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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
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(Amendment No. 5)
Leucadia National Corporation
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(Name of Issuer)
Common Shares, $1 par value 527288 5 10 4
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(Title of class of securities) (CUSIP number)
Stephen E. Jacobs, Esq.
Weil, Gotshal & Manges
767 Fifth Avenue
New York, NY 10153
(212) 310-8000
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(Name, address and telephone number of person authorized to receive
notices and communications)
May 12, 1994
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [_].
Check the following box if a fee is being paid with the statement [_].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7.)
Note: When filing this statement in paper format, six copies of this
statement, including exhibits, should be filed with the Commission. See
Rule 13d-1(a) for other parties to whom copies are to be sent.
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CUSIP No. 527288 5 10 4 13D
1 NAME OF REPORTING PERSON: Ian M. Cumming
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS: N/A
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_]
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF United States
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 5,917,122<F1>
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 306,556<F2>
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 5,917,122(*)
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 306,556(**)
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 6,223,678(*)(**)
OWNED BY REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 21.7%
14 TYPE OF REPORTING PERSON: IN
<F1> Includes 690,000 shares acquirable upon the
exercise of currently exercisable warrants.
<F2> Includes 100,000 shares acquirable upon the
exercise of currently exercisable warrants.
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CUSIP No. 527288 5 10 4 13D
1 NAME OF REPORTING PERSON: Joseph S. Steinberg
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS: N/A
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_]
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF United States
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 5,674,706<F1>
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 21,200
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 5,674,706(*)
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 21,200
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 5,695,906(*)
OWNED BY REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [x]
EXCLUDES CERTAIN SHARES: Excludes 563,700 Common
Shares beneficially owned by two trusts for the
benefit of Joseph S. Steinberg's minor children as
to which Mr. Steinberg disclaims beneficial
ownership.
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 19.8%
14 TYPE OF REPORTING PERSON: IN
<F1> Includes 796,000 shares acquirable upon the
exercise of currently exercisable warrants.
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This Statement constitutes Amendment No. 5 to the Statement
on Schedule 13D (the "Schedule 13D") filed with the Securities and
Exchange Commission by Ian M. Cumming and Joseph S. Steinberg with
respect to the Common Shares, par value $1 per share, of Leucadia
National Corporation (the "Company"). This Amendment No. 5 is the
first amendment to the Schedule 13D since the Company became an EDGAR
filer. Accordingly, this Amendment No. 5 restates, in pertinent part,
the Schedule 13D as follows:
Item 1. Security and Issuer.
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This Statement relates to the common shares, par value $1.00
(the "Common Shares"), of Leucadia National Corporation (the
"Company"). The address of the principal executive office of the
Company is 315 Park Avenue South, New York, New York 10010. All
references to ownership of Common Shares have been adjusted to reflect
a two-for-one stock split of the Common Shares in the form of a 100%
stock dividend effected on January 8, 1993. This Schedule 13D is
being filed by Ian M. Cumming and Joseph S. Steinberg.
Item 2. Identity and Background.
-----------------------
(a)-(c) Mr. Ian M. Cumming's principal occupation is
Chairman of the Board of the Company and his business address is 529
East South Temple, Salt Lake City, Utah 84102.
Mr. Joseph S. Steinberg's principal occupation is President
of the Company and his business address is 315 Park Avenue South, New
York, New York 10010.
(d)-(f) During the last five years, neither Mr. Cumming nor
Mr. Steinberg has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) nor was a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction as a result of which he was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws. For information
concerning certain litigation in which Messrs. Cumming and Steinberg
have been named as defendants, see Appendix A filed with the initial
Schedule 13D. Both Messrs. Cumming and Steinberg are United States
citizens.
Item 3. Source and Amount of Funds or Other Consideration.
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The information contained in Item 4 of this Schedule 13D is
incorporated herein by reference.
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Item 4. Purpose of the Transaction.
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TLC Associates, a New York general partnership ("TLC"), was
organized in April 1979 by Ian M. Cumming, Joseph S. Steinberg, CMCO,
Inc. (formerly Carl Marks & Co., Inc.) ("CMCO"), a New York
corporation engaged in investment banking, and Stern & Stern
Industries, Inc. (formerly Stern & Stern Textiles, Inc.), a New York
corporation engaged in the manufacture and sale of textiles. TLC was
formed to acquire control of the Company. As of May 31, 1990, TLC
beneficially owned 17,298,752 Common Shares, or approximately 58% of
the outstanding Common Shares.
On May 31, 1990, TLC dissolved and distributed its assets,
consisting solely of 17,298,752 Common Shares, to its partners
according to the terms of the TLC partnership agreement (the
"Dissolution"). In the Dissolution, Mr. Cumming received 3,899,518
Common Shares, Mr. Steinberg received 3,509,566 Common Shares and a
trust for the benefit of Mr. Steinberg's minor children received
389,952 Common Shares (as to which Mr. Steinberg disclaims beneficial
ownership). As a result of the Dissolution, Messrs. Cumming and
Steinberg directly own the Common Shares that each had indirectly
beneficially owned prior to the Dissolution and all previously
existing voting arrangements with respect to the Common Shares
beneficially owned by TLC terminated.
