwise provided by the laws of the United States, any vacancy in the
board of directors for any reason, including an increase in the number thereof,
may be filled by action of the board of directors.
FOURTH. The annual meeting of the shareholders for the election of directors
and the transaction of whatever other business may be brought before said
meeting shall be held at the main office or such other place as the board of
directors may designate, on the day of each year specified therefore in the
bylaws, but if no election is held on that day, it may be held on any
subsequent day according to the provisions of law; and all elections shall be
held according to such lawful regulations as may be prescribed by the board of
directors.
FIFTH. The authorized amount of capital stock of this Association shall be
eight million five hundred thousand (8,500,000) shares of which three milliion
five hundred thousand (3,500,000) shares shall be common stock with a
par value of six and 25/100 dollars ($6.25) each, and of which five million
(5,000,000) shares without par value shall be preferred stock. The capital
stock may be increased or decreased from time to time, in accordance with
the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the corporation shall
have any pre-emptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association, issued or sold, nor
any right of subscription to any thereof other than such, if any, as the board
of directors, in its discretion, may from time to time determine and at such
price as the board of directors may from time to time fix.
<PAGE>
The board of directors of the Association is authorized, subject to limitations
prescribed by law and the provisions of this Article, to provide for the
issuance from time to time in one or more series of any number of the preferred
shares, and to establish the number of shares be included in each series, and
to fix the designation, relative rights, preferences, qualifications and
limitations of the shares of each such series. The authority of the board of
directors with respect to each series shall include, but not be limited to,
determination of the following:
a. The number of shares constituting that series and the distinctive
designation of that series;
b. The dividend rate on the shares of that series, whether dividends shall be
cumulative, and, if so, from which dates or dates, and whether they shall be
payable in preference to, or in anther relation to, the dividends payable to
any other class or classes or series of stock;
c. Whether that series shall have voting rights, in addition to the voting
rights provided by law, and, if so, the terms of such voting rights;
d. Whether that series shall have conversion or exchange privileges, and,
if so, the terms and conditions of such conversion or exchange, including
provision for the adjustment of the conversion or exchange rate in such
events as the board of directors shall determine;
e. Whether or not the shares of that series shall be redeemable, and, if so,
the terms and conditions of such redemption, including the manner of
selecting shares for redemption if less than all shares are to be redeemed,
the date or dates upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
f. Whether that series shall be entitled to the benefit of a sinking fund to
be applied to the purchase or redemption of shares of that series, and, if
so, the terms and amounts of such sinking fund;
g. The right of the shares of that series to the benefit of conditions and
restrictions upon the creation of indebtedness of the Association or any
subsidiary, upon the issue of any additional stock (including additional
shares of such series or of any other series) and upon the payment of
dividends or the making of other distributions on, and the purchase,
redemption or other acquisition by the Association or any subsidiary of
any outstanding stock of the Association;
h. The right shares of that series in the event of voluntary or involuntary
liquidation, dissolution or winding up of the Association and whether such
rights shall be in preference to, or in another relation to, the comparable
rights of any other class or classes or series of stock; and
i. Any other relative, participating, optional or other special rights,
qualifications, limitations or restrictions of that series.
Shares of any series of preferred stock which have been redeemed (whether
through the operation of a sinking fund or otherwise) or which, if convertible
or exchangeable, have been converted into or exchanged for shares of stock of
any other class or classes shall have the status of authorized and unissued
shares of preferred stock of the same series and may be reissued as a part of
the series of which they were originally a part or may be reclassified and
reissued as part of a new series of preferred stock to be created by resloution
or resolutions of the board of directors or as part of any other series or
preferred stock, all subject to the conditions and the restrictions adopted by
the board of directors providing for the issue of any series of prefeffed
stock and by the provisions of any applicable law.
Subject to the provisions of any applicable law, or except as otherwise
provided by the resolution or resolutions providing for the issue of any series
of preferred stock, the holders of outstanding shares of common stock shall
exclusively possess voting power for the election of directors and for all
purposes, each holder of record of shares of common stock being entitled to one
vote for each share of common stock standing in his name on the books of the
Association.
Except as otherwise provided by the resolution or resolutions for the issue
of any series of preferred stock, after payment shall have been made to the
holders of preferred stock of the full amount of dividends to which they shall
be entitled pursuant to the resolution or resolutions providing for the issue
of any other series of preferred stock, the holders of common stock shall be
entitled, to the exclusion of the holders of preferred stock of any and all
series, to receive such dividends as from time to time may be declared by the
board of directors.
Except as otherwise provided by the resolution or resolutions for the issue
of any series of preferred stock, in the event of any liquidation, dissolution
or winding up of the Association, whether voluntary or involuntary, after
payment shall have been made to the holders of preferred stock of the full
amount to which they shall be entitled pursuant to the resolution or
resolutions providing for the issue of any series of preferred stock the
holders of common stock shall be entitled, to the exclusion of the holders of
preferred stock of any and all series, to share, ratable according to the
number of shares of common stock held by them, in all remaining assets of the
Association available for distribution to its shareholders.
The number of authorized shares of any class may be increased or decreased by
the affirmative vote of the holders of a majority of the stock of the
Association entitled to vote.
<PAGE>
SIXTH. The board of directors shall appoint one of its members president of
this Association, who shall be chairman of the board, unless the board appoints
another director to be the chairman. The board of directors shall have the
power to appoint one or more vice presidents; and to appoint a secretary and
such other officers and employees as may be required to transact the business
of this Association.
The board of directors shall have the power to define the duties of the
officers and employees of the Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business and affairs of
the Association; to make all bylaws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a board of
directors to do and perform.
SEVENTH. The board of directors shall have the power to change the location of
the main office to any other place within the limits of the City of Hartford,
Connecticut, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The board of directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than ten percent (10%) of the
stock of this Association, may call a special meeting of shareholders at any
time. Unless otherwise provided by the laws of the United States, a notice of
the time, place and purpose of every annual and special meeting of the
shareholders shall be given by first class mail, postage prepaid, mailed at
least ten (10) days prior to the date of such meeting to each shareholder of
record at his address as shown upon the books of this Association.
TENTH. (A) Right to Indemnification. Each person who was or is made 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 (hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director, officer or employee of the Association or is or was
serving at the request of the Association as a director, officer employee or
agent of another corporation of a partnership, joint venture, limited liability
company, trust, or other enterprise, including service with respect to an
empolyee benefit plan, shall be indemnified and held harmless by the
Association to the fullest extent authorized by the law of the state in which
the Association's ultimate parent company is incorporated, except as provided
in subsection (b). The aforesaid indemnity shall protect the indemnified
person against all expense, liability and loss (including attorney's fees,
judgements, fines ERISA excise taxes or penalties, and amounts paid in
settlement) reasonably incurred by such person in connection with such a
proceeding. Such indemnification shall continue as to a person who has ceased
to be a director, officer or employee and shall inure to the benefit of his or
her heirs, executors, and administrators, but shall only cover such person's
period of service with the Association. The Association may, by action of its
Board of Directors, grant rights to indemnification to agents of the
Association and to any director, officer, employee or agent of any of its
subsidiaries with the same scope and effect as the foregoing indemnification
of directors and officers.
(b) Restrictions on Indemnification. Notwithstanding the foregoing, (i) no
person shall be indemnified hereunder by the Association against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by a federal bank regulatory agency which proceeding or action
results in a final order assessing civil money penalties against that person,
requiring affirmative action by that person in the form of payments to the
Association, or removing or prohibiting that person from service with the
Association, and any advancement of expenses to that person in that proceeding
must be repaid; and (ii) no person shall be indemnified hereunder by the
Association and no advancement of expenses shall be made to any person
hereunder to the extent such indemnification or advancement of expenses would
violate or conflict with any applicable federal statute now or hereafter in
force or any applicable final regulation or interpretation now or hereafter
adopted by the Office of the Comptroller of the Currency ("OCC") or the Federal
Deposit Insurance Corporation ("FDIC"). The Association shall comply with any
requirements imposed on it by any such statue or regulation in connection with
any indemnification or advancement of expenses hereunder by the
Association. With respect to proceedings to enforce a claimant's rights to
indemnification, the Association shall indemnify any such claimant in
connection with such a proceeding only as provided in subsection (d) herof.
(c) Advancement of Expenses. The conditional right to indemnification
conferred in this section shall be a contract right and shall include the
right to be paid by the Association the reasonable expenses (including
attorney's fees) incurred in defending a proceeding in advance of its final
disposition (an "advancement of expenses"); provided, however, that an
advancement of expenses shall be made only upon (i) delivery to the Association
of a binding written undertaking by or on behalf of the person receiving the
advancement to repay all amounts so advanced if it is ultimately determined
that such person is not entitled to be indemnified in such proceeding,
including if such proceeding results in a final order assessing civil money
penalties against that person, requiring affirmative action by that person
in the form of payments to the Association, or removing or prohibiting that
person from service with the Association, and (ii) compliance with any other
actions or determinations required by applicable law, regulation or OCC or FDIC
interpretation to be taken or made by the Board of Directors of the Association
or other persons prior to an advancement of expenses. The Association shall
cease advancing expenses at any time its Board of Directors believes that any
of the prerequisites for advancement of expenses are no longer being met.
(d) Right of Claimant to Bring Suit. If a claim under subsection (a) of the
section is not paid in full by the Association within thirty (30) days after
written claim has been received by the Association the claimant may at any time
thereafter bring suit against the Association to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a
suit brought by the Association to recover an advancement of expenses pursuant
to the terms of an undertaking, the claimant shall be entitled to be paid also
the expense of prosecuting or defending such claim. It shall be a defense to
any such action brought by the claimant to enforce a right to indemnification
hereunder (other than an action brought to enforce a claim for an advancement
of expenses where the required undertaking, if any, has been tendered to the
Association) that the claimant has not met any applicable standard for
indemnification under the law of the state in which the Association's ultimate
parent company is incorporated. In any suit brought by the Association to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Association shall be entitled to recover such expenses upon a final
adjudication that the claimant has not met any applicable standard for
indemnification standard for indemnification under the law of the state in
which the Association's ultimate parent company is incorporated.
(e) Non-Exclusivity of Rights. The rights to indeminification and the
advancement of expenses conferred in this section shall not be exclusive of any
other right which any person may have or hereafter acquired under any statute,
agreement, vote of stockholders or disinterested directors or otherwise.
(f) Insurance. The Association may purchase, maintain, and make payment or
reimbursement for reasonable premiums on, insurance to protect itself and any
director, officer, employee or agent of the Association or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Association would have the power to
indemnify such person against such expense, liability or loss under the law of
the state in which the Association's ultimate parent company is incorporated;
provided however, that such insurance shall explicitly exclude insurance
coverage for a final order of a federal bank regulatory agency assessing civil
money penalties against an Association director, officer, employee or agent.
ELEVENTH. These articles of association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount. The notice of any shareholders' meeting at
which an amendment to the articles of association of this Association is to be
considered shall be given as hereinabove set forth.
I hereby certify that the articles of association of this Association, in their
entirety, are listed above in items first through eleventh.
Secretary/Assistant Secretary
- --------------------------------------------------
Dated at , as of .
--------------------------------------- --------------------
Revision of January 11, 1993
<PAGE>
EXHIBIT 2
[LOGO]
- --------------------------------------------------------------------------------
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
- --------------------------------------------------------------------------------
Washington, D.C. 20219
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
that:
(1) The Comptroller of the Currency, pursuant to Revised Statutes
324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession,
custody and control of all records pertaining to the chartering, regulation and
supervision of all National Banking Associations.
(2) "Fleet National Bank of Connecticut", Hartford, Connecticut,
(Charter No. 1338), is a National Banking Association formed under the
laws of the United States and is authorized thereunder to transact the
business of banking on the date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents at
the Treasury Department, in the City of
Washington and District of Columbia, this
28th day of December, 1995.
/s/ EUGENE A. LUDWIG
----------------------------------
Comptroller of the Currency
<PAGE>
EXHIBIT 3
[LOGO]
- --------------------------------------------------------------------------------
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
- --------------------------------------------------------------------------------
Washington, D.C. 20219
Certification of Fiduciary Powers
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
the records in this Office evidence "Fleet National Bank of Connecticut",
Hartford, Connecticut, (Charter No. 1338), was granted, under the hand
and seal of the Comptroller, the right to act in all fiduciary capacities
authorized under the provisions of The Act of Congress approved
September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a. I further certify the
authority so granted remains in full force and effect.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
Office of the Comptroller of the Currency
to be affixed to these presents at the
Treasury Department, in the City of
Washington and District of Columbia, this
28th day of December, 1995.
/s/ EUGENE A. LUDWIG
----------------------------------
Comptroller of the Currency
489
<PAGE>
EXHIBIT 4
AMENDED AND RESTATED BY-LAWS OF
FLEET NATIONAL BANK OF CONNECTICUT
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The regular annual meeting of the shareholders for
the election of Directors and the transaction of any other business that may
properly come before the meeting shall be held at the Main Office of the
Association, or such other place as the Board of Directors may designate, on
the fourth Thursday of April in each year at 1:15 o'clock in the afternoon
unless some other hour of such day is fixed by the Board of Directors.
If, from any cause, an election of Directors is not made on such day, the Board
of Directors shall order the election to be held on some subsequent day, of
of which special notice shall be given in accordance with the provisions of
law, and of these bylaws.
Section 2. Special Meetings. Special meetings of the shareholders may be called
at any time by the Board of Directors, the President, or any shareholders
owning not less than twenty-five percent (25%) of the stock of the Association.
Section 3. Notice of Meetings of Shareholders. Except as otherwise provided
by law, notice of the time and place of annual or special meetings of the share
holders shall be mailed, postage prepaid, at least ten (10) days before the
date of the meeting to each shareholder of record entitled to vote thereat at
his address as shown upon the books of the Association; but any failure to mail
such notice to any shareholder or any irregularity therein, shall not affect
the validity of such meeting or of any of the proceedings therat. Notice of a
special meeting shall also state the purpose of the meeting.
Section 4. Quorum; Adjourned Meetings. Unless otherwise provided by law, a
quorum for the transaction of business at every meeting of the shareholders
shall consist of not less than two-fifths (2/5) of the outstanding capital
stock represented in person or by proxy; less than such quorum may adjourn the
meeting to a future time. No notice need be given of an adjourned annual or
special meeting of the shareholders if the adjournment be to a definite place
and time.
Section 5. Votes and Proxies. At every meeting of the shareholders, each
share of the capital stock shall be entitled to one vote except as otherwise
provided by law. A majority of the votes cast shall decide every question
or matter submitted to the shareholder at any meeting, unless otherwise
provided by law or by the Articles of Association or these By-laws. Share-
holders may vote by proxies duly authorized in writing and filed with the
Cahsier, but no officer, clerk, teller or bookeeper of the Association may act
as a proxy.
<PAGE>
Section 6. Nominations to Board of Directors. At any meeting of shareholders
held for the election of Directors, nominations for election to the Board of
Directors may be made, subject to the provisions of this section, by any share-
holder of record of any outstanding class of stock of the Association entitled
to vote for the election of Directors. No person other than those whose names
are stated as proposed nominees in the proxy statement accompanying the notice
of the meeting may be nominated as such meeting unless a shareholder shall have
given to the President of the Association and to the Comptroller of the
Currency, Washington, DC written notice of intention to nominate such other
person mailed by certified mail or delivered not less than fourteen (14) days
nor or more than fifty (50) days prior to the meeting of shareholders at which
such nomination is to be made; provided, however, that if less than twenty-one
(21) days' notice of such meeting is given to shareholders, such notice of
intention to nominate shall be mailed by certified mail or delivered to said
President and said Comptroller on or before the seventh day following the day
on which the notice of such meeting was mailed. Such notice of intention to
nominate shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the Association that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
the number of shares of capital stock of the Association owned by the
notifying shareholder. In the event such notice is given, the proposed nominee
may be nominated either by the shareholder giving such notice or by any other
shareholder present at the meeting at which such nomination is to be made.
Such notice may contain the names or more than one proposed nominee, and if
more than one is named, any one or more of those named may be nominated.
Section 7. Action Taken Without a Shareholder Meeting. Any action requiring
shareholder approval or consent may be taken without a meeting and without
notice of such meetings by written consent of the shareholders.
ARTICLE II
DIRECTORS
Section 1. Number. The Board of Directors shall consist of such number of
shareholders, not less than five (5) nor more than twenty-five (25), as from
time to time shall be determined by a majority of the votes to which all of its
shareholders are at the time entitled, or by the Board of Directors as
hereinafter provided.
Section 2. Mandatory Retirement for Directors. No person shall be elected a
director who has attained the age of 68 and no person shall continue to serve
as a director after the date of the first meeting of the stockholders of the
Association held on or after the date on which such person attains the age of
68; provided, however, that any director serving on the Board as of December
15, 1995 who has attanined the age of 65 on or prior to such date shall be
permitted to continue to serve as a director until the date of the first
meeting of the stockholders of the Association held on or after the date on
which such person attains the age of 70.
-2-
<PAGE>
Section 3. General Powers. The Board of Directors shall exercise all the
coporate powers of the Association, except as expressly limited by law, and
shall have the control, management, direction and dispositon of all its
property and affairs.
