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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
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LEUCADIA NATIONAL CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
New York 13-2615557
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(State of Incorporation (I.R.S. Employer
or Organization) Identification No.)
315 Park Avenue South, New York, New York 10010
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(Address and Telephone Number of (Zip Code)
Principal Executive Offices)
If this Form relates to the registration of a class of debt securities and
is effective upon filing pursuant to General Instruction A(c)(1) please
check the following box. [_]
If this Form relates to the registration of a class of debt securities and
is to become effective simultaneously with the effectiveness of a
concurrent registration statement under the Securities Act of 1933 pursuant
to General Instruction A(c)(2) please check the following box. [x]
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
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$100,000,000 ______% New York Stock Exchange
Senior Subordinated Notes
due__________, 2005
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
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ITEM 1. Description of Registrant's Securities to be Registered.
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Reference is made to the information contained under the
caption "Description of Notes" on pages 10 through 18 of the
Prospectus, dated May 31, 1995, contained in the Registration
Statement on Form S-3 (No. 33-59463) filed by Leucadia National
Corporation (the "Company") under the Securities Act of 1933 for a
description of the ____% Senior Subordinated Notes due 2005 (the
"Notes") being registered hereby. Such information is incorporated by
reference.
ITEM 2. Exhibits.
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1. Form of Note (incorporated herein by reference from
Exhibit 4.2 to the Company's Registration Statement on Form S-3, File
No. 33-59463).
2. Form of Indenture, dated as of June __, 1995, between
the Company and The First National Bank of Boston, as Trustee, in
respect of the Notes (incorporated herein by reference from Exhibit
4.1 to the Company's Registration Statement on Form S-3, File No.
33-59463).
3. Pages 10-18 of the Company's Prospectus, dated May 31,
1995.
NYFS04...:\30\76830\0213\1628\FRM5315N.380
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized.
LEUCADIA NATIONAL CORPORATION
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(Registrant)
Date: June 1, 1995
By: /s/ Joseph A. Orlando
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Joseph A. Orlando,
Vice President and
Comptroller
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EXHIBIT INDEX
Exhibit No. Exhibit Description Exemption Indication
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1 Form of ____ % Senior Subordinated Note
due 2005 (incorporated herein by reference
from Exhibit 4.2 to the Company's
Registration Statement on Form
S-3, File No. 33-59463).
2 Form of Indenture, dated as of June __,
1995, between the Company and The First
National Bank of Boston, as Trustee, in
respect of the ____% Senior Subordinated
Notes due 2005 (incorporated herein by
reference from Exhibit 4.1 to the
Company's Registration Statement on Form
S-3, File No. 33-59463).
3 Pages 10-18 of the Company's Prospectus,
dated May 31, 1995.
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EXHIBIT 3
DESCRIPTION OF NOTES
The Notes are to be issued under an Indenture to be dated as
of , 1995, between the Company and The First National Bank
of Boston, as Trustee (the "Trustee").
The statements herein relating to the Notes and the
Indenture are summaries and make use of defined terms in the
Indenture, which are incorporated herein by reference, and are
qualified in their entirety by express reference to the
Indenture, a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
GENERAL
The Notes will bear interest from , 1995 at the rate
shown on the cover page of this Prospectus, payable on
and in each year to the Noteholders of record at
the close of business on the and
immediately preceding such interest payment date, commencing
, 1995. The Notes will be due on , 2005,
will be issued only in denominations of $1,000 and integral
multiples of $1,000, and will be general unsecured obligations of
the Company. The Indenture authorizes an aggregate principal
amount of $100,000,000 of the Notes.
OPTIONAL REDEMPTION
The Notes are not redeemable at the option of the Company
prior to maturity.
SINKING FUND
The Notes are not subject to sinking fund payments.