On August 30, 1990, Marks Investing Corporation ("MIC"), a
Delaware corporation that beneficially owned 9,129,464 Common Shares,
was merged (the "Merger") with and into the Company pursuant to the
Agreement and Plan of Merger dated as of April 5, 1990, a copy of
which was filed as Exhibit 1 to the initial Schedule 13D. In the
Merger, in exchange for their aggregate 6.88% interest in MIC, Mr.
Cumming received 400,960 Common Shares, plus $10.98 in lieu of
fractional shares, Mr. Steinberg received 227,210 Common Shares, plus
$24.21 in lieu of fractional shares, and a trust for the benefit of
Mr. Steinberg's minor children received 173,748 Common Shares (as to
which Mr. Steinberg disclaims beneficial ownership), plus $6.40 in
lieu of fractional shares.
On January 10, 1992, Leucadia purchased warrants (the "Old
Warrants") to purchase an aggregate of 1,600,000 Common Shares from
Mr. Cumming, Mr. Steinberg and certain of their respective family
members and donees at a purchase price of $9.1875 per Common Share
(calculated by taking the difference between the $11.00 per Common
Share exercise price of the Old Warrants and $20.1875, the closing
price of a Common Share on the
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New York Stock Exchange Composite Tape on January 9, 1992). The Old
Warrants were issued on May 23, 1991 and were transferable and
exercisable, in whole or in part, from May 23, 1991 through June 5,
1995. The form of Old Warrants was filed as Exhibit 3 to Amendment
No. 2 to the Schedule 13D and the form of Warrant Purchase Agreement
was filed as Exhibit 4 to Amendment No. 3 to the Schedule 13D.
The information contained in Item 6 of this Schedule 13D is
incorporated herein by reference.
Messrs. Cumming and Steinberg have an oral agreement
pursuant to which they will consult with each other as to the election
of a mutually acceptable Board of Directors of the Company.
Except as discussed above, neither Mr. Cumming nor Mr.
Steinberg has any present plans or intentions which would result in or
relate to any of the transactions described in subparagraphs (a)
through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
------------------------------------
(a)-(b) As of May 12, 1994, Ian M. Cumming and Joseph S.
Steinberg owned the following Common Shares:
Ian M. Cumming is the beneficial owner of 5,917,122 Common
Shares (including 690,000 Common Shares issuable upon the exercise of
warrants described in Item 6 hereto (the "Warrants") which are
exercisable within 60 days). The Common Shares represent
approximately 20.6% of the 27,973,623 Common Shares outstanding as of
May 6, 1994. Mr. Cumming has sole dispositive power over such Common
Shares. Mr. Cumming also may be deemed to be the beneficial owner of
an additional 206,556 Common Shares (.7%) beneficially owned by his
wife (directly and through trusts for the benefit of Mr. Cumming's
children of which Mr. Cumming's wife is trustee (the "Trusts")) and
100,000 Common Shares (.4%) issuable upon the exercise of the Warrants
which are exercisable within 60 days that are owned by the Trusts.
Joseph S. Steinberg is the beneficial owner of 5,674,706
Common Shares (including 796,000 Common Shares issuable upon the
exercise of the Warrants which are exercisable within 60 days). The
Common Shares represent approximately 19.7% of the 27,973,623 Common
Shares outstanding as of May 6, 1994. Mr. Steinberg has sole
dispositive power over such Common Shares. Mr. Steinberg also may be
deemed to be the beneficial owner of an
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additional 21,200 Common Shares (less than .1%) beneficially owned by
his wife and minor daughter. Mr. Steinberg disclaims beneficial
ownership as to an aggregate of an additional 563,700 Common Shares
(approximately 2.0%) beneficially owned by two trusts for the benefit
of Mr. Steinberg's minor children of which Mr. Steinberg's brother is
trustee.
Messrs. Cumming and Steinberg have an oral agreement
pursuant to which they will consult with each other as to the election
of a mutually acceptable Board of Directors of the Company.
(c) Not applicable.
(d) The information set forth in response to Item 6 hereof
is hereby incorporated herein by reference.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of
the Issuer.
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Pursuant to an agreement dated as of August 1, 1988 among
the Company, Ian M. Cumming and Joseph S. Steinberg, a copy of which
was filed as Exhibit 1 to the initial Schedule 13D, upon the death of
either Mr. Cumming or Mr. Steinberg, the Company has agreed to
purchase from the respective estate up to 55% of his direct and/or
indirect interest in the Company, subject to reduction in certain
circumstances, not to exceed $50,000,000 in value. The agreement
provides that Messrs. Cumming's and Steinberg's interests in the
Company will be valued at the higher of the average closing price of
the Common Shares on the New York Stock Exchange for the 40 trading
days preceding the date of death or the net book value of the Common
Shares at the end of the fiscal quarter preceding the date of date.
The Company has agreed to fund the purchase of Common Shares pursuant
to this agreement by purchasing and maintaining insurance on the life
of each of Messrs. Cumming and Steinberg in the aggregate face amount
of $50,000,000 per individual. The agreement will expire in December
1997 (subject to earlier termination in certain circumstances).
Following receipt of shareholder approval at the 1992 Annual
Meeting of Shareholders of the Company held on August 12, 1992, the
Company issued warrants (the "Warrants") to purchase 800,000 Common
Shares to each of Ian M. Cumming and Joseph S.