Section 4. Annual Meeting. Immediately following a meeting of shareholders
held for the election of Directors, the Cashier shall notify the directors-
elect who may be present of their election and they shall then hold a meeting
at the Main Office of the Association, or such other place as the Board of
Directors may designate, for the purpose of taking their oaths, organizing the
new Board, electing officers and transacting any other business that may come
before such meeting.
Section 5. Regular Meeting. Regular meetings of the Board of Directors shall
be held without notice at the Main Office of the Association, or such other
place as the Board of Directors may designate, at such dates and times as the
Board shall determine. If the day designated for a regular meeting falls on a
legal holiday, the meeting shall be held on the next business day.
Section 6. Special Meetings. A special meeting of the Board of Directors may
be called at anytime upon the written request of the Chairman of the Board, the
President, or of two Directors, stating the purpose of the meeting. Notice of
the time and place shall be given not later than the day before the date of the
meeting, by mailing a notice to each Director at his last known address, by
delivering such notice to him personally, or by telephoning.
Section 7. Quorum; Votes. A majority of the Board of Directors at the time
holding office shall constitute a quorum for the transaction of all business,
except when otherwise provided by law, but less than a quorum may adjourn
a meeting from time to time and the meeting may be held, as adjourned, without
further notice. If a quorum is present when a vote is taken, the affirmative
vote of a majority of Directors present is the act of the Board of Directors.
Section 8. Action by Directors Without a Meeting. Any action requiring
Director approval or consent may be taken without a meeting and without notice
of such meeting by written consent of all the Directors.
Section 9. Telephonic Participation in Directors' Meetings. A Director or
member of a Committee of the Board of Directors may participate in a meeting of
the Board or of such Committee may participate in a meeting of the Board or of
such Committee by means of a conference telephone or similar communications
equipment enabling all Directors participating in the meeting to hear one
another, and participation in such meeting shall constitute presence in person
at such a meeting.
Section 10. Vacancies. Vacancies in the Board of Directors may be filled by
the remaining members of the Board at any regular or special meeting of the
Board.
Section 11. Interim Appointments. The Board of Directors shall, if the share-
holders at any meeting for the election of Directors have determined a number
of Directors less than twenty-five (25), have the power, by affirmative vote of
the majority of all the Directors, to increase such number of Directors to not
more than twenty-five (25) and to elect Directors to fill the resulting
vacancies and to serve until the next annual meeting of shareholders or the
next election of Directors; provided, however, that the number of Directors
shall not be so increased by more than two (2) if the number last determined
by shareholders was fifteen (15) or less, or increased by more than four (4) if
the number last determined by shareholders was sixteen (16) or more.
Section 12. Fees. The Board of Directors shall fix the amount and direct the
payment of fees which shall be paid to each Director for attendance at any
meeting of the Board of Directors or of any Committees of the Board.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. Executive Committee. The board of directors shall appoint from its
members an Executive Committee which shall consist of such number of persons as
the Board of Directors shall determine; the Chairman of the Board and the
President shall be members ex-officio of the Executive Committee with full
voting power. The Chairman of the Board or the President may from time to time
appoint from the Board of Directors as temporary additional members of the
Executive Committee with full voting powers not more than two members to serve
for such periods as the Chairman of the Board or the President may determine.
The Board of Directors shall designate a member of the Executive Committee to
serve as Chairman thereof. A meeting of the Executive Committee may be called
at any time upon the written request of the Chairman of the Board, the President
or the Chairman of the Executive Committee, stating the purpose of the meeting.
Not less than twenty four hours' notice of said meeting shall be given to each
member the Committee personally, by telephoning, or by mail. The Chairman of
the Executive Committee of or, in his absence, a member of the Committee
chosen by a majority of the members present shall preside at meetings of the
Executive Committee.
-3-
<PAGE>
The Executive Committee shall possess and may exercise all the powers of the
Board when the Board is not in session except such as the Board, only, by law,
is authorized to exercise; it shall keep minutes of its acts and proceedings
and cause same to be presented and reported at every regular meeting and at any
special meeting of the Board including specifically, all its actions relating
to loans and discounts. All acts done and powers and authority conferred by
the Executive Committee, from time to time, within the scope of its authority,
shall be deemed to be, and may be certified as being, the acts of and under the
authority of the Board.
Section 2. Risk Management Committee. The Board shall appoint from its
members a Risk Management Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Risk
Management Committee to serve as Chairman thereof. It shall be the duty of the
Risk Management Committee to (a) serve as the channel of communication with
management and the Board of Directors of Fleet Financial Group, Inc. to assure
that formal processes supported by management information systems are in place
for the identification, evaluation and management of significant risks inherent
in or associated with lending activities, the loan portfolio, asset-liablity
management, the investment portfolio, trust and investment advisory activities,
the sale of nondeposit investment products and new products and services and
such additional activities or functions as the Board may determine from time
to time; (b) assure the formulation and adoption of policies approved by the
Risk Management Committee or Board governing lending activities, management of
the loan portfolio, the maintenance of an adequate allowance for loan and lease
losses, asset-liability management, the investment portfolio, the retail
sale of non-deposit investment products, new products and services and such
additional activities or functions as the Board may determine from time to time
(c) assure that a comprehensive independent loan review program is in place for
the early detection of problem loans and review significant reports of the loan
review department, management's responses to those reports and the risk
attributed to unresolved issues; (d) subject to control of the Board, exercise
general supervision over trust activities, the investment of trust funds, the
disposition of trust investments and the acceptance of new trusts and the terms
of such acceptance, and (e) perform such additional duties and exercise such
additional powers of the Board may determine from time to time.
Section 3. Audit Committee. The Board shall appoint from its memebers and
Audit Committee which shall consist of such number as the Board shall determine
no one of whom shall be an active officer or employee of the Association or
Fleet Financial Group, Inc. or any of its affiliates. In addition, members of
the Audit Committee must not (i) have served as an officer or employee of the
Association or any of its affiliates at any time during the year prior to their
appointment; or (ii) own, control, or have owned or controlled at any time
during the year prior to appointment, ten percent (10%) or more of any
outstanding class of voting securities of the Association. At least two (2)
members of the Audit Committee must have significant executive, professional,
educational or regulatory experience in financial, auditing, accounting,
or banking matters. No member of the Audit Commitee may have significant
direct or indirect credit or other relationships with the Association, the
termination of which would materially adversely affect the Association's
financial condition or results of operations.
The Board shall designate a member of the Audit Committee to serve as Chairman
thereof. It shall be the duty of the Audit Committee to (a) cause a continuous
audit and examination to be made on its behalf into the affairs of the
Association and to review the results of such examination; (b) review
significant reports of the internal auditing department, management's responses
to those reports and the risk attributed to unresolved issues; (c) review the
basis for the reports issued under Section 112 of The Federal Deposit Insurance
Corporation Improvement Act of 1991; (d) consider, in consultation with the
independent auditor and an internal auditing executive, the adequacy of the
Association's internal controls,including the resolution of identified material
weakness and reportable conditions; (e) review regulatory communications
received from any federal or state agency with supervisory jurisdiction or
other examining authority and monitor any needed corrective action by
management; (f) ensure that a formal system of internal controls is in place
for maintaining compliance with laws and regulations; (g) cause an audit of the
Trust Department at least once during each calendar year and within 15 months
of the last such audit or, in liew thereof, adopt a continuous audit system and
report to the Board each calendar year and within 15 months of the previous
report on the performance of such audit function; and (h) perform such
additional duties and exercise such additional powers of the Board as the Board
may determine from time to time.
The Audit Committee may consult with internal counsel and retain its own
outside counsel without approval (prior or otherwise) from the Board or
management and obligate the Association to pay the fees of such counsel.
-4-
<PAGE>
Section 4. Community Affairs Committee. The Board shall appoint from its
members a Community Affairs Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Community
Affairs Committee to serve as Chairman thereof. It shall be the duty of the
Commmunity Affairs Committee to (a) oversee compliance by the Association with
the Community Reinvestment Act of 1977, as amended, and the regulations
promulgated thereunder; and (b) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.
Section 5. Regular Meetings. Except for the Executive Committee which shall
meet on an ad hoc basis as set forth in Section 1 of this Article, regular
meetings of the Committees of the Board of Directors shall be held, without
notice, at such time and place as the Committee or the Board of Directors may
appoint and as often as the business of the Association may require.
Section 6. Special Meetings. A Special Meeting of any of the Committees of
the Board of Directors may be called upon the written request of the Chairman
of the Board or the President, or of any two members of the respective
Committee, stating the purpose of the meeting. Not less than twenty-four
hours' notice of such special meeting shall be given to each member of the
Committee personally, by telephoning, or by mail.
Section 7. Emergency Meetings. An Emergency Meeting of any of the Committees
of the Board of Directors may be called at the request of the Chairman of the
Board or the President, who shall state that an emergency exists, upon not
less than one hour's notice to each member of the Committee personally or by
telephoning.
Section 8. Action Taken Without a Committee Meeting. Any Committee of the
Board of Directors may take action without a meeting and without notice of such
meeting by resolution assented to in writing by all members of such Committee.
Section 9. Quorum. A majority of a Committee fo the Board of Directors shall
constitute a quorum for the transaction of any business at any meeting of such
Committee. If a quorum is not available, the Chairman of the Board or the
President shall have power to make temporary appointments to a Committee of-
members of the Board of Directors, to act in the place instead of members who
temporarily cannot attend any such meeting; provided, however, that any
temporary appointment to the Audit Committee must meet the requirements for
members of that Committee set forth in Section 3 of this Article.
Section 10. Record. The committes of the Board of Directors hall keeep a
record of their respective meetings and proceedings which shall be presented
at the regular meeting of the Board of Directors held in the calendar month
next following the meetings of the Committees. If there is no regular Board
of Directors meeting held in the calendar month next following the meeting of
a Committee, then such Committee's records shall be presented at the next
regular Board of Directors meeting held in a month subsequent to such Committee
meeting.
Section 11. Changes and Vacancies. The Board of Directors shall have power
to change the members of any Committee at any time and to fill vacancies on any
Committee; provided, however, that any newly appointed member of the Audit
Committee must meet the requirements for members of that Committee set forth in
Section 3 of this Article.
Section 12. Other Committees. The Board of Directors may appoint, from time
to time, other committees of one or more persons, for such purposes and with
such powers as the Board may determine.
ARTICLE IV
WAIVER OF NOTICE OF MEETINGS
Section 1. Waiver. Whenever notice is required to be given to any shareholder
Director, or member of a Committee of the Board of Directors, such notice may
be waived in writing either before or after such meeting by any shareholder,
Director or Committee member respectively, as the case may be, who may be
entitled to such notice; and such notice will be deemed to be waived by
attendance at any such meeting.
-5-
<PAGE>
ARTICLE V
OFFICERS AND AGENTS
Section 1. Officers. The Board shall appoint a Chairman of the Board and a
President, and shall have the power to appoint one or more Executive Vice
Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a
Cashier, a Secretary, and Auditor, a Controller, one or more Trust Officers and
such other officers as are deemed necessary or desirable for the proper
transaction of business of the Association. The Chairman of the Board and the
President shall be appointed from members of the Board of Directors. Any two
or more offices, except those of President and Cashier, or Secretary, may be
held by the same person. The Board may, from time to time, by resolution
passed by a majority of the entire Board, designate one or more officers of the
Association or of an affiliate or of Fleet Financial Group, Inc. with power to
appoint one or more Vice Presidents and such other officers of the Association
below the level of Vice President as the officer or officers designated in such
resolution deem necessary or desirable for the proper transaction of the
business of the Association.
Section 2. Chairman of the Board. The chairman of the Board shall preside at
all meetings of the Board of Directors. Subject to definition by the Board of
Directors, he shall have general executive powers and such specific powers and
duties as from time to time may be conferred upon or assigned to him by the
Board of Directors.
Section 3. President. The president shall preside at all meetings of the
Board of Directors if there be no Chairman or if the Chairman be absent.
Subject to definition by the Board of Directors, he shall have general
executive powers and such specific powers and duties as from time to time may
be conferred upon or assigned to him by the Board of Directors.
-6-
<PAGE>
Section 4. Cashier and Secretary. The Cashier shall be the Secretary of the
Board and of the Executive Committee, and shall keep accurate minutes of their
meetings and of all meetings of the shareholders. He shall attend to the
giving of all notices required by these By-laws. He shall be custodian of the
corporate seal, records, documents and papers of the Association. He shall
have such powers and perform such duties as pertain by law or regulation to the
office of Cashier, or as are imposed by these By-laws, or as may be delegated
to him from time to time by the Board of Directors, the Chairman of the Board
or the President.
Section 5. Auditor. The Auditor shall be the chief auditing officer of the
Association. He shall continuously examine the affairs of the Association and
from time to time shall report to the Board of Directors. He shall have such
powers and perform such duties as are conferred upon, or assigned to him by
these By-laws, or as may be delegated to him from time to time by the Board
of Directors.
Section 6. Officers Seriatim. The Board of Directors shall designate from
time to time not less than two officers who shall in the absence or disability
of the Chairman or President or both, succeed seriatim to the duties and
responsibilities of the Chairman and President respectively.
Section 7. Clerks and Agents. The Board of Directors may appoint, from time
to time, such clerks, agents and employees as it may deem advisable for the
prompt and orderly transaction of the business of the Association, define
their duties, fix the salaries to be paid them and dismiss them. Subject to
the authority of the Board of Directors, the Chairman of the Board or the
President, or any other officer of the Association authorized by either of them
may appoint and dismiss all or any clerks, agents and employees and prescribe
their duties and the conditions of their employment, and from time to time
fix their compensation.
Section 8. Tenure. The Chairman of the Board of Directors and the President
shall, except in the case of death, resignation, retirement or disqualification
under these By-laws, or unless removed by the affirmative vote of at least two-
thirds of all of the members of the Board of Directors, hold office for the
term of one year or until their respective successors are appointed. Either
of such officers appointed to fill a vacancy occurring in an unexpired term
shall serve for such unexpired term of such vacancy. All other officers,
clerks, agents, attorneys-in-fact and employees of the Association shall hold
office during the pleasure of the Board of Directors or of the officer or
committee appointing them respectively.
ARTICLE VI
TRUST DEPARTMENT
Section 1. General Powers and Duties. All fiduciary powers of the Association
shall be exercised through the Trust Department, subject to such regulations as
the Comptroller of the Currency shall from time to time establish. The Trust
Department shall be to placed under the management and immediate supervision
of an officer or officers appointed by the Board of Directors. The duties of
all officers of the Trust Department shall be to cause the policies and
instructions of the Board and the Risk Management Committee with respect to the
trusts under their supervision to be carried out, and to supervise the due
performance of the trusts and agencies entrusted to the Association and under
their supervision, in accordance with law and in accordance with the terms of
such trusts and agencies.
-7-
<PAGE>
ARTICLE VII
BRANCH OFFICES
Section 1. Establishment. The Board of Directors shall have full power to
establish, to discontinue, or, from time to time, to change the location of any
branch office, subject to such limitations as may be provided by law.
Section 2. Supervision and Control. Subject to the general supervision and
control of the Board of Directors, the affairs of branch offices shall be
under the immediate supervision and control of the President or of such other
officer or officers, employee or employees, or other individuals as the Board
of Directors may from time to time determine, with such powers and duties as
the Board of Directors may confer upon or assign to him or them.
ARTICLE VIII
SIGNATURE POWERS
Section 1. Authorization. The power of officers, empolyees, agents and
attorneys to sign on behalf of and to affix the seal of the Association shall
be prescribed by the Board of Directors or by the Executive Committee or by
both; provided that the President is authorized to restrict such power of any
officer, employee, agent or attorney to the business of a specific department
or departments, or to a specific branch office or branch offices. Facsimile
signatures may be authorized.
-8-
<PAGE>
ARTICLE IX
STOCK CERTIFICATES AND TRANSFERS
Section 1. Stock Records. The Trust Department shall have custody of the
stock certificate books and stock ledgers of the Association, and shall make
all transfers of stock, issue certificates thereof and disburse dividends
declared thereon.
Section 2. Form of Certificate. Every shareholder shall be entitled to a
certificate conforming to the requirements of law and otherwise in such form
as the Board of Directors may approve. The certificates shall state on the
face thereof that the stock is transferable only on the books of the
Association and shall be signed by such officers as may be prescribed from time
to tiem by the Board of Directors or Executive Committee. Facsimile signatures
may be authorized.
Section 3. Transfers of Stock. Transfers of stock shall be made only on the
books of the Association by the holder in person, or by attorney duly
authorized in writing, upon surrender of the certificate therefor properly
endorsed, or upon the surrender of such certificate accompanied by a properly
executed written assignment of the same, or a written power of attorney to
sell, assign or transfer the same or the shares represented thereby.
Section 4. Lost Certificate. The Board of Directors or Executive Committee
may order a new certificate to be issued in place of a certificate lost or
destroyed, upon proof of such loss or destruction and upon tender to the
Association by the shareholder, of a bond in such amount and with or without
surety, as may be ordered, indemnifying the Association against all liability,
loss, cost and damage by reason of such loss or destruction and the issuance
of a new certificate.