SUBORDINATION OF NOTES
The payment of all Obligations with respect to the Notes
will be subordinated in right of payment, as set forth in the
Indenture, to the prior payment in full of all Senior
Indebtedness (as defined in the Indenture) of the Company whether
outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed. Upon (a) the maturity of Senior
Indebtedness by lapse of time, acceleration or otherwise or (b)
any distribution of the assets of the Company upon any
dissolution, winding up, liquidation or reorganization of the
Company, the holders of Senior Indebtedness will be entitled to
receive payment in full before the Noteholders are entitled to
receive any payment. In addition, the Indenture will provide
that no payments in respect of any Obligations with respect to
the Notes may be made if (i) any payment default on any Senior
Indebtedness shall have occurred or (ii) any other default under
any Senior Indebtedness shall have occurred which would permit
the holders thereof to accelerate such Indebtedness and the
Company shall have received notice of such default, unless, in
the case of clauses (i) or (ii), such default shall have been
cured or waived; provided, that (a) payments on the Notes may
resume in the case of any default described in clause (ii) on the
date which is 179 days after the giving of such notice (provided
there is not then a default under clause (i)) and (b) in no event
shall such payment blockage be applicable for more than 179 days
in each 360-day period. If in any of the situations referred to
in clause (i) or (ii) above a payment is made to the Trustee or
to Noteholders before all Senior Indebtedness has been paid in
full or provision has been made for such payment, the payment to
the Trustee or Noteholders must be paid over to the holders of
the Senior Indebtedness.
The Indenture defines "Senior Indebtedness" to mean all
Obligations of the Company with respect to the following, whether
outstanding at the date of original execution of the Indenture or
thereafter incurred, created or assumed: (a) indebtedness of the
Company for money borrowed, including, without limitation,
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Company for money borrowed which is evidenced by notes,
debentures, bonds or other securities issued under the
provisions of an indenture or other instrument, and also
including indebtedness represented by Purchase Money Obligations
(as defined), but only to the extent such indebtedness is
enforceable by a money judgment; (b) guarantees or assumptions by
the Company of indebtedness of others of any of the kinds
described in the preceding clause (a); and (c) renewals,
extensions and refundings of, and indebtedness of a successor
corporation issued in exchange for or in replacement of,
indebtedness, guarantees and assumptions of the kinds described
in the preceding clauses (a) or (b), unless, in the case of any
particular indebtedness, obligation, guarantee, assumption,
renewal, extension or refunding, the instrument creating or
evidencing the same expressly provides that such indebtedness,
obligation, guarantee, assumption, renewal, extension or
refunding is not superior in right of payment to the Notes;
provided, that Senior Indebtedness shall not be deemed to include
(i) any indebtedness of the Company to any Subsidiary, (ii) any
liability for taxes, (iii) any amounts payable or other
liabilities to trade creditors arising in the ordinary course of
business, (iv) any indebtedness which is subordinate or junior by
its terms to any other indebtedness of the Company, (v) the 10-
3/8% Notes, (vi) the 5-1/4% Debentures or (vii) the Swiss Franc
Bonds. At March 31, 1995, the amount of outstanding Senior
Indebtedness of the Company was $149,081,000, net of debt
discount of $919,000, and the amount of indebtedness of
Subsidiaries of the Company, to which the Notes are effectively
subordinated, was $23,068,000, exclusive of $191,989,000 of
Deposits. The Indenture will provide that no indebtedness of the
Company shall be senior in right of payment to the Notes unless such
indebtedness is pari passu in right of payment with the Company's
other Senior Indebtedness.
"Obligations" means any principal, interest, penalties,
fees, indemnities and other obligations and liabilities payable
under the documentation governing the applicable Indebtedness.
By reason of such subordination, in the event of insolvency,
general creditors of the Company may recover less, ratably, than
holders of Senior Indebtedness and may recover more, ratably,
than Noteholders or holders of other subordinated indebtedness of
the Company.
The Notes will rank senior in right of payment to the 5-1/4%
Debentures and the Swiss Franc Bonds and pari passu with the 10-
3/8% Notes.
CERTAIN COVENANTS
The Indenture will contain the following covenants:
Restriction on Incurrence of Indebtedness by the Company and
on Incurrence of Indebtedness and Issuance of Preferred Stock by
Its Subsidiaries. The Company shall not, and shall not permit
any Subsidiary to, create, incur, assume, or guarantee the
payment of any Indebtedness, and shall not permit any of its
Subsidiaries to issue any Preferred Stock, if, at the time of
such event and after giving effect thereto on a pro forma basis,
the Company's ratio of Consolidated Debt to Consolidated Tangible
Net Worth, as of the most recent date for which consolidated
financial statements are available and adjusted for the
incurrence of all Indebtedness and the issuance of all Preferred
Stock by Subsidiaries (other than Permitted Indebtedness) since
that date, would be greater than 1.75 to 1. This restriction
shall not preclude the incurrence of Permitted Indebtedness.