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Steinberg, at a purchase price of $20.1875 per share, the closing
price of a Common Share on the New York Stock Exchange, Inc. on
January 9, 1992, the day prior to the date the Warrants were
authorized by the Board of Directors of the Company. The Warrants
expire on January 10, 1997, and were not exercisable or transferable
(other than by gift or pursuant to the laws of descent and
distribution) prior to April 1, 1993.
The number of Common Shares that may be purchased pursuant
to the Warrants is subject to adjustment to reflect stock splits,
combinations of shares, recapitalizations, stock dividends, and
subscriptions and/or purchase rights in respect of Common Shares.
Each of the holders of the Warrants is entitled to demand registration
and incidental registration rights, the cost of which will be borne by
the Company. The foregoing description of the Warrants is qualified
in its entirety by reference to the form of Warrants filed as Exhibit
5 to Amendment No. 4 to the Schedule 13D.
In connection with a private transaction, Mr. Cumming has
entered into a certain Stock Pledge Agreement dated as of May 12, 1994
pursuant to which Mr. Cumming has pledged to The First National Bank
of Boston, as Agent, 500,000 Common Shares and Warrants to purchase an
aggregate of 690,000 Common Shares as security for certain
obligations, which, subject to certain conditions, mature on different
dates between May 1997 and May 1999. So long as there is no event of
default under the Stock Pledge Agreements, Mr. Cumming is entitled to
continue to exercise all voting rights with respect to such Common
Shares and to receive dividends, if any, with respect thereto. The
foregoing is qualified in its entirety by reference to the form of
Stock Pledge Agreement filed as Exhibit 6 hereto.
From time to time Mr. Cumming has pledged certain Common
Shares in connection with the maintenance of margin accounts and other
extensions of credit entered into in the normal course. As a result,
in addition to the pledges described herein, Mr. Cumming currently has
pledged an aggregate of 477,400 Common Shares to Chemical Bank and an
aggregate of 600,000 Common Shares to Republic New York Securities
Corp.
The information contained in Item 4 of this Schedule 13D is
incorporated herein by reference.
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Item 7. Material to be Filed as Exhibits.
--------------------------------
1. Agreement dated as of August 1, 1988 among Leucadia
National Corporation, Ian M. Cumming and Joseph S. Steinberg
(previously filed).
2. Agreement among the Reporting Persons with respect to
the filing of this Schedule 13D (previously filed).
3. Form of the Old Warrants (previously filed).
4. Form of Warrant Purchase Agreement (previously filed).
5. Form of the New Warrants (previously filed).
6. Form of Stock Pledge Agreement (filed herewith).
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SIGNATURE
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After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Statement is
true, complete and correct.
Dated: May 31, 1994
/s/ Ian M. Cumming
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Ian M. Cumming
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SIGNATURE
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After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Statement is
true, complete and correct.
Dated: May 31, 1994
/s/ Joseph S. Steinberg
-----------------------
Joseph S. Steinberg
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EXHIBIT INDEX
Exhibit No. Document Page
----------- -------- ----
1 Agreement dated as of August 1,
1988 among Leucadia National
Corporation, Ian M. Cumming
and Joseph S. Steinberg
(previously filed).
2 Agreement among the Reporting
Persons with respect to the
filing of this Schedule 13D
(previously filed).
3 Form of the Old Warrants
(previously filed).
4 Form of Warrant Purchase
Agreement (previously filed).
5 Form of the New Warrants
(previously filed).
6 Form of Stock Pledge Agreement
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Exhibit No. 6
STOCK PLEDGE AGREEMENT
----------------------
This STOCK PLEDGE AGREEMENT made as of May 12, 1994, by and
between IAN M. CUMMING, an individual with an address at 1470 Military
Way, Salt Lake City, Utah 84103 (the "Pledgor"), and THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, as agent
(hereinafter, in such capacity, the "Agent") for itself and the other
financial institutions (hereinafter, collectively, the "Banks") which
are or may become parties to a Term Loan Agreement dated as of May 12,
1994 (as amended and in effect from time to time, the "Loan
Agreement"), among the Pledgor, the Banks and the Agent.
WHEREAS, the Pledgor is the direct legal and beneficial
owner of certain of the issued and outstanding shares of the capital
stock and other securities of certain corporations described on Annex A
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(the "Companies"); and
WHEREAS, it is a condition precedent to the Banks' making
any loans or otherwise extending credit to the Pledgor under the Loan
Agreement that the Pledgor execute and deliver to the Agent, for the
benefit of the Banks and the Agent, a pledge agreement in
substantially the form hereof; and
WHEREAS, the Pledgor has entered into a Guaranty dated as of
the date hereof (the "Guaranty") in favor of the Agent for the benefit
of the Banks and the Agent, pursuant to which the Pledgor guarantees
all of the obligations of Powdr Corp. ("Powdr") to the Banks and the
Agent under that certain Term Loan Agreement dated as of May 2, 1994
(the "Powdr Agreement") among Powdr, the Banks and the Agent, and the
other Loan Documents (as defined in the Powdr Agreement); and
WHEREAS, the Pledgor has agreed to secure its obligations
under the Guaranty and the Loan Agreement with a pledge agreement in
substantially the form hereof; and
WHEREAS, the Pledgor wishes to grant pledges and security
interests in favor of the Agent, for the benefit of the Banks and the
Agent, as herein provided;
NOW, THEREFORE, in consideration of the premises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree
as follows:
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1. PIEDGE OF STOCK, ETC.