Section 5. Closing Transfer Books. The Board of Directors may close the
transfer books for a period not exceeding thirty days preceding any regular
or special meeting of the shareholders, or the day designated for the payment
of a dividend or the allotment of rights. In lieu of closing the transfer
books the Board of Directors may fix a day and hour not more than thirty days
prior to the day of holding any meeting of the shareholders, or the day
designated for the payment of a dividend, or the day designated for the
allotment of rights, or the day when any change of conversion or exchange of
capital stock is to go into effect, as the day as of which shareholders
entitled to notice of and to vote at such meetings or entitled to such dividend
or to such allotment of rights or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, shall be determined, and
only such shareholders as shall be shareholders of record on the day and hour
so fixed shall be entitled to notice of and to vote at such meeting or to
receive payment of such dividend or to receive such allotment of rights or to
exercise such rights, as the case may be.
ARTICLE X
THE CORPORATE SEAL
Section 1. Seal. The following is an impression of the seal of the
Association adopted by the Board of Directors.
ARTICLE XI
BUSINESS HcOURS
Section 1. Business Hours. The main office of this Association and each
branch office thereof shall be open for business each day, except Saturdays,
Sundays and days recognized by the laws of the State of Rhode Island as legal
holidays, for such hours as the President, or such other officer as the Board
of Directors shall from time to time designate, may determine as to each
office to conform to local custom and convenience, provided that any one or
more of the main and branch offices or certain departments thereof may be open
for such hours as the President, or such other officer as the Board of
Directors shall from time to time designate, may determine as to each office or
department on any legal holiday on which work is not prohibited by law, and
provided further that any one or more of the main and branch offices or certain
departments thereof may be ordered closed or open on any day for such hours as
to each office or department as the President, or such other officer as the
Board of Directors shall from time to time designate, subject to applicable
laws and regulations, may determine when such action may be required by reason
of disaster or other emergency condition.
ARTICLE IX
CHANGES IN BY-LAWS
Section 1. Amendments. These By-laws may be amended upon vote of a majority
of the entire Board of Directors at any meeting of the Board, provided ten (10)
day's notice of the proposed amendment has been given to each member of the
Board of Directors. No amendment may be made unless the By-law, as amended, is
consistent with the requirements of law and of the Articles of Association.
These By-laws may also be amended by the Association's shareholders.
A true copy
Attest:
Secretary/Assistant Secretary
- ---------------------------------------
Dated at , as of .
--------------------------------------- ----------------------
Revision of January 11, 1993
-9-
<PAGE>
EXHIBIT 5
CONSENT OF THE TRUSTEE
REQUIRED BY SECTION 321(b)
OF THE TRUST INDENTURE ACT OF 1939
The undersigned, as Trustee under the Indenture to be entered into between
Loewen Group International, Inc. and Fleet National Bank of Connecticut, as
Trustee, does hereby consent that, pursuant to Section 321(b) of the Trust
Indenture Act of 1939, reports of examinations with respect to the undersigned
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
FLEET NATIONAL BANK OF CONNECTICUT,
as Trustee
By /s/ Michael M. Hopkins
-------------------------------
Its: Vice President
Dated: March 8, 1996
<PAGE>
EXHIBIT 6
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
Please refer to page i, / 1 /
[LOGO] Table of Contents, for
the required disclosure
of estimated burden.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(951231)
REPORT AT THE CLOSE OF BUSINESS DECEMBER 31, 1995 -----------
(RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State member banks);
12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).
This report form is to be filed by banks with branches and consolidation
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
-----------------------------------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and
Income (including the supporting schedules) have been prepared in conformance
with the instructions issued by the appropriate Federal regulatory authority
and are true to the best of my knowledge and belief.
/s/ GIRO DEROSA
- --------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report
January 25, 1996
- --------------------------------------------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in
some cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) 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 appropriate Federal
regulatory authority and is true and correct.
/s/ GUNNAR S. OVERSTROM
- --------------------------------------------------------------------------------
Director (Trustee)
/s/ JOEL B. ALVORD
- --------------------------------------------------------------------------------
Director (Trustee)
/s/ DAVID L. EYLES
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
<PAGE>
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal
Feserve District Bank.
STATE NONMEMBER BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Crofton, MD 21114.
NATIONAL BANKS: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Crofton, MD 21114.
<TABLE>
<CAPTION>
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<S> <C>
___
FDIC Certificate Number | 1 | 0 | 5 | 8 | 2 | |
______________________ CALL NO. 190 31 12-31-95
(RCRI 9050)
CERT: 02499 10582 STBK 09-0590
FLEET NATIONAL BANK OF CONNECTICUT
777 MAIN STREET
HARTFORD, CT 06115
| |
___ ___
<FN>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency
</TABLE>
<PAGE>
FFIEC 031
Page i
/2/
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices
________________________________________________________________________________
TABLE OF CONTENTS
SIGNATURE PAGE Cover
REPORT OF INCOME
Schedule RI--Income Statement...........................................RI-1,2,3
Schedule RI-A--Changes in Equity Capital....................................RI-3
Schedule RI-B--Charge-offs and Recoveries and
Changes in Allowance for Loan and Lease
Losses..................................................................RI-4,5
Schedule RI-C--Applicable Income Taxes by
Taxing Authority..........................................................RI-5
Schedule RI-D--Income from
International Operations..................................................RI-6
Schedule RI-E--Explanations...............................................RI-7,8
REPORT OF CONDITION
Schedule RC--Balance Sheet................................................RC-1,2
Schedule RC-A--Cash and Balances Due
From Depository Institutions..............................................RC-3
Schedule RC-B--Securities.................................................RC-4,5
Schedule RC-C--Loans and Lease Fianancing
Receivables:
Part I. Loans and Leases..............................................RC-6,7
Part II. Loans to Small Businesses and
Small Farms (included in the forms for
June 30 only).....................................................RC-7a,7b
Schedule RC-D--Trading Assets and Liabilities
(to be completed only by selected banks)..................................RC-8
Schedule RC-E--Deposit Liabilities.......................................RC-9,10
Schedule RC-F--Only Assets.................................................RC-11
Schedule RC-G--Other Liabilities...........................................RC-11
Schedule RC-H--Selected Balance Sheet Items for
Domestic Offices.........................................................RC-12
Schedule RC-I--Selected Assets and Liabilities
of IBF's.................................................................RC-13
Schedule RC-K--Quarterly Averages..........................................RC-13
Schedule RC-L--Off-Balance Sheet Items..................................RC-14,15
Schedule RC-M--Memoranda................................................RC-16,17
Schedule RC-N--Past Due and Nonaccrual Loans,
Leases, and Other Assets..............................................RC-18,19
Schedule RC-O--Other Data for Deposit
Insurance Assessments.................................................RC-20,21
Schedule RC-R--Risk-Based Captial.......................................RC-22,23
Optional Narrative Statement Concerning the
Amounts Reported in the Reports of
Conditions and Income....................................................RC-24
Special Report (TO BE COMPLETED BY ALL BANKS)
Schedule RC-J--Repricing Opportunities (sent only to
and to be completed only by savings banks)
<PAGE>
DISCLOSURE OF ESTIMATED BURDEN
The estimated average burden associated with this information collection is
30.7 hours per respondent and is estimated to vary from 15 to 200 hours per
response, depending on individual circumstances. Burden estimates include the
time for reviewing instructions, gathering and maintaining data in the required
form, and completing the information collection, but exclude the time for
compiling and maintaining business records in the normal course of a
respondent's activities. Comments concerning the accuracy of this burden
estimate and suggestions for reducing this burden should be directed to the
Office of Information and Regulatory Affairs. Office of Management and Budget,
Washington, D.C. 20503, and to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
For information or assistance, national and state nonmember banks should
contact the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington,
D.C. 20429, toll free on (800)688-FDIC (3342), Monday through Friday between
8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-1
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT
Address: 777 MAIN STREET
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
Consolidated Report of Income
for the period January 1, 1995 - December 31, 1995
All Report of Income schedules are to be reported on a calendar year-to-date basis in thousands of dollars.
file
Schedule RI--Income Statement ________
| 1480 |
|________|
_______________________________________________________________________________________________ ___________|________|
<S> <C> <C>
1. Interest income: | ////////////////// |
a. Interest and fee income on loans: | ////////////////// |
(1) In domestic offices: | ////////////////// |
(a) Loans secured by real estate ................................................... | 4011 382,429 | 1.a.(1)(a)
(b) Loans to depository institutions ............................................... | 4019 732 | 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers ............ | 4024 309 | 1.a.(1)(c)
(d) Commercial and industrial loans ................................................ | 4012 466,509 | 1.a.(1)(d)
(e) Acceptances of other banks ..................................................... | 4026 70 | 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expenditures: | ////////////////// |
(1) Credit cards and related plans ............................................. | 4054 813 | 1.a.(1)(f)(1)
(2) Other ...................................................................... | 4055 52,452 | 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions ......................... | 4056 0 | 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political | ////////////////// |
subdivisions in the U.S.: | ////////////////// |
(1) Taxable obligations ........................................................ | 4503 240 | 1.a.(1)(h)(1)
(2) Tax-exempt obligations ..................................................... | 4504 2,486 | 1.a.(1)(h)(2)
(i) All other loans in domestic offices ............................................ | 4058 59,226 | 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ...................... | 4059 0 | 1.a.(2)
b. Income from lease financing receivables: | ////////////////// |
(1) Taxable leases ..................................................................... | 4505 1,015 | 1.b.(1)
(2) Tax-exempt leases .................................................................. | 4307 0 | 1.b.(2)
c. Interest income on balances due from depository institutions:(1) | ////////////////// |
(1) In domestic offices ................................................................ | 4105 7 | 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ...................... | 4106 4,751 | 1.c.(2)
d. Interest and dividend income on securities: | ////////////////// |
(1) U.S. Treasury securities and U.S. Government agency and corporation obligations .... | 4027 187,576 | 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: | ////////////////// |
(a) Taxable securities ............................................................. | 4506 0 | 1.d.(2)(a)
(b) Tax-exempt securities .......................................................... | 4507 3 | 1.d.(2)(b)
(3) Other domestic debt securities ..................................................... | 3657 78,170 | 1.d.(3)
(4) Foreign debt securities ............................................................ | 3658 223 | 1.d.(4)
(5) Equity securities (including investments in mutual funds) .......................... | 3659 6,646 | 1.d.(5)
e. Interest income from assets held in trading accounts ................................... | 4069 0 | 1.e.
______________________
<FN>
____________
(1) Includes interest income on time certificates of deposit not held for trading.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-2
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI--Continued
________________
Dollar Amounts in Thousands | Year-to-date |
___________________________________________________________________________________ ______________
<S> <C> <C>
1. Interest income (continued) | RIAD Bil Mil Thou |
f. Interest income on federal funds sold and securities purchased | ////////////////// |
under agreements to resell in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs .................... | 4020 11,399 | 1.f.
g. Total interest income (sum of items 1.a through 1.f) ................ | 4107 1,255,056 | 1.g.
2. Interest expense: | ////////////////// |
a. Interest on deposits: | ////////////////// |
(1) Interest on deposits in domestic offices: | ////////////////// |
(a) Transaction accounts (NOW accounts, ATS accounts, and | ////////////////// |
telephone and preauthorized transfer accounts) .............. | 4508 8,111 | 2.a.(1)(a)
(b) Nontransaction accounts: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................... | 4509 25,029 | 2.a.(1)(b)(1)
(2) Other savings deposits .................................. | 4511 49,772 | 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more ........ | 4174 102,210 | 2.a.(1)(b)(3)
(4) All other time deposits ................................. | 4512 120,235 | 2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement | ////////////////// |
subsidiaries, and IBFs .......................................... | 4172 38,926 | 2.a.(2)
b. Expense of federal funds purchased and securities sold under | ////////////////// |
agreements to repurchase in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs .................... | 4180 213,972 | 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading | ////////////////// |
liabilities, and other money borrowed ............................... | 4185 134,947 | 2.c.
d. Interest on mortgage indebtedness and obligations under | ////////////////// |
capitalized leases .................................................. | 4072 833 | 2.d.
e. Interest on subordinated notes and debentures ....................... | 4200 19,159 | 2.e.
f. Total interest expense (sum of items 2.a through 2.e) ............... | 4073 713,194 | 2.f.
___________________________
3. Net interest income (item 1.g minus 2.f) ............................... | ////////////////// | RIAD 4074 | 541,862 | 3.
___________________________
4. Provisions: | ////////////////// |
___________________________
a. Provision for loan and lease losses ................................. | ////////////////// | RIAD 4230 | 5,258 | 4.a.
b. Provision for allocated transfer risk ............................... | ////////////////// | RIAD 4243 | 0 | 4.b.
___________________________
5. Noninterest income: | ////////////////// |
a. Income from fiduciary activities .................................... | 4070 84,978 | 5.a.
b. Service charges on deposit accounts in domestic offices ............. | 4080 65,848 | 5.b.
c. Trading gains (losses) and fees from foreign exchange transactions .. | 4075 1,436 | 5.c.
d. Other foreign transaction gains (losses) ............................ | 4076 0 | 5.d.
e. Other gains (losses) and fees from trading assets and liabilities ... | 4077 1,422 | 5.e.
f. Other noninterest income: | ////////////////// |
(1) Other fee income ................................................ | 5407 59,418 | 5.f.(1)
(2) All other noninterest income* ................................... | 5408 54,976 | 5.f.(2)
___________________________
g. Total noninterest income (sum of items 5.a through 5.f) ............. | ////////////////// | RIAD 4079 | 268,078 | 5.g.
6. a. Realized gains (losses) on held-to-maturity securities .............. | ////////////////// | RIAD 3521 | (6) | 6.a.
b. Realized gains (losses) on available-for-sale securities ............ | ////////////////// | RIAD 3196 | 300 | 6.b.
| ////////////////// |___________________________
7. Noninterest expense: | ////////////////// |
a. Salaries and employee benefits ...................................... | 4135 277,219 | 7.a.
b. Expenses of premises and fixed assets (net of rental income) | ////////////////// |
(excluding salaries and employee benefits and mortgage interest) .... | 4217 88,758 | 7.b.
c. Other noninterest expense* .......................................... | 4092 390,919 | 7.c.
___________________________
d. Total noninterest expense (sum of items 7.a through 7.c) ............ | ////////////////// | RIAD 4093 | 756,896 | 7.d.
___________________________
8. Income (loss) before income taxes and extraordinary items and other | ////////////////// |
___________________________
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d)| ////////////////// | RIAD 4301 | 48,080 | 8.
9. Applicable income taxes (on item 8) .................................... | ////////////////// | RIAD 4302 | 20,832 | 9.
___________________________
10. Income (loss) before extraordinary items and other adjustments | ////////////////// |
___________________________
(item 8 minus 9) ....................................................... | ////////////////// | RIAD 4300 | 27,248 | 10.
_________________________________________________
<FN>
____________
*Describe on Schedule RI-E--Explanations.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-3
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI--Continued
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________ ______________
<S> <C> <C>
11. Extraordinary items and other adjustments: | ////////////////// |
a. Extraordinary items and other adjustments, gross of income taxes* . | 4310 0 | 11.a.
b. Applicable income taxes (on item 11.a)* ........................... | 4315 0 | 11.b.
c. Extraordinary items and other adjustments, net of income taxes | ////////////////// |
___________________________
(item 11.a minus 11.b) ............................................ | ////////////////// | RIAD 4320 | 0 | 11.c.
12. Net income (loss) (sum of items 10 and 11.c) ......................... | ////////////////// | RIAD 4340 | 27,248 | 12.
_________________________________________________
</TABLE>
<TABLE>
<CAPTION> __________
______|__I481__|
Memoranda | Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after | ////////////////// |
August 7, 1986, that is not deductible for federal income tax purposes .......................... | 4513 0 | M.1.
2. Income from the sale and servicing of mutual funds and annuities in domestic offices | ////////////////// |
(included in Schedule RI, item 8) ............................................................... | 8431 0 | M.2.
3. Estimated foreign tax credit included in applicable income taxes, items 9 and 11.b above ........ | 4309 0 | M.3.
4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Taxable equivalent adjustment to "Income (loss) before income taxes and extraordinary | ////////////////// |
items and other adjustments" (item 8 above) ..................................................... | 1244 1,837 | M.4.
5. Number of full-time equivalent employees on payroll at end of current period (round to | //// Number |
nearest whole number) ........................................................................... | 4150 5,002 | M.5.
6. Not applicable | ////////////////// |
7. If the reporting bank has restated its balance sheet as a result of applying push down | //// MM DD YY |
accounting this calendar year, report the date of the bank's acquisition ........................ | 9106 00/00/00 | M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) | ////////////////// |
(included in schedule RI, items 5.c and 5.e): | //// Bil Mil Thou |
a. Interest rate esposures ...................................................................... | 8757 1,442 | M.8.a.
b. Foreign exchange exposures ................................................................... | 8758 1,416 | M.8.b.
c. Equity security and index exposures .......................................................... | 8759 0 | M.8.c.
d. Commodity and other exposures ................................................................ | 8760 0 | M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes other than trading: | ////////////////// |
a. Net increase (decrease) to interest income.....................................................| 8761 (13,220)| M.9.a.
b. Net (increase) decrease to interest expense ...................................................| 8762 (6,842)| M.9.b.
c. Other (noninterest) allocations ...............................................................| 8763 0 | M.9.c.