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1.1. PLEDGE OF STOCK. The Pledgor hereby pledges,
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assigns, grants a security interest in, and delivers to the
Agent, for the benefit of the Banks and the Agent, (i) those
certain shares of capital stock of the Companies and (ii)
those certain securities consisting of warrants to purchase
the capital stock of the Companies, each as more fully
described on Annex A hereto, to be held by the Agent, for
----- -
the benefit of the Banks and the Agent, subject to the terms
and conditions hereinafter set forth. The certificates for
such shares and other securities, accompanied by stock
powers or other appropriate instruments of assignment
thereof duly executed in blank by the Pledgor, have been
delivered to the Agent.
1.2. ADDITIONAL OR SUBSTITUTED STOCK. In case the
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Pledgor shall be required to provide additional security in
accordance with Section 9(d) of the Loan Agreement or wishes
to substitute shares or other securities in accordance with
Section 6 of the Loan Agreement, then the Pledgor shall
forthwith deliver to and pledge such additional or
substituted shares or other securities to the Agent, for the
benefit of the Banks and the Agent, under this Agreement and
shall deliver to the Agent forthwith any certificates
therefor, accompanied by stock powers or other appropriate
instruments of assignment duly executed by the Pledgor in
blank. The Pledgor agrees that the Agent may from time to
time attach as Annex A hereto an updated list of the shares
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of capital stock or securities at the time pledged with the
Agent hereunder.
1.3. PLEDGE OF CASH COLLATERAL ACCOUNT. The Pledgor
---------------------------------
also hereby pledges, assigns, grants a security interest in,
and delivers to the Agent, for the benefit of the Banks and
the Agent, the Cash Collateral Account and all of the Cash
Collateral as such terms are hereinafter defined.
2. DEFINITIONS. All capitalized terms used herein without
-----------
definition shall have the respective meanings provided therefor in the
Loan Agreement. Terms used herein and not defined in the Loan
Agreement or otherwise defined herein that are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts or
in any other applicable jurisdiction have such defined meanings
herein, unless the context otherwise indicated or requires, and the
following terms shall have the following meanings:
Cash Collateral. See Section 4.
---------------
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Cash Collateral Account. See Section 4.
-----------------------
Obligations. Collectively, all obligations of the Pledgor
-----------
to the Banks, whether direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising under or in
relation to the Loan Agreement, the related promissory notes of the
Pledgor and the Guaranty, in each case as now in effect or as
hereafter amended, modified, supplemented or restated.
Stock. Includes the shares of stock described in Annex A
----- ----- -
attached hereto, any shares of stock obtained through the exercise of
warrants described in Annex A attached hereto and any additional
----- -
shares of stock at the time pledged with the Agent hereunder.
Stock Collateral. The property at any time pledged to the
----------------
Agent hereunder (whether described herein or not) and all income
therefrom, increases therein and proceeds thereof, including without
limitation the stock, the warrants described in Annex A and that
included in Cash Collateral, but excluding from the definition of
"Stock Collateral" any income, increases or proceeds received by the
Pledgor to the extent expressly permitted by Section 6.
Time Deposits. See Section 4.
-------------
3. SECURITY FOR OBLIGATIONS. This Agreement and the
------------------------
security interest in and pledge of the Stock Collateral hereunder are
made with and granted to the Agent, for the benefit of the Banks and
the Agent, as security for the payment and performance in full of all
the Obligations.
4. LIQUIDATION, RECAPITALIZATION, ETC.
----------------------------------
4.1. DISTRIBUTIONS PAID TO AGENT. Any sums or other
---------------------------
property paid or distributed upon or with respect to any of
the Stock, whether by dividend or redemption or upon the
liquidation or dissolution of the issuer thereof or
otherwise, shall, except to the limited extent provided in
Section 6, be paid over and delivered to the Agent to be
held by the Agent, for the benefit of the Banks and the
Agent, as security for the payment and performance in full
of all of the Obligations. In case, pursuant to the
recapitalization or reclassification of the capital of the
issuer thereof or pursuant to the reorganization thereof,
any distribution of capital shall be made on or in respect
of any of the Stock or any property shall be distributed
upon or with respect to any of the Stock or the Stock
Collateral, the property so distributed
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shall be delivered to the Agent, for the benefit of the
Banks and the Agent, to be held by it as security for the
Obligations. Except to the limited extent provided in
Section 6, all sums of money and property paid or
distributed in respect of the Stock Collateral, whether as a
dividend or upon such a liquidation, dissolution,
recapitalization or reclassification or otherwise, that are
received by the Pledgor shall, until paid or delivered to
the Agent, be held in trust for the Agent, for the benefit
of the Banks and the Agent, as security for the payment and
performance in full of all of the Obligations.
4.2. CASH COLLATERAL ACCOUNT. All sums of money that
-----------------------
are delivered to the Agent pursuant to this Section 4 shall
be deposited into an interest bearing account with the Agent
(the "Cash Collateral Account"). Some or all of the funds
from time to time in the Cash Collateral Account may be
invested in time deposits, including, without limitation,
certificates of deposit issued by the Agent (such
certificates of deposit or other time deposits being
hereinafter referred to, collectively, as "Time Deposits"),
that are satisfactory to the Agent after consultation with
the Pledgor, provided, that, in each such case, arrangements
--------
satisfactory to the Agent are made and are in place to
perfect and to insure the first priority of the Agent's
security interest therein. Interest earned on the Cash
Collateral Account and on the Time Deposits, and the
principal of the Time Deposits at maturity that is not
invested in new Time Deposits, shall be deposited in the
Cash Collateral Account. The Cash Collateral Account, all
sums from time to time standing to the credit of the Cash
Collateral Account, any and all Time Deposits, any and all
instruments or other writings evidencing Time Deposits and
any and all proceeds or any thereof are hereinafter referred
to as the "Cash Collateral."
4.3. PLEDGOR'S RIGHTS TO CASH COLLATERAL, ETC. Except
----------------------------------------
as otherwise expressly provided in Section 15 hereof, the
Pledgor shall have no right to withdraw sums from the Cash
Collateral Account, to receive any of the Cash Collateral or
to require the Agent to part with the Agent's possession of
any instruments or other writings evidencing any Time
Deposits.
5. WARRANTY OF TITLE; AUTHORITY. The Pledgor hereby
----------------------------
represents and warrants that: (a) the Pledgor has good and marketable
title to, and is the sole record and beneficial owner of, the Stock
Collateral described in Section 1, subject to no pledges, liens,
security interests, charges, options, restrictions or other
encumbrances except the pledge and security interest created by this
Agreement, (b) all of the Stock described in Section 1 is validly
issued, fully paid and non-assessable, (c) the Pledgor has the legal
capacity to
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execute, deliver and perform his obligations under this Agreement and
to pledge and grant a security interest in all of the Stock Collateral
pursuant to this Agreement, and the execution, delivery and
performance hereof and the pledge of and granting of a security
interest in the Stock Collateral hereunder do not contravene any law,
rule or regulation or of any judgment, decree or order of any tribunal
or constitute a default under any agreement or instrument to which the
Pledgor is a party or by which he or any of his property is bound or
affected, and (d) the information set forth in Annex A hereto relating
----- -
to the Stock Collateral is true, correct and complete in all respects.
The Pledgor covenants that he will defend the rights of the Banks and
the Agent and security interest of the Agent, for the benefit of the
Banks and the Agent, in such Stock Collateral against the claims and
demands of all other persons. The Pledgor further covenants that he
will have the like title to and right to pledge and grant a security
interest in the Stock Collateral hereafter pledged or in which a
security interest is granted to the Agent hereunder and will likewise
defend the rights, pledge and security interest thereof and therein of
the Banks and the Agent.
6. DIVIDENDS, VOTING, ETC., PRIOR TO MATURITY. So long as
------------------------------------------
no Event of Default shall have occurred and be continuing, the Pledgor
shall be entitled to receive all cash dividends paid in respect of the
Stock, to vote the Stock and to give consents, waivers and
ratifications in respect of the Stock; provided, however, that no vote
-------- -------
shall be cast or consent, waiver or ratification given by the Pledgor
if the effect thereof would impair any of the Stock Collateral or be
inconsistent with or result in any violation of any of the provisions
of the Loan Agreement, the Notes or any of the other Loan Documents.
So long as no Event of Default shall have occurred and be continuing,
the Pledgor shall be entitled to exercise, in whole or in part, the
warrants to purchase shares of capital stock of the Companies pledged
hereunder, subject at all times to the pledge thereof, provided that,
-------------
the Pledgor shall forthwith deliver to the Agent all certificates
representing the capital stock of the Companies issued upon such
exercise, accompanied by stock powers duly executed by the Pledgor in
blank. All such rights of the Pledgor to receive cash dividends or
exercise the warrants shall cease in case an Event of Default shall
have occurred and be continuing. All such rights of the Pledgor to
vote and give consents, waivers and ratifications with respect to the
Stock shall, at the Agent's option, as evidenced by the Agent's
notifying the Pledgor of such election, cease in case an Event of
Default shall have occurred and be continuing.