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-4
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-A--Changes in Equity Capital
Indicate decreases and losses in parentheses. _________
| I483 |
_____________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________|____________________|
<S> <C> <C>
1. Total equity capital originally reported in the December 31, 1994, Reports of Condition | ////////////////// |
and Income ...................................................................................... | 3215 1,236,358 | 1.
2. Equity capital adjustments from amended Reports of Income, net* ................................. | 3216 0 | 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) ............................ | 3217 1,236,358 | 3.
4. Net income (loss) (must equal Schedule RI, item 12) ............................................. | 4340 27,248 | 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net .............................. | 4346 125,000 | 5.
6. Changes incident to business combinations, net .................................................. | 4356 0 | 6.
7. LESS: Cash dividends declared on preferred stock ................................................ | 4470 11,330 | 7.
8. LESS: Cash dividends declared on common stock ................................................... | 4460 97,000 | 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions | ////////////////// |
for this schedule) .............................................................................. | 4411 0 | 9.
10. Corrections of material accounting errors from prior years* (see instructions for this schedule) | 4412 0 | 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities ................ | 8433 32,197 | 11.
12. Foreign currency translation adjustments ........................................................ | 4414 0 | 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ........ | 4415 30,000 | 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule RC, | ////////////////// |
item 28) ........................................................................................ | 3210 1,342,473 | 14.
______________________
<FN>
____________
*Describe on Schedule RI-E--Explanations.
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance for Loan and Lease Losses
Part I. Charge-offs and Recoveries on Loans and Leases
Part I excludes charge-offs and recoveries through
the allocated transfer risk reserve.
__________
| I486 | -
_________________________________ ________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| Calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Loans secured by real estate: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ......................................... | 4651 73,797 | 4661 17,780 | 1.a.
b. To non-U.S. addressees (domicile) ..................................... | 4652 0 | 4662 0 | 1.b.
2. Loans to depository institutions and acceptances of other banks: | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository institutions .................. | 4653 0 | 4663 0 | 2.a.
b. To foreign banks ...................................................... | 4654 0 | 4664 0 | 2.b.
3. Loans to finance agricultural production and other loans to farmers ...... | 4655 73 | 4665 97 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ......................................... | 4645 11,164 | 4617 5,987 | 4.a.
b. To non-U.S. addressees (domicile) ..................................... | 4646 0 | 4618 0 | 4.b.
5. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures: | ////////////////// | ////////////////// |
a. Credit cards and related plans ........................................ | 4656 1,137 | 4666 412 | 5.a.
b. Other (includes single payment, installment, and all student loans) ... | 4657 3,932 | 4667 2,290 | 5.b.
6. Loans to foreign governments and official institutions ................... | 4643 0 | 4627 0 | 6.
7. All other loans .......................................................... | 4644 1,131 | 4628 269 | 7.
8. Lease financing receivables: | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ......................................... | 4658 0 | 4668 0 | 8.a.
b. Of non-U.S. addressees (domicile) ..................................... | 4659 0 | 4669 0 | 8.b.
9. Total (sum of items 1 through 8) ......................................... | 4635 91,234 | 4605 26,835 | 9.
___________________________________________
</TABLE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-5
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-B--Continued
Part I. Continued
Memoranda
_________________________________ ________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| Calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1-3. Not applicable | ////////////////// | ////////////////// |
4. Loans to finance commercial real estate, construction, and land | ////////////////// | ////////////////// |
development activities (not secured by real estate) included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, items 4 and 7, above .............................. | 5409 1,891 | 5410 1,411 | M.4.
5. Loans secured by real estate in domestic offices (included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, item1, above): | ////////////////// | ////////////////// |
a. Construction and land development ..................................... | 3582 6,020 | 3583 2,428 | M.5.a.
b. Secured by farmLand ................................................... | 3584 104 | 3585 5 | M.5.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit ..................... | 5411 1,696 | 5412 65 | M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties ...... | 5413 19,988 | 5414 4,864 | M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties ............. | 3588 5,613 | 3589 1,633 | M.5.d.
e. Secured by nonfarm nonresidential properties .......................... | 3590 40,376 | 3591 8,785 | M.5.e.
|_________________________________________|
Part II. Changes in Allowance for Loan and Lease Losses
_____________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
1. Balance originally reported in the December 31, 1994, Reports of Condition and Income ......... | 3124 283,800 | 1.
2. Recoveries (must equal part I, item 9, column B above) ........................................ | 4605 26,835 | 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above) ................................. | 4635 91,234 | 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a)......................... | 4230 5,258 | 4.
5. Adjustments* (see instructions for this schedule) ................................ ............ | 4815 42,284 | 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, | ////////////////// |
item 4.b) ..................................................................................... | 3123 266,943 | 6.
|____________________|
____________
*Describe on Schedule RI-E--Explanations.
Schedule RI-C--Applicable Income Taxes by Taxing Authority
Schedule RI-C is to be reported with the December Report of Income.
| I489 | -
____________ ________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Federal ....................................................................................... | 4780 17,383 | 1.
2. State and local................................................................................ | 4790 3,449 | 2.
3. Foreign ....................................................................................... | 4795 0 | 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) ............ | 4770 20,832 | 4.
____________________________| |
5. Deferred portion of item 4 ........................................ | RIAD 4772 | (69,592)| ////////////////// | 5.
__________________________________________________
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-6
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-D--Income from International Operations
For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs where international operations
account for more than 10 percent of total revenues, total assets, or net income.
Part I. Estimated Income from International Operations
__________
| 1492 | -
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, | ////////////////// |
and IBFs: | ////////////////// |
a. Interest income booked ................................................................... | 4837 N/A | 1.a.
b. Interest expense booked .................................................................. | 4838 N/A | 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and IBFs | ////////////////// |
(item 1.a minus 1.b) ..................................................................... | 4839 N/A | 1.c.
2. Adjustments for booking location of international operations: | ////////////////// |
a. Net interest income attributable to international operations booked at domestic offices .. | 4840 N/A | 2.a.
b. Net interest income attributable to domestic business booked at foreign offices .......... | 4841 N/A | 2.b.
c. Net booking location adjustment (item 2.a minus 2.b) ..................................... | 4842 N/A | 2.c.
3. Noninterest income and expense attributable to international operations: | ////////////////// |
a. Noninterest income attributable to international operations .............................. | 4097 N/A | 3.a.
b. Provision for loan and lease losses attributable to international operations ............. | 4235 N/A | 3.b.
c. Other noninterest expense attributable to international operations ....................... | 4239 N/A | 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a | ////////////////// |
minus 3.b and 3.c) ....................................................................... | 4843 N/A | 3.d.
4. Estimated pretax income attributable to international operations before capital allocation | ////////////////// |
adjustment (sum of items 1.c, 2.c, and 3.d) ................................................. | 4844 N/A | 4.
5. Adjustment to pretax income for internal allocations to international operations to reflect | ////////////////// |
the effects of equity capital on overall bank funding costs ................................. | 4845 N/A | 5.
6. Estimated pretax income attributable to international operations after capital allocation | ////////////////// |
adjustment (sum of items 4 and 5) ........................................................... | 4846 N/A | 6.
7. Income taxes attributable to income from international operations as estimated in item 6 .... | 4797 N/A | 7.
8. Estimated net income attributable to international operations (item 6 minus 7) .............. | 4341 N/A | 8.
______________________
<CAPTION>
Memoranda ______________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Intracompany interest income included in item 1.a above ..................................... | 4847 N/A | M.1.
2. Intracompany interest expense included in item 1.b above .................................... | 4848 N/A | M.2.
______________________
</TABLE>
<TABLE>
<CAPTION>
Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest income booked at IBFs .............................................................. | 4849 N/A | 1.
2. Interest expense booked at IBFs ............................................................. | 4850 N/A | 2.
3. Noninterest income attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs): | ////////////////// |
a. Gains (losses) and extraordinary items ................................................... | 5491 N/A | 3.a.
b. Fees and other noninterest income ........................................................ | 5492 N/A | 3.b.
4. Provision for loan and lease losses attributable to international operations booked at | ////////////////// |
domestic offices (excluding IBFs) ........................................................... | 4852 N/A | 4.
5. Other noninterest expense attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs) ............................................................................ | 4853 N/A | 5.
______________________
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-7
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all
significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.)
__________
| I495 | -
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) | ////////////////// |
Report amounts that exceed 10% of Schedule RI, item 5.f.(2): | ////////////////// |
a. Net gains on other real estate owned ..................................................... | 5415 0 | 1.a.
b. Net gains on sales of loans .............................................................. | 5416 0 | 1.b.
c. Net gains on sales of premises and fixed assets .......................................... | 5417 0 | 1.c.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 5.f.(2): | ////////////////// |
_____________
d. | TEXT 4461 |______________________________________________________________________________| 4461 33,165 | 1.d.
___________ REIMBURSEMENT FROM AFFILIATES
e. | TEXT 4462 |______________________________________________________________________________| 4462 | 1.e.
___________
f. | TEXT 4463 |______________________________________________________________________________| 4463 | 1.f.
_____________
2. Other noninterest expense (from Schedule RI, item 7.c): | ////////////////// |
a. Amortization expense of intangible assets ................................................ | 4531 23,094 | 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c: | ////////////////// |
b. Net losses on other real estate owned .................................................... | 5418 0 | 2.b.
c. Net losses on sales of loans ............................................................. | 5419 0 | 2.c.
d. Net losses on sales of premises and fixed assets ......................................... | 5420 0 | 2.d.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 7.c: | ////////////////// |
_____________
e. | TEXT 4464 |______________________________________________________________________________| 4464 166,229 | 2.e.
___________ MERGER & RESTRUCTURING CHARGES
f. | TEXT 4467 |______________________________________________________________________________| 4467 | 2.f.
___________
g. | TEXT 4468 |______________________________________________________________________________| 4468 | 2.g.
_____________
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and | ////////////////// |
applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe | ////////////////// |
all extraordinary items and other adjustments): | ////////////////// |
_____________
a. (1) | TEXT 4469 |__________________________________________________________________________| 4469 | 3.a.(1)
_____________
(2) Applicable income tax effect | RIAD 4486 | | ////////////////// | 3.a.(2)
_____________ ____________________________
b. (1) | TEXT 4487 |__________________________________________________________________________| 4487 | 3.b.(1)
_____________
(2) Applicable income tax effect | RIAD 4488 | | ////////////////// | 3.b.(2)
_____________ ____________________________
c. (1) | TEXT 4489 |__________________________________________________________________________| 4489 | 3.c.(1)
_____________
(2) Applicable income tax effect | RIAD 4491 | | ////////////////// | 3.c.(2)
____________________________
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, | ////////////////// |
item 2) (itemize and describe all adjustments): | ////////////////// |
_____________
a. | TEXT 4492 |______________________________________________________________________________| 4492 | 4.a.
___________
b. | TEXT 4493 |______________________________________________________________________________| 4493 | 4.b.
_____________
5. Cumulative effect of changes in accounting principles from prior years (from | ////////////////// |
Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): | ////////////////// |
_____________
a. | TEXT 4494 |______________________________________________________________________________| 4494 | 5.a.
___________
b. | TEXT 4495 |______________________________________________________________________________| 4495 | 5.b.
_____________
6. Corrections of material accounting errors from prior years (from Schedule RI-A, | ////////////////// |
item 10) (itemize and describe all corrections): | ////////////////// |
_____________
a. | TEXT 4496 |______________________________________________________________________________| 4496 | 6.a.
___________
b. | TEXT 4497 |______________________________________________________________________________| 4497 | 6.b.
_____________
______________________
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RI-8
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Continued
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
7. Other transactions with parent holding company (from Schedule RI-A, item 13) | ////////////////// |
(itemize and describe all such transactions): | ////////////////// |
_____________ CAPITAL CONTRIBUTION FROM THE PARENT COMPANY
a. | TEXT 4498 |______________________________________________________________________________| 4498 30,000 | 7.a.
___________
b. | TEXT 4499 |______________________________________________________________________________| 4499 | 7.b.
_____________
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, | ////////////////// |
item 5) (itemize and describe all adjustments): | ////////////////// |
_____________
a. | TEXT 4521 | ADJUSTMENT DUE TO BARCLAY'S ACQUISITION
|______________________________________________________________________________| 4521 41,743 | 8.a.
_____________ SCC TRANSFER
b. | TEXT 4522 |______________________________________________________________________________| 4522 541 | 8.b.
_____________
____________________
9. Other explanations (the space below is provided for the bank to briefly describe, | I498 | I499 | -
______________________
at its option, any other significant items affecting the Report of Income):
___
No comment |X| (RIAD 4769)
___
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-1
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for December 31, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.
Schedule RC--Balance Sheet
__________
| C400 | -
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// |
a. Noninterest-bearing balances and currency and coin(1) ................................... | 0081 1,363,000 | 1.a.
b. Interest-bearing balances(2) ............................................................ | 0071 50,200 | 1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A) .............................. | 1754 3,197 | 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ............................ | 1773 4,048,366 | 2.b.
3. Federal funds sold and securities purchased under agreements to resell in domestic offices | ////////////////// |
of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// |
a. Federal funds sold ...................................................................... | 0276 205,800 | 3.a.
b. Securities purchased under agreements to resell ......................................... | 0277 0 | 3.b.
4. Loans and lease financing receivables: ____________________________| ////////////////// |
a. Loans and leases, net of unearned income (from Schedule RC-C) | RCFD 2122 | 11,528,458 | ////////////////// | 4.a.
b. LESS: Allowance for loan and lease losses ................... | RCFD 3123 | 266,943 | ////////////////// | 4.b.
c. LESS: Allocated transfer risk reserve ....................... | RCFD 3128 | 0 | ////////////////// | 4.c.
____________________________
d. Loans and leases, net of unearned income, | ////////////////// |
allowance, and reserve (item 4.a minus 4.b and 4.c) ..................................... | 2125 11,261,515 | 4.d.
5. Trading assets (from schedule RC-D )........................................................ | 3545 840 | 5.
6. Premises and fixed assets (including capitalized leases) ................................... | 2145 163,677 | 6.
7. Other real estate owned (from Schedule RC-M) ............................................... | 2150 684 | 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ... | 2130 0 | 8.
9. Customers' liability to this bank on acceptances outstanding ............................... | 2155 7,330 | 9.
10. Intangible assets (from Schedule RC-M) ..................................................... | 2143 310,314 | 10.
11. Other assets (from Schedule RC-F) .......................................................... | 2160 714,575 | 11.
12. Total assets (sum of items 1 through 11) ................................................... | 2170 18,129,498 | 12.
______________________
<FN>
____________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-2
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC--Continued
___________________________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
<S> <C> <C>
LIABILITIES | /////////////////////// |
13. Deposits: | /////////////////////// |
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) ..... | RCON 2200 10,797,121 | 13.a.
____________________________
(1) Noninterest-bearing(1) ................................ | RCON 6631 3,401,997 | /////////////////////// | 13.a.(1)
(2) Interest-bearing ...................................... | RCON 6636 7,395,124 | /////////////////////// | 13.a.(2)
____________________________
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, | /////////////////////// |
part II) .............................................................................. | RCFN 2200 431,872 | 13.b.
____________________________
(1) Noninterest-bearing ................................... | RCFN 6631 0 | /////////////////////// | 13.b.(1)
(2) Interest-bearing ...................................... | RCFN 6636 431,872 | /////////////////////// | 13.b.(2)
____________________________
14. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | /////////////////////// |
a. Federal funds purchased ............................................................... | RCFD 0278 2,699,716 | 14.a.
b. Securities sold under agreements to repurchase ........................................ | RCFD 0279 40,059 | 14.b.
15. a. Demand notes issued to the U.S. Treasury .............................................. | RCON 2840 304,843 | 15.a.
b. Trading liabilities (from Schedule RC-D) .............................................. | RCFD 3548 814 | 15.b.
16. Other borrowed money: | /////////////////////// |
a. With original maturity of one year or less ............................................ | RCFD 2332 1,557,198 | 16.a.
b. With original maturity of more than one year .......................................... | RCFD 2333 131,588 | 16.b.
17. Mortgage indebtedness and obligations under capitalized leases ........................... | RCFD 2910 9,173 | 17.
18. Bank's liability on acceptances executed and outstanding ................................. | RCFD 2920 7,330 | 18.
19. Subordinated notes and debentures ........................................................ | RCFD 3200 440,000 | 19.
20. Other liabilities (from Schedule RC-G) ................................................... | RCFD 2930 367,311 | 20.
21. Total liabilities (sum of items 13 through 20) ........................................... | RCFD 2948 16,787,025 | 21.
| /////////////////////// |
22. Limited-life preferred stock and related surplus ......................................... | RCFD 3282 0 | 22.
EQUITY CAPITAL | /////////////////////// |
23. Perpetual preferred stock and related surplus ............................................ | RCFD 3838 125,000 | 23.
24. Common stock ............................................................................. | RCFD 3230 19,487 | 24.
25. Surplus (exclude all surplus related to preferred stock).................................. | RCFD 3839 955,984 | 25.
26. a. Undivided profits and capital reserves ................................................ | RCFD 3632 238,795 | 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ................ | RCFD 8434 3,207 | 26.b.
27. Cumulative foreign currency translation adjustments ...................................... | RCFD 3284 0 | 27.
28. Total equity capital (sum of items 23 through 27) ........................................ | RCFD 3210 1,342,473 | 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, | /////////////////////// |
and 28) .................................................................................. | RCFD 3300 18,129,498 | 29.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external __________________
auditors as of any date during 1994 ............................................................... | RCFD 6724 N/A | M.1.
__________________
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
<FN>
____________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-3
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-A--Cash and Balances Due From Depository Institutions
Exclude assets held for trading.
__________
| C405 | -
_________________________________ ________
| (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and | ////////////////// | ////////////////// |
coin .................................................................... | 0022 257,049 | ////////////////// | 1.
a. Cash items in process of collection and unposted debits .............. | ////////////////// | 0020 56,466 | 1.a.
b. Currency and coin .................................................... | ////////////////// | 0080 200,583 | 1.b.
2. Balances due from depository institutions in the U.S. ................... | ////////////////// | 0082 722,819 | 2.
a. U.S. branches and agencies of foreign banks (including their IBFs) ... | 0083 0 | ////////////////// | 2.a.
b. Other commercial banks in the U.S. and other depository institutions | ////////////////// | ////////////////// |
in the U.S. (including their IBFs) ................................... | 0085 722,819 | ////////////////// | 2.b.
3. Balances due from banks in foreign countries and foreign central banks .. | ////////////////// | 0070 51,241 | 3.
a. Foreign branches of other U.S. banks ................................. | 0073 0 | ////////////////// | 3.a.
b. Other banks in foreign countries and foreign central banks ........... | 0074 51,241 | ////////////////// | 3.b.
4. Balances due from Federal Reserve Banks ................................. | 0090 382,091 | 0090 382,091 | 4.
5. Total (sum of items 1 through 4) (total of column A must equal | ////////////////// | ////////////////// |
Schedule RC, sum of items 1.a and 1.b) .................................. | 0010 1,413,200 | 0010 1,413,200 | 5.
___________________________________________
<CAPTION>
______________________
Memorandum Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, | ////////////////// |
column B above) .............................................................................. | 0050 722,619 | M.1.
______________________
</TABLE>
Schedule RC-B--Securities
Exclude assets held in trading accounts.
<TABLE>
<CAPTION>
_______
| C410 |
___________________________________________________________________________ ________
| Held-to-maturity | Available-for-sale |
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________ ____________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C> <C>
1. U.S. Treasury securities ......... | 0211 250 | 0213 250 | 1286 994,774 | 1287 987,179 | 1.
2. U.S. Government agency | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
and corporation obligations | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
(exclude mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
securities): | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Issued by U.S. Govern- | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
ment agencies(2) .............. | 1289 0 | 1290 0 | 1291 0 | 1293 0 | 2.a.
b. Issued by U.S. | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
Government-sponsored | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
agencies(3) ................... | 1294 0 | 1295 0 | 1297 335,490 | 1298 335,336 | 2.b.
_____________________________________________________________________________________
<FN>
_____________
(1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates," U.S. Maritime Administration obligations, and
Export-Import Bank participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the Farm Credit System, the Federal Home
Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Financing
Corporation, Resolution Funding Corporation, the Student Loan Marketing Association, and the Tennessee Valley Authority.
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-5
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued
_____________________________________________________________________________________
| Held-to-maturity | Available-for-sale |
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________________________ ____________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
3. Securities issued by states | ////////////////// |/ //////////////// | ////////////////// | ///////////////// |
and political subdivisions | ////////////////// |////////////////// | ////////////////// | ///////////////// |
in the U.S.: | ////////////////// |////////////////// | ////////////////// | ////////// ////// |
a. General obligations ......... | 1676 0 |1677 0 | 1678 0 | 1679 0 | 3.a.
b. Revenue obligations ......... | 1681 47 |1686 52 | 1690 0 | 1691 0 | 3.b.
c. Industrial development ...... | ////////////////// |////////////////// | ////////////////// | ///////////////// |
and similiar obligations ........| 1694 0 |1695 0 | 1696 0 | 1697 0 | 3.c.
4. Mortgage-backed: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Pass-through securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(1) Guaranteed by | ////////////////// |////////////////// | ////////////////// | ///////////////// |
GNMA ....................... | 1698 0 |1699 0 | 1701 917 | 1702 917 | 4.a.(1)
(2) Issued by FNMA | ////////////////// |////////////////// | ////////////////// | ///////////////// |
and FHLMC ................. | 1703 0 |1705 0 | 1706 1,459,829 | 1707 1,468,551 | 4.a.(2)
(3) Other pass-through | ////////////////// |////////////////// | ///////////////////| ///////////////// |
secruities ................. | 1709 0 |1710 0 | 1711 4,961 | 1713 5,044 | 4.a.(3)
b. Other mortgage-backed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (include CMO's, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
REMICs, and stripped | ////////////////// |////////////////// | ////////////////// | ///////////////// |
MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(1) Issued or guaranteed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
by FNMA, FHLMC, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
or GNMA ............... | 1714 0 |1715 0 | 1716 83,871 | 1717 85,311 | 4.b.(1)
(2) Collateralized | ////////////////// |////////////////// | ////////////////// | ///////////////// |
by MBS issued or | ////////////////// |////////////////// | ////////////////// | ///////////////// |
guaranteed by FNMA | ////////////////// |////////////////// | ////////////////// | ///////////////// |
FHLMC, or GNMA ........ | 1718 0 |1719 0 | 1731 0 | 1732 0 | 4.b.(2)
(3) All other mortgage- | ////////////////// |////////////////// | ////////////////// | //////////////// |
backed securities ..... | 1733 0 |1734 0 | 1735 320,670 | 1736 318,092 | 4.b.(3)
5. Other debt securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Other domestic debt | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities | 1737 0 |1738 0 | 1739 717,383 | 1741 723,027 | 5.a.
b. Foreign debt | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities ................. | 1742 2,900 |1743 2,900 | 1744 0 | 1746 0 | 5.b.
6. Equity securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Investments in mutual | ////////////////// |////////////////// | ////////////////// | ///////////////// |
funds ...................... | ////////////////// |////////////////// | 1747 8,471 | 1748 8,471 | 6.a.
b. Other equity securities | ////////////////// |////////////////// | ////////////////// | ///////////////// |
with readily determin- | ////////////////// |////////////////// | ////////////////// | ///////////////// |
able fair values ........... | ////////////////// |////////////////// | 1749 0 | 1751 0 | 6.b.
c. All other equity | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (1) ............. | ////////////////// |////////////////// | 1752 116,438 | 1753 116,438 | 6.c.
7. Total (sum of items 1 | ////////////////// |////////////////// | ////////////////// | ///////////////// |
through 6) (total of | ////////////////// |////////////////// | ////////////////// | ///////////////// |
column A must equal | ////////////////// |////////////////// | ////////////////// | ///////////////// |
Schedule RC, item 2.a) | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(total of column D must | ////////////////// |////////////////// | ////////////////// | ///////////////// |
equal Schedule RC, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
item 2.b) ..................... | 1754 3,197 | 1771 3,202 | 1772 4,042,804 | 1773 4,048,366 | 7.
____________ |__________________________________________________________________________________|
1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D.
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-5
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued
___________
Memoranda | C412 | -
___________ _________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Pledged securities(2) ......................................................................... | 0416 2,835,053 | M.1.
2. Maturity and repricing data for debt securities(2)(3)(4) (excluding those in nonaccrual status):| ////////////////// |
a. Fixed rate debt securities with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | 0343 341,085 | M.2.a.(1)
(2) Over three months through 12 months .................................................... | 0344 145,034 | M.2.a.(2)
(3) Over one year through five years ....................................................... | 0345 2,473,872 | M.2.a.(3)
(4) Over five years ........................................................................ | 0346 785,951 | M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4)) ..... | 0347 3,745,942 | M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently ........................................................... | 4544 177,962 | M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | 4545 2,750 | M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | 4551 0 | M.2.b.(3)
(4) Less frequently than every five years .................................................. | 4552 0 | M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4)) .. | 4553 180,712 | M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total debt | ////////////////// |
securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus nonaccrual | ////////////////// |
debt securities included in Schedule RC-N, item 9, column C) ............................... | 0393 3,926,654 | M.2.c.
3. Not applicable | ////////////////// |
4. Held-to-maturity debt securities restructured and in compliance with modified terms (included | ////////////////// |
in Schedule RC-B, items 3 through 5, column A, above) ......................................... | 5365 0 | M.4.
5. Not applicable | ////////////////// |
6. Floating rate debt securities with a remaining maturity of one year or less(2)(5) (to be | ////////////////// |
completed by all banks ........................................................................ | 5519 0 | M.6.
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or | ////////////////// |
trading securities during the calendar year-to-date (report the amortized cost at date of sale. | ////////////////// |
or transfer ................................................................................... | 1778 3,221,535 | m.7.
8. High-Risk mortgage securities (included in the held-to-maturity and available-for-sale | ////////////////// |
accounts in Schedule RC-B, item 4.b): | ////////////////// |
a. Amortized cost ............................................................................. | 8780 0 | M.8.a.
b. Fair Value ................................................................................. | 8781 0 | M.8.b.
9. Structured notes (included in the held-to-maturity and available-for-sale accounts in | ////////////////// |
Schedule RC-B, items.2, 3, and 5): | ////////////////// |
a. Amortized cost ............................................................................. | 8782 0 | M.9.a.
b. Fair Value ................................................................................. | 8783 0 | M.9.b.
----------------------
<FN>
____________
(2) Includes held-to-maturity securities at amortized cost and available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal Reserve stock, common stock, and preferred stock.
(4) Memorandum item 2 is not applicable to savings banks that must complete supplemental Schedule RC-J.
(5) For commercial banks, the debt securities included in Memorandum item 6 will also have been reported in Memorandum item 2.b.
above. For savings bank, the debt securities included in Memorandum item 6 will also have been reported in supplemental
Schedule. RC-J, part I, item 4. Savings banks should note that available-for-sale cash debt securities are reported at fair
value in Memorandum item 6 and at amortized cost in Schedule RC-J.
</TABLE>
15
<PAGE>
City, State Zip: HARTFORD, CT 06115
<TABLE>
<CAPTION>
Schedule RC-C--Loans and Lease Financing Receivables
Part I. Loans and Leases
Do not deduct the allowance for loan and lease losses from amounts __________
reported in this schedule. Report total loans and leases, net of unearned _________________________________| C415 | -
income. Exclude assets held for trading. | (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Loans secured by real estate ........................................... | 1410 4,366,800 | ////////////////// | 1.
a. Construction and land development ................................... | ////////////////// | 1415 57,923 | 1.a.
b. Secured by farmland (including farm residential and other | ////////////////// | ////////////////// |
improvements) ....................................................... | ////////////////// | 1420 584 | 1.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit ................... | ////////////////// | 1797 380,335 | 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(a) Secured by first liens ...................................... | ////////////////// | 5367 2,632,460 | 1.c.(2)(a)
(b) Secured by junior liens ..................................... | ////////////////// | 5368 212,499 | 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties ........... | ////////////////// | 1460 63,227 | 1.d.
e. Secured by nonfarm nonresidential properties ........................ | ////////////////// | 1480 1,019,772 | 1.e.
2. Loans to depository institutions: | ////////////////// | ////////////////// |
a. To commercial banks in the U.S. ..................................... | ////////////////// | 1505 8,656 | 2.a.
(1) To U.S. branches and agencies of foreign banks .................. | 1506 0 | ////////////////// | 2.a.(1)
(2) To other commercial banks in the U.S. ........................... | 1507 8,656 | ////////////////// | 2.a.(2)
b. To other depository institutions in the U.S. ........................ | 1517 0 | 1517 0 | 2.b.
c. To banks in foreign countries ....................................... | ////////////////// | 1510 0 | 2.c.
(1) To foreign branches of other U.S. banks ......................... | 1513 0 | ////////////////// | 2.c.(1)
(2) To other banks in foreign countries ............................. | 1516 0 | ////////////////// | 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers .... | 1590 962 | 1590 962 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ....................................... | 1763 5,421,227 | 1763 5,421,227 | 4.a.
b. To non-U.S. addressees (domicile) ................................... | 1764 0 | 1764 0 | 4.b.
5. Acceptances of other banks: | ////////////////// | ////////////////// |
a. Of U.S. banks ....................................................... | 1756 1,096 | 1756 1,096| 5.a.
b. Of foreign banks .................................................... | 1757 0 | 1757 0 | 5.b.
6. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures (i.e., consumer loans) (includes purchased paper) ......... | ////////////////// | 1975 572,541 | 6.
a. Credit cards and related plans (includes check credit and other | ////////////////// | ////////////////// |
revolving credit plans) ............................................. | 2008 31,493 | ////////////////// | 6.a.
b. Other (includes single payment, installment, and all student loans) . | 2011 541,048 | ////////////////// | 6.b.
7. Loans to foreign governments and official institutions (including | ////////////////// | ////////////////// |
foreign central banks) ................................................. | 2081 0 | 2081 0 | 7.
8. Obligations (other than securities and leases) of states and political | ////////////////// | ////////////////// |
subdivisions in the U.S. (includes nonrated industrial development | ////////////////// | ////////////////// |
obligations) ........................................................... | 2107 34,682 | 2107 34,682 | 8.
9. Other loans ............................................................ | 1563 1,134,145 | ////////////////// | 9.
a. Loans for purchasing or carrying securities (secured and unsecured) . | ////////////////// | 1545 43,527 | 9.a.
b. All other loans (exclude consumer loans) ............................ | ////////////////// | 1564 1,090,618 | 9.b.
10. Lease financing receivables (net of unearned income) ................... | ////////////////// | 2165 7,046 | 10.
a. Of U.S. addressees (domicile) ....................................... | 2182 7,046 | ////////////////// | 10.a.
b. Of non-U.S. addressees (domicile) ................................... | 2183 0 | ////////////////// | 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above ........ | 2123 18,697 | 2123 18,697 | 11.
12. Total loans and leases, net of unearned income (sum of items 1 through | ////////////////// | ////////////////// |
10 minus item 11) (total of column A must equal Schedule RC, item 4.a) . | 2122 11,528,458 | 2122 11,528,458 | 12.
___________________________________________
</TABLE>
16
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590
Address: 777 MAIN STREET
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-C--Continued
Part I. Continued
___________________________________________
| (Column A) | (Column B) |
| Consolidated | Domestic |
Memoranda | Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Commercial paper included in Schedule RC-C, part I, above .............. | 1496 0 | 1496 0 | M.1.
2. Loans and leases restructured and in compliance with modified terms | ////////////////// | ////////////////// |
(included in Schedule RC-C, part I, above and not reported as past due | ////////////////// | ////////////////// |
or nonaccrual in Schedule RC-N, Memorandum item 1): | ////////////////// | ////////////////// |
a. Loans secured by real estate: | ////////////////// | ////////////////// |
(1) To U.S. addressees (domicile) ................................... | 1687 34,952 | M.2.a.(1)
(2) To non-U.S. addressees (domicile) ............................... | 1689 0 | M.2.a.(2)
b. All other loans and all lease financing receivables (exclude loans | ////////////////// |
to individuals for household, family, and other personal expenditures)| 8691 0 | M.2.b.
c. Commercial and industrial loans to and lease financing receivables | ////////////////// |
of non-U.S. addressees (domicile) included in Memorandum item 2.b | ////////////////// |
above ............................................................... | 8692 0 | M.2.c.
3. Maturity and repricing data for loans and leases(1) (excluding those | ////////////////// |
in nonaccrual status): | ////////////////// |
a. Fixed rate loans and leases with a remaining maturity of: | ////////////////// |
(1) Three months or less ............................................ | 0348 627,991 | M.3.a.(1)
(2) Over three months through 12 months ............................. | 0349 91,775 | M.3.a.(2)
(3) Over one year through five years ................................ | 0356 883,482 | M.3.a.(3)
(4) Over five years ................................................. | 0357 1,974,606 | M.3.a.(4)
(5) Total fixed rate loans and leases (sum of | ////////////////// |
Memorandum items 3.a.(1) through 3.a.(4)) ....................... | 0358 3,577,854 | M.3.a.(5)
b. Floating rate loans with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently .................................... | 4554 3,811,759 | M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly . | 4555 809,284 | M.3.b.(2)
(3) Every five years or more frequently, but less frequently than | ////////////////// |
annually ........................................................ | 4561 3,175,427 | M.3.b.(3)
(4) Less frequently than every five years ........................... | 4564 107,097 | M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) | ////////////////// |
through 3.b.(4)) ................................................ | 4567 7,903,567 | M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) | ////////////////// |
(must equal the sum of total loans and leases, net, from | ////////////////// |
Schedule RC-C, part I, item 12, plus unearned income from | ////////////////// |
Schedule RC-C, part I, item 11, minus total nonaccrual loans and | ////////////////// |
leases from Schedule RC-N, sum of items 1 through 8, column C) ...... | 1479 11,481,421 | M.3.c.
4. Loans to finance commercial real estate, construction, and land | ////////////////// |
development activities (not secured by real estate) included in | ////////////////// |
Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2) ........... | 2746 54,772 | M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I, | ////////////////// |
above .................................................................. | 5369 0 | M.5.
6. Adjustable rate closed-end loans secured by first liens on 1-4 family | ////////////////// |_____________________
residential properties (included in Schedule RC-C, part I, item | ////////////////// | RCON Bil Mil Thou |
| ////////////////// |____________________
1.c.(2)(a), column B, page RC-6) ....................................... | ////////////////// | 5370 918,495 | M.6.