7. REMEDIES.
--------
7.1. IN GENERAL. If an Event of Default shall have
----------
occurred and be continuing, the Agent shall thereafter have
the following rights and remedies (to the extent permitted
by applicable law) in addition to the rights and remedies of
a secured party under the Uniform Commercial Code as in
effect in the
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Commonwealth of Massachusetts or in any other applicable
jurisdiction, all such rights and remedies being cumulative,
not exclusive, and enforceable alternatively, successively
or concurrently, at such time or times as the Agent deems
expedient:
(a) if the Agent so elects and gives notice of
such election to the Pledgor, the Agent may vote any or
all shares of the Stock (whether or not the same shall
have been transferred into its name or the name of its
nominee or nominees) for any lawful purpose, including,
without limitation, if the Agent so elects, for the
liquidation of the assets of the issuer thereof, and
give all consents, waivers and ratifications in respect
of the Stock and otherwise act with respect thereto as
though it were the outright owner thereof and the Agent
may exercise all rights of the holder of the warrants
pledged hereunder, including, without limitation, the
right to demand registration of the capital stock
issuable on exercise thereof (in each case, the Pledgor
hereby irrevocably constituting and appointing the
Agent the proxy and attorney-in-fact of the Pledgor,
with full power of substitution, to do so);
(b) the Agent may demand, sue for, collect or make
any compromise or settlement the Agent deems suitable
in respect of any Stock Collateral;
(c) the Agent may sell, resell, assign and
deliver, or otherwise dispose of any or all of the
Stock Collateral, for cash or credit or both and upon
such terms at such place or places, at such time or
times and to such entities or other persons as the
Agent thinks expedient, all without demand for
performance by the Pledgor or any notice or
advertisement whatsoever except as expressly provided
herein or as may otherwise be required by law;
(d) the Agent may cause all or any part of the
Stock Collateral held by it to be transferred into its
name or the name of its nominee or nominees; and
(e) the Agent may set off against the Obligations
any and all sums deposited with it or held by it,
including without limitation, any sums credited to the
Cash Collateral Account and any Time Deposits issued by
the Agent.
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7.2. SALE OF STOCK COLLATERAL. In the event of any
------------------------
disposition of the Stock Collateral as provided in paragraph
(c) of Section 7.1 above, the Agent shall give to the
Pledgor at least five (5) Business Days prior written notice
of the time and place of any public sale of the Stock
Collateral or of the time after which any private sale or
any other intended disposition is to be made. The Pledgor
hereby acknowledges that five (5) Business Days prior
written notice of such sale or sales shall be reasonable
notice. The Agent may enforce its rights hereunder without
any other notice and without compliance with any other
condition precedent now or hereunder imposed by statute,
rule of law or otherwise (all of which are hereby expressly
waived by the Pledgor, to the fullest extent permitted by
law). The Agent may buy any part or all of the Stock
Collateral at any public sale and if any part or all of the
Stock Collateral is of a type customarily sold in a
recognized market or is of the type which is the subject of
widely-distributed standard price quotations, the Agent may
buy at private sale and may make payments thereof by any
means. The Agent may apply the cash proceeds actually
received from any sale or other disposition to the
reasonable expenses of retaking, holding, preparing for
sale, selling and the like, to reasonable attorneys' fees,
travel and all other expenses which may be incurred by the
Agent in attempting to collect the Obligations or to enforce
this Agreement or in the prosecution or defense of any
action or proceeding related to the subject matter of this
Agreement, and then to the Obligations in such order or
preference as the Agent may determine after proper allowance
for Obligations not then due. Only after such applications,
and after payment by the Agent of any amount required by
Section 9-504(1)(c) of the Uniform Commercial Code as in
effect in the Commonwealth of Massachusetts or any similar
provision of the UCC as in effect in any other applicable
jurisdiction, need the Agent account to the Pledgor for any
surplus. To the extent that any of the Obligations are to be
paid or performed by a person other than the Pledgor, the
Pledgor waives and agrees not to assert any rights or
privileges which it may have under Section 9-112 of the
Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts or any similar provision of the UCC as in
effect in any other applicable jurisdiction.
7.3. REGISTRATION OF STOCK. If the Agent shall
---------------------
determine to exercise its right to sell any or all of the
Stock Collateral pursuant to this Section 7, and if in the
opinion of counsel for the Agent it is necessary, or if in
the reasonable opinion of the Agent it is advisable, to have
the Stock, or that portion thereof to be sold, registered
under the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), the Pledgor agrees to use
his best
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efforts to cause the issuer or issuers of the Stock
contemplated to be sold, to execute and deliver, and cause
the directors and officers of such issuer to execute and
deliver, all at the Pledgor's expense, all such instruments
and documents, and to do or cause to be done all such other
acts and things as may be necessary or, in the reasonable
opinion of the Agent, advisable to register such Stock under
the provisions of the Securities Act and to cause the
registration statement relating thereto to become effective
and to remain effective for a period of nine (9) months from
the date such registration statement became effective, and
to make all amendments thereto or to the related prospectus
or both that, in the reasonable opinion of the Agent, are
necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission
applicable thereto. The Pledgor agrees to use his best
efforts to cause such issuer or issuers to comply with the
provisions of the securities or "Blue Sky" laws of any
jurisdiction which the Agent shall designate and to cause
such issuer or issuers to make available to its security
holders, as soon as practicable, an earnings statement
(which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.