___________________________________________
<FN>
_____________________________
(1) Memorandum item 3 is not applicable to savings banks that must complete supplememtal Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C, part I, item 1, column A.
</TABLE>
17
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-7
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
_________
| C420 |
__________________________________________________________________________________________________ _______________|________|
<S> <C> <C>
ASSETS | /////////////////////// |
1. U.S. Treasury securities in domestic offices ................................................ | RCON 3531 0 | 1.
2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage- | /////////////////////// |
backed securities) .......................................................................... | RCON 3532 0 | 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices ...... | RCON 3533 0 | 3.
4. Mortgage-backed securities (MBS) in domestic offices ........................................ | /////////////////////// |
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA ..................... | RCON 3534 0 | 4.a.
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA | /////////////////////// |
(include CMOs, REMICs, and stripped MBS) ................................................. | RCON 3535 0 | 4.b.
c. All other mortgage-backed securities ......................................................| RCON 3536 0 | 4.c.
5. Other debt securities in domestic offices ................................................... | RCON 3537 0 | 5.
6. Certificates of deposit in domestic offices ................................................. | RCON 3538 0 | 6.
7. Commercial paper in domestic offices ........................................................ | RCON 3539 0 | 7.
8. Bankers acceptances in domestic offices ..................................................... | RCON 3540 0 | 8.
9. Other trading assets in domestic offices .................................................... | RCON 3541 0 | 9.
10. Trading assets in foreign offices ........................................................... | RCFN 3542 0 | 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts: | /////////////////////// |
a. In domestic offices ...................................................................... | RCON 3543 840 | 11.a.
b. In foreign offices ....................................................................... | RCFN 3544 0 | 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) ........... | RCFD 3545 840 | 12.
<CAPTION>
___________________________
___________________________
| ///////// Bil Mil Thou |
LIABILITIES _________________________
<S> <C> <C>
13. Liability for short positions ............................................................... | RCFD 3546 0 | 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts ................................................................................... | RCFD 3547 814 | 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) ...... | RCFD 3548 814 | 15.
___________________________
</TABLE>
18
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-9
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Deposit Liabilities
Part I. Deposits in Domestic Offices
__________
| C425 | -
______________________________________________________ ________
| | Nontransaction |
| Transaction Accounts | Accounts |
_________________________________________ ____________________
| (Column A) | (Column B) | (Column C) |
| Total transaction | Memo: Total | Total |
| accounts (including| demand deposits | nontransaction |
| total demand | (included in | accounts |
| deposits) | column A) | (including MMDAs) |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou |
__________________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
Deposits of: | ////////////////// | ////////////////// | ////////////////// |
1. Individuals, partnerships, and corporations .......... | 2201 2,628,372 | 2240 2,505,998 | 2346 7,107,737 | 1.
2. U.S. Government ...................................... | 2202 53,678 | 2280 53,432 | 2520 120 | 2.
3. States and political subdivisions in the U.S. ........ | 2203 163,019 | 2290 132,660 | 2530 133,788 | 3.
4. Commercial banks in the U.S. ......................... | 2206 554,474 | 2310 554,474 | ////////////////// | 4.
a. U.S. branches and agencies of foreign banks ....... | ////////////////// | ////////////////// | 2347 0 | 4.a.
b. Other commercial banks in the U.S. ................ | ////////////////// | ////////////////// | 2348 500 | 4.b.
5. Other depository institutions in the U.S. ............ | 2207 101,483 | 2312 101,483 | 2349 0 | 5.
6. Banks in foreign countries ........................... | 2213 1,730 | 2320 1,730 | ////////////////// | 6.
a. Foreign branches of other U.S. banks .............. | ////////////////// | ////////////////// | 2367 0 | 6.a.
b. Other banks in foreign countries .................. | ////////////////// | ////////////////// | 2373 0 | 6.b.
7. Foreign governments and official institutions | ////////////////// | ////////////////// | ////////////////// |
(including foreign central banks) .................... | 2216 1,023 | 2300 1,023 | 2377 0 | 7.
8. Certified and official checks ........................ | 2330 51,197 | 2330 51,197 | ////////////////// | 8.
9. Total (sum of items 1 through 8) (sum of | ////////////////// | ////////////////// | ////////////////// |
columns A and C must equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// |
item 13.a) ........................................... | 2215 3,554,976 | 2210 3,401,997 | 2385 7,242,145 | 9.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
______________________
Memoranda Dollar Amounts in Thousands | RCON Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): | ////////////////// |
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ......................... | 6835 888,500 | M.1.a.
b. Total brokered deposits ..................................................................... | 2365 1,195,257 | M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): | ////////////////// |
(1) Issued in denominations of less than $100,000 ........................................... | 2343 0 | M.1.c.(1)
(2) Issued either in denominations of $100,000 or in denominations greater than $100,000 | ////////////////// |
and participated out by the broker in shares of $100,000 or less ........................ | 2344 1,195,257 | M.1.c.(2)
d. Total deposits denominated in foreign currencies ............................................ | 3776 0 | M.1.d.
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. | ////////////////// |
reported in item 3 above which are secured or collateralized as required under state law) ... | 5590 226,852 | M.1.e.
2. Components of total nontransaction accounts (sum of Memoranda items 2.a through 2.d must | ////////////////// |
equal item 9, column C above): | ////////////////// |
a. Savings deposits: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................................................... | 6810 1,491,520 | M.2.a.(1)
(2) Other savings deposits (excludes MMDAs) ................................................. | 0352 1,862,085 | M.2.a.(2)
b. Total time deposits of less than $100,000 ................................................... | 6648 2,386,133 | M.2.b.
c. Time certificates of deposit of $100,000 or more ............................................ | 6645 1,502,407 | M.2.c.
d. Open-account time deposits of $100,000 or more .............................................. | 6646 0 | M.2.d.
3. All NOW accounts (included in column A above) .................................................. | 2398 152,979 | M.3.
______________________
</TABLE>
19
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-10
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Continued
Part I. Continued
Memoranda (continued)
_________________________________________________________________________________________________________________________________
| Deposit Totals for FDIC Insurance Assessments ______________________ |
| Dollar Amounts in Thousands | RCON Bil Mil Thou | |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
| 4. Total deposits in domestic offices (sum of item 9, column A and item 9, column C) |/////////////////// | |
| (must equal Schedule RC, item 13.a) ......................................................... | 2200 10,797,121 | M.4. |
| | ////////////////// | |
| a. Total demand deposits (must equal item 9, column B) ...................................... | 2210 3,401,997 | M.4.a.|
| b. Total time and savings deposits(1) (must equal item 9, column A plus item 9, column C | ////////////////// | |
| minus item 9, column B) .................................................................. | 2350 7,395,124 | M.4.b.|
______________________
<FN>
| ____________ |
| (1) For FDIC insurance assessment purposes, "total time and savings deposits" consists of nontransaction accounts and all |
| transaction accounts other than demand deposits. |
_________________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
5. Time deposits of less than $100,000 and open-account time deposits of $100,000 or more | ////////////////// |
(included in Memorandum items 2.b and 2.d above) with a remaining maturity or repricing | ////////////////// |
frequency of:(1) | ////////////////// |
a. Three months or less ....................................................................... | 0359 326,126 | M.5.a.
b. Over three months through 12 months (but not over 12 months) ............................... | 3644 1,116,701 | M.5.b.
6. Maturity and repricing data for time certificates of deposit of $100,000 or more:(1) | ////////////////// |
a. Fixed rate time certificates of deposit of $100,000 or more with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | 2761 377,758 | M.6.a.(1)
(2) Over three months through 12 months .................................................... | 2762 268,933 | M.6.a.(2)
(3) Over one year through five years ....................................................... | 2763 852,593 | M.6.a.(3)
(4) Over five years ........................................................................ | 2765 3,123 | M.6.a.(4)
(5) Total fixed rate time certificates of deposit of $100,000 or more (sum of | ////////////////// |
Memorandum items 6.a.(1) through 6.a.(4)) .............................................. | 2767 1,502,407 | M.6.a.(5)
b. Floating rate time certificates of deposit of $100,000 or more with a repricing frequency of:| ////////////////// |
(1) Quarterly or more frequently ........................................................... | 4568 0 | M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | 4569 0 | M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | 4571 0 | M.6.b.(3)
(4) Less frequently than every five years .................................................. | 4572 0 | M.6.b.(4)
(5) Total floating rate time certificates of deposit of $100,000 or more (sum of | ////////////////// |
Memorandum items 6.b.(1) through 6.b.(4)) .............................................. | 4573 0 | M.6.b.(5)
c. Total time certificates of deposit of $100,000 or more (sum of Memorandum items 6.a.(5) | ////////////////// |
and 6.b.(5)) (must equal Memorandum item 2.c. above) ....................................... | 6645 1,502,407 | M.6.c.
______________________
<FN>
_____________
(1) Memorandum items 5 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J.
</TABLE>
20
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-11
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Continued
Part II. Deposits in Foreign Offices (including Edge and
Agreement subsidiaries and IBFs)
______________________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
Deposits of: | ////////////////// |
1. Individuals, partnerships, and corporations ................................................... | 2621 401,872 | 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks) ................................ | 2623 30,000 | 2.
3. Foreign banks (including U.S. branches and | ////////////////// |
agencies of foreign banks, including their IBFs) .............................................. | 2625 0 | 3.
4. Foreign governments and official institutions (including foreign central banks) ............... | 2650 0 | 4.
5. Certified and official checks ................................................................. | 2330 0 | 5.
6. All other deposits ............................................................................ | 2668 0 | 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) .......................... | 2200 431,872 | 7.
______________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-F--Other Assets
__________
| C430 | -
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. Income earned, not collected on loans ........................................................ | RCFD 2164 56,906 | 1.
2. Net deferred tax assets(1) ................................................................... | RCFD 2148 158,056 | 2.
3. Excess residential mortgage servicing fees receivable ........................................ | RCFD 5371 18,275 | 3.
4. Other (itemize amounts that exceed 25% of this item) ......................................... | RCFD 2168 481,338 | 4.
_____________ ___________________________
a. | TEXT 3549 |____________________________________________________| RCFD 3549 | | /////////////////////// | 4.a.
___________
b. | TEXT 3550 |____________________________________________________| RCFD 3550 | | /////////////////////// | 4.b.
___________
c. | TEXT 3551 |____________________________________________________| RCFD 3551 | | /////////////////////// | 4.c.
_____________
___________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) ........................... | RCFD 2160 714,575 | 5.
___________________________
<CAPTION>
Memorandum ___________________________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. Deferred tax assets disallowed for regulatory capital purposes ............................... | RCFD 5610 0 | M.1.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-G--Other Liabilities
__________
| C435 | -
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices(2) ............................ | RCON 3645 44,239 | 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable) ................. | RCFD 3646 300,519 | 1.b.
2. Net deferred tax liabilities(1) .............................................................. | RCFD 3049 0 | 2.
3. Minority interest in consolidated subsidiaries ............................................... | RCFD 3000 0 | 3.
4. Other (itemize amounts that exceed 25% of this item) ......................................... | RCFD 2938 22,553 | 4.
_____________ ___________________________
a. | TEXT 3552 |____________________________________________________| RCFD 3552 | | /////////////////////// | 4.a.
___________
b. | TEXT 3553 |____________________________________________________| RCFD 3553 | | /////////////////////// | 4.b.
___________
c. | TEXT 3554 |____________________________________________________| RCFD 3554 | | /////////////////////// | 4.c.
_____________
___________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) ........................... | RCFD 2930 367,311 | 5.
___________________________
<FN>
____________
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.
</TABLE>
21
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-12
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-H--Selected Balance Sheet Items for Domestic Offices
__________
| C440 | -
____________ ________
| Domestic Offices |
____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Customers' liability to this bank on acceptances outstanding .................................... | 2155 7,330 | 1.
2. Bank's liability on acceptances executed and outstanding ........................................ | 2920 7,330 | 2.
3. Federal funds sold and securities purchased under agreements to resell .......................... | 1350 205,800 | 3.
4. Federal funds purchased and securities sold under agreements to repurchase ...................... | 2800 2,739,775 | 4.
5. Other borrowed money ............................................................................ | 3190 1,688,786 | 5.
EITHER | ////////////////// |
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 2163 N/A | 6.
OR | ////////////////// |
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs ....................... | 2941 381,872 | 7.
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and IBFs) . | 2192 18,079,498 | 8.
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and IBFs)| 3129 16,355,152 | 9.
______________________
</TABLE>
<TABLE>
<CAPTION>
Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices. ______________________
| RCON Bil Mil Thou |
____________________
<S> <C> <C>
10. U.S. Treasury securities ....................................................................... | 1779 987,429 | 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed | ////////////////// |
securities) .................................................................................... | 1785 335,336 | 11.
12. Securities issued by states and political subdivisions in the U.S. ............................. | 1786 47 | 12.
13. Mortgage-backed securities (MBS): | ////////////////// |
a. Pass-through securities: | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1787 1,469,468 | 13.a.(1)
(2) Other pass-through securities ........................................................... | 1869 5,044 | 13.a.(2)
b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1877 85,311 | 13.b.(1)
(2) Other pass-through securities ........................................................... | 2253 318,092 | 13.b.(2)
14. Other domestic debt securities ................................................................. | 3159 723,027 | 14.
15. Foreign debt securities ........................................................................ | 3160 2,900 | 15.
16. Equity securities: | ////////////////// |
a. Investments in mutual funds ................................................................. | 3161 8,471 | 16.a.
b. Other equity securities with readily determinable fair values ............................... | 3162 0 | 16.b.
c. All other equity securities ................................................................. | 3169 116,438 | 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) .......... | 3170 4,051,563 | 17.
______________________
</TABLE>
<TABLE>
<CAPTION>
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
EITHER | ////////////////// |
1. Net due from the IBF of the domestic offices of the reporting bank .............................. | 3051 N/A | M.1.
OR | ////////////////// |
2. Net due to the IBF of the domestic offices of the reporting bank ................................ | 3059 N/A | M.2.
______________________
</TABLE>
22
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-13
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-I--Selected Assets and Liabilities of IBFs
To be completed only by banks with IBFs and other "foreign" offices. __________
| C445 | -
____________ ________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) .................. | 2133 N/A | 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, | ////////////////// |
column A) ...................................................................................... | 2076 N/A | 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A) ..... | 2077 N/A | 3.
4. Total IBF liabilities (component of Schedule RC, item 21) ...................................... | 2898 N/A | 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, | ////////////////// |
part II, items 2 and 3) ........................................................................ | 2379 N/A | 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) ...... | 2381 N/A | 6.
______________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-K--Quarterly Averages (1)
__________
| C455 | -
_________________ ________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
<S> <C> <C>
ASSETS | /////////////////////// |
1. Interest-bearing balances due from depository institutions ............................... | RCFD 3381 16,087 | 1.
2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2) ....... | RCFD 3382 2,872,045 | 2.
3. Securities issued by states and political subdivisions in the U.S.(2) .................... | RCFD 3383 49 | 3.
4. a. Other debt securities(2) .............................................................. | RCFD 3647 1,101,314 | 4.a.
b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock) . | RCFD 3648 117,774 | 4.b.
5. Federal funds sold and securities purchased under agreements to resell in domestic offices | /////////////////////// |
of the bank and of its Edge and Agreement subsidiaries, and in IBFs ...................... | RCFD 3365 160,423 | 5.
6. Loans: | /////////////////////// |
a. Loans in domestic offices: | /////////////////////// |
(1) Total loans ....................................................................... | RCON 3360 11,541,536 | 6.a.(1)
(2) Loans secured by real estate ...................................................... | RCON 3385 4,433,576 | 6.a.(2)
(3) Loans to finance agricultural production and other loans to farmers ............... | RCON 3386 2,734 | 6.a.(3)
(4) Commercial and industrial loans ................................................... | RCON 3387 5,556,473 | 6.a.(4)
(5) Loans to individuals for household, family, and other personal expenditures ....... | RCON 3388 600,686 | 6.a.(5)
| /////////////////////// |
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs ............. | RCFN 3360 0 | 6.b.
7. Trading assets ........................................................................... | RCFD 3401 5,753 | 7.
8. Lease financing receivables (net of unearned income) ..................................... | RCFD 3484 8,921 | 8.
9. Total assets (4) ......................................................................... | RCFD 3368 17,423,900 | 9.
LIABILITIES | /////////////////////// |
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, | /////////////////////// |
and telephone and preauthorized transfer accounts) (exclude demand deposits) ............. | RCON 3485 167,144 | 10.
11. Nontransaction accounts in domestic offices: | /////////////////////// |
a. Money market deposit accounts (MMDAs) ................................................. | RCON 3486 1,426,084 | 11.a.
b. Other savings deposits ................................................................ | RCON 3487 1,882,740 | 11.b.
c. Time certificates of deposit of $100,000 or more ...................................... | RCON 3345 1,601,542 | 11.c.
d. All other time deposits ............................................................... | RCON 3469 2,363,615 | 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs .. | RCFN 3404 451,941 | 12.
13. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs .............. | RCFD 3353 3,225,979 | 13.
14. Other borrowed money ..................................................................... | RCFD 3355 1,839,039 | 14.