7.4. PRIVATE SALES. The Pledgor recognizes that the
-------------
Agent may be unable to effect a public sale of the Stock
Collateral by reason of certain prohibitions contained in
the Securities Act, federal banking laws, and other
applicable laws, but may be compelled to resort to one or
more private sales thereof to a restricted group of
purchasers. The Pledgor agrees that any such private sales
may be at prices and other terms less favorable to the
seller than if sold at public sales and that such private
sales shall not by reason thereof be deemed not to have been
made in a commercially reasonable manner. The Agent shall
be under no obligation to delay a sale of any of the Stock
Collateral for the period of time necessary to permit the
issuer of such securities to register such securities (or
securities issuable upon exercise thereof) for public sale
under the Securities Act, or such other federal banking or
other applicable laws, even if the issuer would agree to do
so. Subject to the foregoing, the Agent agrees that any sale
of the Stock Collateral shall be made in a commercially
reasonable manner, and the Pledgor agrees to use his best
efforts to cause the issuer or issuers of the Stock
Collateral contemplated to be sold, to execute and deliver,
and cause the directors and officers of such issuer to
execute and deliver, all at the Pledgor's expense, all such
instruments and documents, and to do or cause to be done all
such other acts and things as may be necessary or, in the
reasonable opinion of the Agent, advisable to exempt
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such Stock Collateral from registration under the provisions
of the Securities Act, and to make all amendments to such
instruments and documents which, in the opinion of the
Agent, are necessary or advisable, all in conformity with
the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission
applicable thereto. The Pledgor further agrees to use his
best efforts to cause such issuer or issuers to comply with
the provisions of the securities or "Blue Sky" laws of any
jurisdiction which the Agent shall designate and, if
required, to cause such issuer or issuers to make available
to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.
7.5. PLEDGOR'S AGREEMENTS, ETC. The Pledgor further
-------------------------
agrees to do or cause to be done all such other acts and
things as may be reasonably necessary to make any sales of
any portion or all of the Stock Collateral pursuant to this
Section 7 valid and binding and in compliance with any and
all applicable laws (including, without limitation, the
Securities Act, the Securities Exchange Act of 1934, as
amended, the rules and regulations of the Securities and
Exchange Commission applicable thereto and all applicable
state securities or "Blue Sky" laws), regulations, orders,
writs, injunctions, decrees or awards of any and all courts,
arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales,
all at the Pledgor's expense. The Pledgor further agrees
that a breach of any of the covenants contained in this
Section 7 will cause irreparable injury to the Agent and the
Banks, that the Agent and the Banks have no adequate remedy
at law in respect of such breach and, as a consequence,
agrees that each and every covenant contained in this
Section 7 shall be specifically enforceable against the
Pledgor by the Agent and the Pledgor hereby waives and
agrees not to assert any defenses against an action for
specific performance of such covenants. Notwithstanding the
provisions of this Article 7, no registration statement
shall be required to be filed or become or remain effective
if (a) it would require a special audit of the financial
statements of the issuer, (b) registrations may not be
appropriately effected in light of any material pending
transaction of the issuer or its subsidiaries, or any
registration of any underwritten public offering of
securities made on behalf of the issuer has become effective
within 90 days prior to the anticipated effectiveness of the
registration requested pursuant to this Article 7 or (c)
such registration statement would be filed prior to the
earlier of the 90th day after the end of any fiscal year of
the issuer or the date
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on which the issuer's audited financial statements for such
fiscal year are available.
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8. MARSHALLING. Neither the Agent nor any Bank shall be
-----------
required to marshal any present or future collateral security for
(including but not limited to this Agreement and the Stock
Collateral), or other assurances of payment of, the Obligations or any
of them, or to resort to such collateral security or other assurances
of payment in any particular order. All of the Agent's rights
hereunder and of the Banks and the Agent in respect of such collateral
security and other assurances of payment shall be cumulative and in
addition to all other rights, however existing or arising. To the
extent that he lawfully may, the Pledgor hereby agrees that he will
not invoke any law relating to the marshalling of collateral that
might cause delay in or impede the enforcement of the Agent's rights
under this Agreement or under any other instrument evidencing any of
the Obligations or under which any of the Obligations is outstanding
or by which any of the Obligations is secured or payment thereof is
otherwise assured, and to the extent that he lawfully may the Pledgor
hereby irrevocably waives the benefits of all such laws.
9. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of
----------------------------------
the Pledgor hereunder shall remain in full force and effect without
regard to, and shall not be impaired by (a) any exercise or
nonexercise, or any waiver, by the Agent or any Bank of any right,
remedy, power or privilege under or in respect of any of the
Obligations or any security thereof (including this Agreement); (b)
any amendment to or modification of the Loan Agreement, the Notes, the
other Loan Documents, the Guaranty or any of the Obligations; (c) any
amendment to or modification of any instrument (other than this
Agreement) securing any of the Obligations, including, without
limitation, any of the Security Documents; or (d) the taking of
additional security for, or any other assurances of payment of, any of
the Obligations or the release or discharge or termination of any
security or other assurances of payment or performance for any of the
Obligations; whether or not the Pledgor shall have notice or knowledge
of any of the foregoing.
10. TRANSFER, ETC., BY PLEDGOR. Except as otherwise
--------------------------
permitted herein, without the prior written consent of the Agent, the
Pledgor will not sell, assign, transfer or otherwise dispose of, grant
any option with respect to, or pledge or grant any security interest
in or otherwise encumber or restrict any of the Stock Collateral or
any interest therein, except for the pledge thereof and security
interest therein provided for in this Agreement.
11. FURTHER ASSURANCES. The Pledgor will do all such acts,
------------------
and will furnish to the Agent all such financing statements,
certificates, legal opinions and other documents and will obtain all
such governmental consents and corporate approvals and will do or
cause to be done all such other things as the Agent may reasonably
request from time
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to time in order to give full effect to this Agreement and to secure
the rights of the Banks and the Agent hereunder, all without any cost
or expense to the Agent or any Bank. If the Agent so elects, a
photocopy of this Agreement may at any time and from time to time be
filed by the Agent as a financing statement in any recording office in
any jurisdiction.