___________________________
<FN>
_____________
(1) For all items, banks have the option of reporting either (1) an average of daily figures for the quarter, or
(2) an average of weekly figures (i.e., the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized cost.
(3) Quarterly averages for all equity securities should be based on historical cost.
(4) The quarterly average for total assets should reflect all debt securities (not held for trading) at amortized
cost, equity securities with readily determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
</TABLE>
23
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-4
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-L--Off-Balance Sheet Items
Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts
reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk. __________
| C460 | -
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unused commitments: | ////////////////// |
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home | ////////////////// |
equity lines ............................................................................... | 3814 454,277| 1.a.
b. Credit card lines .......................................................................... | 3815 0 | 1.b.
c. Commercial real estate, construction, and land development: | ////////////////// |
(1) Commitments to fund loans secured by real estate ....................................... | 3816 55,329 | 1.c.(1)
(2) Commitments to fund loans not secured by real estate ................................... | 6550 17,337 | 1.c.(2)
d. Securities underwriting .................................................................... | 3817 0 | 1.d.
e. Other unused commitments ................................................................... | 3818 6,446,592 | 1.e.
2. Financial standby letters of credit and foreign office guarantees ............................. | 3819 1,024,104 | 2.
___________________________
a. Amount of financial standby letters of credit conveyed to others | RCFD 3820 | 1,074 | ////////////////// | 2.a.
___________________________
3. Performance standby letters of credit and foreign office guarantees ........................... | 3821 121,267 | 3.
a. Amount of performance standby letters of credit conveyed to | ////////////////// |
___________________________
others .......................................................... | RCFD 3822 | 0 | ////////////////// | 3.a.
___________________________
4. Commercial and similar letters of credit ...................................................... | 3411 38,963 | 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by | ////////////////// |
the reporting bank ............................................................................ | 3428 0 | 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting | ////////////////// |
(nonaccepting) bank ........................................................................... | 3429 0 | 6.
7. Securities borrowed ........................................................................... | 3432 0 | 7.
8. Securities lent (including customers' securities lent where the customer is indemnified | ////////////////// |
against loss by the reporting bank) ........................................................... | 3433 0 | 8.
9. Mortgages transferred (i.e., sold or swapped) with recourse that have been treated as sold | ////////////////// |
for Call Report purposes: | ////////////////// |
a. FNMA and FHLMC residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3650 62,825 | 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3651 56,528 | 9.a.(2)
b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3652 0 | 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3653 0 | 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3654 0 | 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3655 0 | 9.c.(2)
10. When-issued securities: | ////////////////// |
a. Gross commitments to purchase .............................................................. | 3434 0 | 10.a.
b. Gross commitments to sell .................................................................. | 3435 0 | 10.b.
11. Spot foreign exchange contracts ............................................................... | 8765 0 | 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives ) (itemize and | ////////////////// |
describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") | 3430 0 | 12.
a. | TEXT 3555 |______________________________________________________| RCFD 3555 | | ////////////////// | 12.a.
b. | TEXT 3556 |______________________________________________________| RCFD 3556 | | ////////////////// | 12.b.
___________
c. | TEXT 3557 |______________________________________________________| RCFD 3557 | | ////////////////// | 12.c.
_____________
d. | TEXT 3558 |______________________________________________________| RCFD 3558 | | ////////////////// | 12.d.
_____________
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and | ////////////////// |
describe each component of this item over 25% of Schedule RC,item 28,"Total equity capital" | 5591 0 | 13.
_____________ __________________________
a. | TEXT 5592 |______________________________________________________| RCFD 5592 | | ////////////////// | 13.a.
___________
b. | TEXT 5593 |______________________________________________________| RCFD 5593 | | ////////////////// | 13.b.
___________
c. | TEXT 5594 |______________________________________________________| RCFD 5594 | | ////////////////// | 13.c.
_____________
d. | TEXT 5595 |______________________________________________________| RCFD 5595 | | ////////////////// | 13.d.
_____________ ________________________________________________
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-15
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-L -- Continued
_____________
| C461 | -
_________________________________________ ____________________________|___________|
| (Column A) | (Column B) | (Column C) | (Column D) |
| Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other|
| Contracts | Contracts | Contracts | Contracts |
|___________________|____________________|____________________|____________________|
Dollar Amounts in Thousands |Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou |
______________________________________________________________________________________________________________________|
<S> <C> <C> <C> <C> <C>
| Off-balance Sheet Derivatives | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
| Position Indicators | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
___________________________________| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
14. Gross amounts (e.g., notional | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
amounts) (for each column, sum of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
items 14.a through 14.e must equal| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
sum of items 15, 16.a, and 16.b): |___________________|____________________|___________________ |____________________|
a. Future contracts .............. | 0 | 0 | 0 | 0 | 14.a.
| RCFD 8693 | RCFD 8694 | RCFD 8695 | RCFD 8696 |
b. Forward contracts ............. | 60,000 | 0 | 0 | 0 | 14.b.
| RCFD 8697 | RCFD 8698 | RCFD 8699 | RCFD 8700 |
c. Exchange-traded option contracts| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Written options .......... | 0 | 0 | 0 | 0 | 14.c.(1)
| RCFD 8701 | RCFD 8702 0 | RCFD 8703 | RCFD 8704 |
(2) Purchased options ........ | 0 | 0 | 0 | 0 | 14.c.(2)
| RCFD 8705 | RCFD 8706 | RCFD 8707 | RCFD 8708 |
d. Over-the-counter option contracts: | //////////////////| ///////////////// | ///////////////// | //////////////// |
(1) Written options .......... | 70,250 | 0 | 0 | 0 | 14.d.(1)
| RCFD 8709 | RCFD 8710 | RCFD 8711 | RCFD 8712 |
(2) Purchased options ........ | 370,250 | 0 | 0 | 0 | 14.d.(2)
| RCFD 8713 | RCFD 8714 | RCFD 8715 | RCFD 8716 |
e. Swaps ............................ | 3,537,871 | 0 | 0 | 0 | 14.e.
| RCFD 3450 | RCFD 3826 | RCFD 8719 | RCFD 8720 |
15. Total gross notional amount of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
derivative contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading ......................... | 191,500 | 0 | 0 | 0 | 15.
| RCFD A126 | RFD A127 | RCFD 8723 | RCFD 8724 |
16. Total gross notional amount of | ///////////////// | //////////////// | ///////////////// | ////////////////// |
derivative contracts held for | ///////////////// | ///////////////// | ///////////////// | ////////////////// |
purposes other than trading: | ///////////////// | ///////////////// | ///////////////// | ////////////////// |
a. Contracts marked to market ... | 0 | 0 | 0 | 0 | 16.a.
| RCFD 8725 | RCFD 8726 | RCF 8727 | RCFD 8728 |
b. Contracts not marked to market | 3,846,871 | 0 | 0 | 0 | 16.b.
| RCF 8729 | RCFD 8730 | RFD 8731 | RCFD 8732 |
___________________________________________________________________________________|
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-15
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-L -- Continued
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other|
| Contracts | Contracts | Contracts | Contracts |
|___________________|____________________|____________________|____________________|
Dollar Amounts in thousands |RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________________________________________________|
<S> <C> <C> <C> <C> <C>
| Off-balance Sheet Derivatives | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
| Position Indicators | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
___________________________________| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
17. Gross fair values of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
derivative contracts: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8733 840 | 8734 0 | 8735 0 | 8736 0 | 17.a.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8737 814 | 8738 0 | 8739 0 | 8740 0 | 17.a.(2)
b. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
purposes other than | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading that are marked | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
to market: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8741 0 | 8742 0 | 8743 0 | 8744 0 | 17.b.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8745 0 | 8746 0 | 8747 0 | 8748 0 | 17.b.(2)
c. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
purposes other than | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading that are not | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
marked to market: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value .................. | 8749 4,117 | 8750 0 | 8751 0 | 8752 0 | 17.c.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8753 51,811 | 8754 0 | 8755 0 | 8756 0 | 17.c.(2)
|__________________________________________________________________________________|
______________________
Memoranda Dollar Amounts in Thousands | RCFD Bil Mil Thou |
_________________________________________________________________________________________________________________________
1. -2. Not applicable | ////////////////// |
3. Unused commitments with an original maturity exceeding one year that are reported in | ////////////////// |
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments | ////////////////// |
that are fee paid or otherwise legally binding) ................................................ | 3833 4,666,515 | M.3.
a. Participations in commitments with an original maturity | ////////////////// |
exceeding one year conveyed to others ................................|RCFD 3834 | 77,235 | ////////////////// | M.3.a.
________________________
4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Standby letters of credit and foreign office guarantees (both financial and performance) issued | ////////////////// |
to non-U.S. addresses (domicile) included in Schedule RC-L, items 2 and 3, above ............... | 3377 419,235 | M.4.
5. To be completed for the September report only: | ////////////////// |
Installment loans to individuals for household, family, and other personal expenditures that | ////////////////// |
have been securitized and sold without recourse (with servicing retained), amounts outstanding | ////////////////// |
by type of loan: | ////////////////// |
a. Loans to purchase private passenger automobiles ............................................. | 2741 N/A | M.5.a.
b. Credit cards and related plans .............................................................. | 2742 N/A | M.5.b.
c. All other consumer installment credit (Including mobile home loans) ......................... | 2743 N/A | M.5.c.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-17
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9| _____________
| C465 |
_________|___________|
Schedule RC-M--Memoranda | |
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
______________________________________________________________________________________________________|____________________|
<S> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal | ////////////////// |
shareholders, and their related interests as of the report date: | ////////////////// |
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal |
shareholders and their related interests ..................................................... | 6164 6,676 | 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of all | ////////////////// |
extensions of credit by the reporting bank (Including extensions of credit to | ////////////////// |
related interests) equals or exceeds the lesser of $500,000 or 5 percent Number | ////////////////// |
___________________________| ////////////////// |
of total capital as defined for this purpose in agency regulations. | RCFD 6165 | 4 | ////////////////// |
___________________________| ////////////////// | 1.b.
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches | ////////////////// |
and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b) .................... | 3405 0 | 2.
3. Not applicable. | ////////////////// |
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others | ////////////////// |
(include both retained servicing and purchased servicing): | ////////////////// |
a. Mortgages serviced under a GNMA contract ...................................................... | 5500 21,759 | 4.a.
b. Mortgages serviced under a FHLMC contract: | ////////////////// |
(1) Serviced with recourse to servicer ........................................................ | 5501 12,023 | 4.b.(1)
(2) Serviced without recourse to servicer ..................................................... | 5502 1,173,885 | 4.b.(2)
c. Mortgages serviced under a FNMA contract: | ////////////////// |
(1) Serviced under a regular option contract .................................................. | 5503 50,802 | 4.c.(1)
(2) Serviced under a special option contract .................................................. | 5504 1,913,154 | 4.c.(2)
d. Mortgages serviced under other servicing contracts ............................................ | 5505 3,879,382 | 4.d.
5. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must | ////////////////// |
equal Schedule RC, item 9): | ////////////////// |
a. U.S. addressees (domicile) .................................................................... | 2103 7,330 | 5.a.
b. Non-U.S. addressees (domicile) ................................................................ | 2104 0 | 5.b.
6. Intangible assets: | ////////////////// |
a. Mortgage servicing rights ..................................................................... | 3164 26,116 | 6.a.
b. Other identifiable intangible assets: | ////////////////// |
(1) Purchased credit card relationships ....................................................... | 5506 0 | 6.b.(1)
(2) All other identifiable intangible assets .................................................. | 5507 3,834 | 6.b.(2)
c. Goodwill ...................................................................................... | 3163 280,364 | 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) ........................ | 2143 310,314 | 6.d.
e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or | ////////////////// |
are otherwise qualifying for regulatory capital purposes ...................................... | 6442 0 | 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to | ////////////////// |
redeem the debt ...................................................................................| 3295 0 | 7.
______________________
- ------------
<FN>
(1) Do not report federal funds sold and securities purchased under agreements to resell with other
commercial banks in the U.S. in this item.
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATINAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-18
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-M--Continued ________________________
Dollar Amounts in Thousands | Bil Mil Thou|
_____________________________________________________________________________________________ |_______________________|
<S> <C> C>
8. a. Other real estate owned: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ......................... | RCFD 5372 0 | 8.a.(1)
(2) All other real estate owned: | /////////////////////// |
(a) Construction and land development in domestic offices ....................... | RCON 5508 0 | 8.a.(2)(a)
(b) Farmland in domestic offices ................................................ | RCON 5509 0 | 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices ....................... | RCON 5510 517 | 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices .......... | RCON 5511 0 | 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices ....................... | RCON 5512 167 | 8.a.(2)(e)
(f) In foreign offices .......................................................... | RCFN 5513 0 | 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) ....... | RCFD 2150 684 | 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ......................... | RCFD 5374 0 | 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies ... | RCFD 5375 0 | 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) ....... | RCFD 2130 0 | 8.b.(3)
c. Total assets of unconsolidated subsidiaries and associated companies ................ | RCFD 5376 0 | 8.c.
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, | /////////////////////// |
item 23, "Perpetual preferred stock and related surplus" ............................... | RCFD 3778 0 | 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include | /////////////////////// |
proprietary, private label, and third party products): | /////////////////////// |
a. Money market funds .................................................................. | RCON 6441 0 | 10.a.
b. Equity securities funds ............................................................. | RCON 8427 0 | 10.b.
c. Debt securities funds ............................................................... | RCON 8428 0 | 10.c.
d. Other mutual funds .................................................................. | RCON 8429 0 | 10.d.
e. Annuities ........................................................................... | RCON 8430 0 | 10.e.
f. Sales of proprietary mutual funds and annuities (included in itmes 10.a through | /////////////////////// |
10.e. above) ........................................................................... | RCON 8784 0 | 10.f.
_________________________
</TABLE>
<TABLE>
<CAPTION>
_________________________________________________________________________________________________________________________________
| |
______________________
|Memorandum Dollar Amounts in Thousands | RCFD Bil Mil Thou | |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
|1. Interbank holdings of capital instruments (to be completed for the December report only): | ////////////////// | |
| a. Reciprocal holdings of banking organizations' capital instruments ........................ | 3836 0 | M.1.a. |
| b. Nonreciprocal holdings of banking organizations' capital instruments ..................... | 3837 0 | M.1.b. |
______________________
| |
_________________________________________________________________________________________________________________________________
</TABLE>
28
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-19
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-N--Past Due and Nonaccrual Loans, Leases,
and Other Assets
The FFIEC regards the information reported in __________
all of Memorandum item 1, in items 1 through 10, | C470 | -
column A, and in Memorandum items 2 through 4, ______________________________________________________ ________
column A, as confidential. | (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
| accruing | accruing | |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
1. Loans secured by real estate: | ////////////////// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ................ | 1245 74,980 | 1246 18,839 | 1247 36,031 | 1.a.
b. To non-U.S. addressees (domicile) ............ | 1248 0 | 1249 0 | 1250 0 | 1.b.
2. Loans to depository institutions and | ////////////////// | ////////////////// | ////////////////// |
acceptances of other banks: | ////////////////// | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository | ////////////////// | ////////////////// | ////////////////// |
institutions ................................. | 5377 0 | 5378 0 | 5379 0 | 2.a.
b. To foreign banks ............................. | 5380 0 | 5381 0 | 5382 0 | 2.b.
3. Loans to finance agricultural production and | ////////////////// | ////////////////// | ////////////////// |
other loans to farmers .......................... | 1594 17 | 1597 0 | 1583 2 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ................ | 1251 16,064 | 1252 1,062 | 1253 26,685 | 4.a.
b. To non-U.S. addressees (domicile) ............ | 1254 0 | 1255 0 | 1256 0 | 4.b.
5. Loans to individuals for household, family, and | ////////////////// | ////////////////// | ////////////////// |
other personal expenditures: | ////////////////// | ////////////////// | ///////////////// |
a. Credit cards and related plans ............... | 5383 592 | 5384 162 | 5385 149 | 5.a.
b. Other (includes single payment, installment, | ////////////////// | ////////////////// | ////////////////// |
and all student loans) ....................... | 5386 17,822 | 5387 1,880 | 5388 1,749 | 5.b.
6. Loans to foreign governments and official | ////////////////// | ////////////////// | ////////////////// |
institutions .................................... | 5389 0 | 5390 0 | 5391 0 | 6.
7. All other loans ................................. | 5459 4,902 | 5460 435 | 5461 1,118 | 7.
8. Lease financing receivables: | ////////////////// | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ................ | 1257 57 | 1258 0 | 1259 0 | 8.a.
b. Of non-U.S. addressees (domicile) ............ | 1271 0 | 1272 0 | 1791 0 | 8.b.
9. Debt securities and other assets (exclude other | ////////////////// | ////////////////// | ////////////////// |
real estate owned and other repossessed assets) . | 3505 0 | 3506 0 | 3507 0 | 9.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
________________________________________________________________
10. Loans and leases reported in items 1 | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
through 8 above which are wholly or partially | ////////////////// | ////////////////// | ////////////////// |
guaranteed by the U.S. Government ............... | 5612 1,479 | 5613 321 | 5614 251 | 10.
a. Guaranteed portion of loans and leases | ////////////////// | ////////////////// | ////////////////// |
included in item 10 above .................... | 5615 1,252 | 5616 248 | 5617 225 | 10.a.