12. AGENT'S EXONERATION. Under no circumstances shall the
-------------------
Agent be deemed to assume any responsibility for or obligation or duty
with respect to any part or all of the Stock Collateral of any nature
or kind or any matter or proceedings arising out of or relating
thereto, other than (a) to exercise reasonable care in the physical
custody of the Stock Collateral and (b) after an Event of Default
shall have occurred and be continuing to act in a commercially
reasonable manner. Neither the Agent nor any Bank shall be required
to take any action of any kind to collect, preserve or protect its or
the Pledgor's rights in the Stock Collateral or against other parties
thereto. The Agent's prior recourse to any part or all of the Stock
Collateral shall not constitute a condition of any demand, suit or
proceeding for payment or collection of any of the Obligations.
13. NO WAIVER, ETC. Neither this Agreement nor any term
--------------
hereof may be changed, waived, discharged or terminated except by a
written instrument expressly referring to this Agreement and to the
provisions so modified or limited, and executed by the Agent, with the
consent of the Majority Banks, and the Pledgor. No act, failure or
delay by the Agent shall constitute a waiver of its rights and
remedies hereunder or otherwise. No single or partial waiver by the
Agent of any default or right or remedy that it may have shall operate
as a waiver of any other default, right or remedy or of the same
default, right or remedy on a future occasion. The Pledgor hereby
waives presentment, notice of dishonor and protest of all instruments,
included in or evidencing any of the Obligations or the Stock
Collateral, and any and all other notices and demands whatsoever
(except as expressly provided herein or in the Loan Agreement).
14. NOTICE, ETC. All notices, requests and other
-----------
communications hereunder shall be made in the manner set forth in
Section 18 of the Loan Agreement.
15. TERMINATION; PARTIAL RELEASE. Upon final payment and
----------------------------
performance in full of the Obligations, this Agreement shall terminate
and the Agent shall, at the Pledgor's request and expense, return such
Stock Collateral in the possession or control of the Agent as has not
theretofore been disposed of pursuant to the provisions hereof,
together with any moneys and other property at the time held by the
Agent hereunder. Upon repayment or prepayment in full or in part of
the Term Loan or the term loan under the Powdr Agreement, the Agent
shall, within ten (10) Business Days after receipt of a request from
the Pledgor, release Stock Collateral having a fair market value of up
to two times the principal amount
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so repaid or prepaid, provided that after giving effect to such
--------
release, the Collateral Coverage Ratio shall equal or exceed 2.00 to
1.00.
16. OVERDUE AMOUNTS. Until paid, all amounts due and
---------------
payable by the Pledgor hereunder shall be a debt secured by the Stock
Collateral and shall bear, whether before or after judgment, interest
at the rate of interest for overdue principal set forth in the Loan
Agreement.
17. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT
--------------------------------------
IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS. The Pledgor agrees that any suit for
the enforcement of this Agreement may be brought in the courts of the
Commonwealth of Massachusetts or any federal court sitting therein and
consents to the non-exclusive jurisdiction of such court and to
service of process in any such suit being made upon the Pledgor by
mail at the address specified in Section 18 of the Loan Agreement. The
Pledgor hereby waives any objection that he may now or hereafter have
to the venue of any such suit or any such court or that such suit is
brought in an inconvenient court.
18. WAIVER OF JURY TRIAL. THE PLEDGOR WAIVES HIS RIGHT TO A
--------------------
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS.
Except as prohibited by law, the Pledgor waives any right which he may
have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages.
The Pledgor (a) certifies that neither the Agent or any Bank nor any
representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would
not, in the event of litigation, seek to enforce the foregoing waivers
and (b) acknowledges that, in entering into the Loan Agreement and the
other Loan Documents to which the Agent is a party, the Agent and the
Banks are relying upon, among other things, the waivers and
certifications contained in this Section 18.
19. MISCELLANEOUS. The headings of each section of this
-------------
Agreement are for convenience only and shall not define or limit the
provisions thereof. This Agreement and all rights and obligations
hereunder shall be binding upon the Pledgor and his respective
successors and assigns, and shall inure to the benefit of the Agent
and the Banks and their respective successors and assigns. If any term
of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall be in no
way affected
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thereby, and this Agreement shall be construed and be enforceable as
if such invalid, illegal or unenforceable term had not been included
herein. The Pledgor acknowledges receipt of a copy of this Agreement.
IN WITNESS WHEREOF, intending to be legally bound, the
Pledgor and the Agent have caused this Agreement to be executed as of
the date first above written.
-----------------------------------
Ian M. Cumming
THE FIRST NATIONAL BANK OF BOSTON,
as Agent
By:
--------------------------------
Title:
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ANNEX A TO PLEDGE AGREEMENT
---------------------------
Capital Stock
-------------
Par or
Class of Number of Liquidation
Issuer Shares Shares Value
------ -------- --------- -----------
Powdr Corp. Common 13,334 $.01/share
Leucadia National Common 500,000 $1.00/share
Corporation
Warrants
--------
Number of Exercise Expiration
Issuer Shares Price Date
------ --------- -------- ----------
Leucadia 690,000 $20.1875 January 10, 1997
National
Corporation