________________________________________________________________
</TABLE>
29
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-20
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-N--Continued
__________
| C473 | -
______________________________________________________ ________
| (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
Memoranda | accruing | accruing | |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
1. Restructured loans and leases included in | ////////////////// | /////////////////// | ///////////////// |
Schedule RC-N, items 1 through 8, above (and not | ////////////////// | /////////////////// | ///////////////// |
reported in Schedule RC-C, part I, Memorandum | ////////////////// | /////////////////// | ///////////////// |
item 2) ......................................... | 1658 0 | 1659 0 | 1661 1,578 | M.1.
2. Loans to finance commercial real estate, | ////////////////// | /////////////////// | ///////////////// |
construction, and land development activities | ////////////////// | /////////////////// | ///////////////// |
(not secured by real estate) included in | ////////////////// | /////////////////// | ///////////////// |
Schedule RC-N, items 4 and 7, above ............. | 6558 4,511 | 6559 0 | 6560 1,403 | M.2.
|____________________|____________________ |___________________
3. Loans secured by real estate in domestic offices | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou|
|___________________ |____________________ ____________________
(included in Schedule RC-N, item 1, above): | ////////////////// | ////////////////// | ////////////////// |
a. Construction and land development ............ | 2759 2,261 | 2769 268 | 3492 378 | M.3.a.
b. Secured by farmland .......................... | 3493 0 | 3494 0 | 3495 139 | M.3.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by | ////////////////// | ////////////////// | ////////////////// |
1-4 family residential properties and | ////////////////// | ////////////////// | ////////////////// |
extended under lines of credit ........... | 5398 4,446 | 5399 2,091 | 5400 2,628 | M.3.c.(1)
(2) All other loans secured by 1-4 family | ////////////////// | ////////////////// | ////////////////// |
residential properties ................... | 5401 39,576 | 5402 12,419 | 5403 10,421 | M.3.c.(2)
d. Secured by multifamily (5 or more) | ////////////////// | ////////////////// | ////////////////// |
residential properties ....................... | 3499 1,336 | 3500 175 | 3501 520 | M.3.d.
e. Secured by nonfarm nonresidential properties . | 3502 27,361 | 3503 3,886 | 3504 21,945 | M.3.e.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
| Past due 30 | Past due 90 |
| through 89 days | days or more |
____________________ ____________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________
<S> <C> <C> <C>
4. Interest rate, foreign exchange rate, and other | ////////////////// | ////////////////// |
commodity and equity contracts: | ////////////////// | ////////////////// |
a. Book value of amounts carried as assets ...... | 3522 0 | 3528 0 | M.4.a.
b. Replacement cost of contracts with a | ////////////////// | ////////////////// |
positive replacement cost .................... | 3529 0 | 3530 0 | M.4.b.
___________________________________________
</TABLE>
30
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-21
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION> ______________________
Schedule RC-O--Other Data for Deposit Insurance Assessments | C475 |
|____________________|
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unposted debits (see instructions): | ////////////////// |
a. Actual amount of all unposted debits ...................................................... | 0030 N/A | 1.a.
OR | ////////////////// |
b. Separate amount of unposted debits: | ////////////////// |
(1) Actual amount of unposted debits to demand deposits ................................... | 0031 0 | 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits(1) ...................... | 0032 0 | 1.b.(2)
2. Unposted credits (see instructions): | ////////////////// |
a. Actual amount of all unposted credits ..................................................... | 3510 N/A | 2.a.
OR | ////////////////// |
b. Separate amount of unposted credits: | ////////////////// |
(1) Actual amount of unposted credits to demand deposits .................................. | 3512 182,201 | 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1) ..................... | 3514 0 | 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included in total | ////////////////// |
deposits in domestic offices) ................................................................ | 3520 0 | 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in | ////////////////// |
Puerto Rico and U.S. territories and possessions (not included in total deposits): | ////////////////// |
a. Demand deposits of consolidated subsidiaries .............................................. | 2211 8,343 | 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries ................................. | 2351 0 | 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries ...................... | 5514 0 | 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: | ////////////////// |
a. Demand deposits in insured branches (included in Schedule RC-E, Part II) .................. | 2229 0 | 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II) ..... | 2383 0 | 5.b.
c. Interest accrued and unpaid on deposits in insured branches | ////////////////// |
(included in Schedule RC-G, item 1.b) ..................................................... | 5515 0 | 5.c.
______________________
______________________
Item 6 is not applicable to state nonmember banks that have not been authorized by the | ////////////////// |
Federal Reserve to act as pass-through correspondents. | ////////////////// |
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on | ////////////////// |
behalf of its respondent depository institutions that are also reflected as deposit liabilities| ////////////////// |
of the reporting bank: | ////////////////// |
a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, | ////////////////// |
Memorandum item 4.a) ...................................................................... | 2314 0 | 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, | ////////////////// |
Memorandum item 4.b) ...................................................................... | 2315 0 | 6.b.
7. Unamortized premiums and discounts on time and savings deposits:(1) | ////////////////// |
a. Unamortized premiums ...................................................................... | 5516 0 | 7.a.
b. Unamortized discounts ..................................................................... | 5517 0 | 7.b.
______________________
_______________________________________________________________________________________________________________________________
| |
|8. To be completed by banks with "Oakar deposits." |
______________________
| Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) of | ////////////////// | |
| the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s)) .... | 5518 292,130 | 8. |
______________________
| |
_______________________________________________________________________________________________________________________________
______________________
9. Deposits in lifeline accounts ................................................................ | 5596 ///////////// | 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total | ////////////////// |
deposits in domestic offices) ................................................................ | 8432 0 | 10.
______________________
<FN>
______________
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction
accounts and all transaction accounts other than demand deposits.
</TABLE>
31
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-22
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-O--Continued
Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Adjustments to demand deposits in domestic offices reported in Schedule RC-E for | ////////////////// |
certain reciprocal demand balances: | ////////////////// |
a. Amount by which demand deposits would be reduced if reciprocal demand balances | ////////////////// |
between the reporting bank and savings associations were reported on a net basis | ////////////////// |
rather than a gross basis in Schedule RC-E .................................................. | 8785 0 | 11.a.
b. Amount by which demand deposits would be increased if reciprocal demand balances | ////////////////// |
between the reporting bank and U.S. branches and agencies of foreign banks were | ////////////////// |
reported on a gross basis rather than a net basis in Schedule RC-E .......................... | A181 0 | 11.b.
c. Amount by which demand deposits would be reduced if cash items in process of | ////////////////// |
collections were included in the calculation of net reciprocal demand balances between | ////////////////// |
the reporting bank and the domestic offices of U.S. banks and savings associations | ////////////////// |
in Schedule RC-E ............................................................................ | A182 2,235 | 11.c.
____________________
Memoranda (to be completed each quarter except as noted) Dollar Amounts in Thousands | RCON Bil Mil Thou |
________________________________________________________________________________________________|____________________|
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a. (1) and | ////////////////// |
1.b.(1) must equal Schedule RC, item 13.a): | ////////////////// |
a. Deposits accounts of $100,000 or less: | ////////////////// |
(1) amount of deposit accounts of $100,000 or less .................................... | 2702 6,065,796 | M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (to be Number | ////////////////// |
completed for the June report only) ..........................|RCON 3779________N/A | ////////////////// | M.1.a.(2)
b. Deposit accounts of more than $100,000: | ////////////////// |
(1) Amount of deposit accounts of more than $100,000 .................................. | 2710 4,731,325 | M.1.b.(1)
Number | ////////////////// |
(2) Number of deposit accounts of more than $100,000 .............|RCON 2722______7,493 | ////////////////// | M.1.b.(2)
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by mutiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2)
above by $100,000 and subtracting the result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether your bank has a method or
procedure for determining a better estimate of uninsured deposits that the ____________YES_______NO__
estimated described above ............................................................... |RCON 6861| |///| x | M.2.a.
____________________
b. If the box marked YES has been checked, report the estimate of uninsured deposits |RCON Bil Mil Thou|
determined by using your bank's method or procedure .................................... | 5597 N/A | M.2.b.
_____________________________________________________________________________________________________________________________
| C477 | -
Person to whom questions about the Reports of Condition and Income should be directed: __________
PAMELA S. FLYNN, VICE PRESIDENT (401) 278-5194
___________________________________________________________________________________ ______________________________________
Name and Title (TEXT 8901) Area code and phone number (TEXT 8902)
</TABLE>
32
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590 FFIEC 031
Address: 777 MAIN STREET Page RC-23
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-R--Risk-Based Capital
This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC,
item 12, for June 30, 1994, must complete items 2 through 9 and Memorandum item 1 and 2. Banks with assets of less than
$1 billion must complete items 1 and 2 below or Schedule RC-R in its entirety, depending on their response to item 1 below.
<S> <C>
1. Test for determining the extent to which Schedule RC-R must be completed. To be completed
____________
only by banks with total assets of less than $1 billion. Indicate in the appropriate | C480 | -
_____|__________|
box at the right whether the bank has total capital greater than or equal to eight percent | YES NO |
____________ _______________
of adjusted total assets ............................................................... | RCFD 6056 | |////| | 1.
_____________________________
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government
agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan
and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete items 2 below. If the box marked
NO has been checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight
percent or that the bank is not in compliance with the risk-based capital guidelines.
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
|Subordinated Debt(1)| Other |
| and Intermediate | Limited- |
Item 2 is to be completed by all banks. | Term Preferred | Life Capital |
| Stock | Instruments |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
2. Subordinated debt(1) and other limited-life capital instruments (original | ////////////////// | ////////////////// |
weighted average maturity of at least five years) with a remaining | ////////////////// | ////////////////// |
maturity of: | ////////////////// | ////////////////// |
a. One year or less ...................................................... | 3780 0 | 3786 0 | 2.a.
b. Over one year through two years ....................................... | 3781 0 | 3787 0 | 2.b.
c. Over two years through three years .................................... | 3782 0 | 3788 0 | 2.c.
d. Over three years through four years ................................... | 3783 0 | 3789 0 | 2.d.
e. Over four years through five years .................................... | 3784 0 | 3790 0 | 2.e.
f. Over five years ....................................................... | 3785 440,000 | 3791 0 | 2.f.
___________________________________________
3. Not applicable
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
Items 4-9 and Memorandum item 1 and 2 are to be completed | Assets | Credit Equiv- |
by banks that answered NO to item 1 above and | Recorded | alent Amount |
by banks with total assets of $1 billion or more. | on the | of Off-Balance |
| Balance Sheet | Sheet Items(2) |
____________________ ____________________
4. Assets and credit equivalent amounts of off-balance sheet items assigned | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________
<S> <C> <C> <C>
to the Zero percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Securities issued by, other claims on, and claims unconditionally | ////////////////// | ////////////////// |
guaranteed by, the U.S. Government and its agencies and other | ////////////////// | ////////////////// |
OECD central governments .......................................... | 3794 995,941 | ////////////////// | 4.a.(1)
(2) All other ......................................................... | 3795 615,688 | ////////////////// | 4.a.(2)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3796 0 | 4.b.
___________________________________________
<FN>
______________
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not report in column B the risk-weighted amount of assets reported in column A.
</TABLE>
33
<PAGE>
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590
Address: 777 MAIN STREET
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-R--Continued
___________________________________________
| (Column A) | (Column B) |
| Assets | Credit Equiv- |
| Recorded | alent Amount |
| on the | of Off-Balance |
| Balance Sheet | Sheet Items(1) |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 20 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Claims conditionally guaranteed by the U.S. Government and its | ////////////////// | ////////////////// |
agencies and other OECD central governments ....................... | 3798 21,803 | ////////////////// | 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. Govern- | ////////////////// | ////////////////// |
ment and its agencies and other OECD central governments; by | ////////////////// | ////////////////// |
securities issued by U.S. Government-sponsored agencies; and | ////////////////// | ////////////////// |
by cash on deposit ................................................ | 3799 0 | ////////////////// | 5.a.(2)
(3) All other ......................................................... | 3800 2,925,314 | ////////////////// | 5.a.(3)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3801 50,397 | 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 50 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet .................................. | 3802 2,913,084 | ////////////////// | 6.a.
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3803 62,727 | 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 100 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet .................................. | 3804 10,920,564 | ////////////////// | 7.a.
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3805 3,386,096 | 7.b.
8. On-balance sheet asset values excluded from the calculation of the | ////////////////// | ////////////////// |
risk-based capital ratio(2) .............................................. | 3806 4,047 | ////////////////// | 8.
9. Total assets recorded on the balance sheet (sum of | ////////////////// | ////////////////// |
items 4.a, 5.a, 6.a, 7.a, and 8, column A)(must equal Schedule RC, | ////////////////// | ////////////////// |
item 12 plus items 4.b and 4.c) .......................................... | 3807 18,396,441 | ////////////////// | 9.
___________________________________________
Memoranda
______________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
1.Current credit exposure across all off-balance sheet derivative contracts covered by the | ///////////////// |
risked-based capital standards ...................................................................| 8764 4,957| M.1.
|___________________|
________________________________________________________________
| With a remaining maturity of |
|______________________________________________________________|
| (Column A) | (Column B) | (Column C) |
| | | |
| One year or less | Over one year | Over five years |
| | through five years | |
|______________________________________________________________|
| RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
|____Tril____________|_____Tril___________|____Tril____________|
2. Notional principal amounts of <C> <C> <C> <C>
a. Interest rate contracts ................. | 3809 1,233,650 | 8766 2,389,471 | 8767 0 | M.2.a.
b. Foreign exchange contracts .............. | 3812 0 | 8769 0 | 8770 0 | M.2.b.
c. Gold contracts .......................... | 8771 0 | 8772 0 | 8773 0 | M.2.c.
d. Other precious metals contracts ......... | 8774 0 | 8775 0 | 8776 0 | M.2.d.
e. Other commodity contracts ............... | 8777 0 | 8778 0 | 8779 0 | M.2.e.
f. Equity derivative contracts ............. | A000 0 | A001 0 | A002 0 | M.2.f.
|______________________________________________________________|
_________________
<FN>
1) Do not report in column B the risk-weighted amount of assets reported in column A.
2) Include the difference between the fair value and the amortized cost of available-for-sale securities in item 8 and report
the amortized cost of these securities in items 4 through 7 above. Item 8 also includes on-balance sheet asset values (or
portions thereof) of off-balance sheet interest rate, foreign exchange rate, and commodity contracts and those contracts (e.g.,
futures contracts) not subject to risk-based capital. Exclude from item 8 margin accounts and accrued receivables as well as
any portion of the allowance for loan and lease losses in excess of the amount that may be included in Tier 2 capital.
3) Exclude foreign exchange contracts with an original maturity of 14 days or less and all futures contracts.
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<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK OF CONNECTICUT Call Date: 12/31/95 ST-BK: 09-0590
Address: 777 MAIN STREET
City, State Zip: HARTFORD, CT 06115
FDIC Certificate No.: |0|2|4|9|9|
<CAPTION>
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
- -------------------------------------------------------------------------------------------------------------------------------
| OMB No. For OCC: 1557-0081
Name and address of Bank | OMB No. For FDIC: 3064-0052
| OMB No. For Federal Reserve: 7100-0036
| Expiration Date: 3/31/96
|
PLACE LABEL HERE |
| SPECIAL REPORT
| (Dollar Amounts in Thousands)
|
|___________________________________________________________________
| CLOSE OF BUSINESS| FDIC Certificate Number | |
| DATE | | C-700 | -
| 12/31/95 | |0|2|4|9|9 | |
__________________________________________________________________________________________________________________________________
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
- ----------------------------------------------------------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but does not constitute a part of the Report of Condition.
With each Report of Condition, these Laws require all banks to furnish a report of all loans or other extensions of credit to
their executive officers made since the date of the previous Report of Condition. Data regarding individual loans or other
extensions of credit are not required. If no such loans or other extensions of credit were made during the period, insert "none"
against subitem (a). (Exclude the first $15,000 of indebtedness of each executive officer under bank credit card plan.) See
Sections 215.2 and 215.3 of Title 12 of the Code of Federal Regulations (Federal Reserve Board Regulation 0) for the definitions
of "executive officer" and "extension of credit," respectively. Exclude loans and other extensions of credit to directors and
principal shareholders who are not executive officers.
________________________________________________________________________________________________________________________________
<S> <C>
a. Number of loans made to executive officers since the previous Call Report date ...................| RCFD 3561| 0 a.
b. Total dollar amount of above loans (in thousands of dollars) .....................................| RCFD 3652| 0 b.
c. Range of interest charged on above loans
(example: 9 3/4% = 9.75) ........................................|RCFD 7701| 0.00 | % to | RCFD 7702 | 0.00 | % c.
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
SIGNATURE OF TITLE OF OFFICER AUTHORIZED TO SIGN REPORT | DATE (Month, Day, Year)
|
|
________________________________________________________________________________________________________________________________
NAME AND TITLE OF PERSON TO WHOM INQUIRIES MAY BE DIRECTED (TEXT 8903) | AREA CODE/PHONE NUMBER/EXTENSION
| (TEXT 8904)
|
ROBERT P. DUFF VICE PRESIDENT | (203) 986-2474
|
________________________________________________________________________________________________________________________________
FDIC 8040/53 (6-95)
35
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