"Consolidated Debt" means, on any date, the sum of (i) total
Indebtedness of the Company and its Subsidiaries, at such date,
determined in accordance with generally accepted accounting
principles as in effect on December 31, 1994 ("GAAP") on a
consolidated basis, and (ii) the aggregate liquidation preference
of all Preferred Stock of Subsidiaries of the Company, at such
date, other than Preferred Stock to the extent held by the
Company and its Subsidiaries; provided, that Consolidated Debt
shall not include Permitted Indebtedness.
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"Indebtedness" of any Person means (i) any liability of such
Person (a) for borrowed money, (b) evidenced by a note, debenture
or similar instrument (including a Purchase Money Obligation or
deferred payment obligation) given in connection with the
acquisition of any property or assets (other than inventory or
similar property acquired in the ordinary course of business),
including securities, (c) for the payment of a Capitalized Lease
Obligation of such Person or (d) with respect to the
reimbursement of any letter of credit, banker's acceptance or
similar credit transaction (other than trade letters of credit
issued in the ordinary course of business; provided, that the
failure to make prompt reimbursement of any trade letter of
credit shall be deemed to be the incurrence of Indebtedness); and
(ii) any guarantee by such Person of any liability of others
described in clause (i) above or any obligation of such Person
with respect to any liability of others described in clause (i)
above. Indebtedness shall not include Deposits.
"Permitted Indebtedness" means (i) any Indebtedness of the
Company and its Subsidiaries outstanding on the date of the
Indenture, or any refinancing or replacement thereof; provided,
that the aggregate amount of such Indebtedness is not increased,
(ii) Acquired Indebtedness, (iii) Preferred Stock of Subsidiaries
held by the Company or its Subsidiaries (it being understood that
the sale of such Preferred Stock by the Company or such
Subsidiary to any Person other than the Company or a Subsidiary
of the Company or such Subsidiary no longer being a Subsidiary
shall be deemed the issuance of Preferred Stock for purposes of
the above test) and (iv) intercompany Indebtedness.
"Acquired Indebtedness" means Indebtedness or Preferred
Stock of a Person either (i) existing at the time such Person
becomes a Subsidiary, (ii) assumed in connection with the
acquisition of assets of such Person or (iii) any refinancing or
replacement by such Person of such Indebtedness or Preferred
Stock; provided, that the aggregate amount of such Indebtedness
or Preferred Stock then outstanding is not increased. Acquired
Indebtedness shall not include (x) any such Indebtedness created
or Preferred Stock issued in anticipation of such Person becoming
a Subsidiary (other than a refinancing or replacement of
Indebtedness or Preferred Stock of such Person, which original
Indebtedness or Preferred Stock was not incurred or issued in
anticipation of such Person becoming a Subsidiary), or (y) any
Indebtedness or Preferred Stock that is recourse to the Company
or any Subsidiary or any of their respective assets, other than
to such Person and its Subsidiaries and their respective assets.
Restriction on Investments by Insurance Subsidiaries. The
Indenture will provide that the Company shall not permit any
Subsidiary which is an insurance company to make, directly or
indirectly, any Investment other than in Investment Grade
Securities if, after giving effect thereto at the time of such
Investment, less than 80% of the aggregate Investments of such
insurance company would consist of Investment Grade Securities,
valuing Investments for purposes of this restriction at original
cost. The foregoing restriction shall not (i) apply to
Investments in the Company or any Subsidiary of the Company, (ii)
prevent the Company or its Subsidiaries from acquiring the
Capital Stock of, or all or substantially all of the assets of,
an insurance company or (iii) apply to securities issued in a
restructuring or exchange offer or similar transaction offered
generally to all holders of another security then held by such
Subsidiary.
"Investment Grade Securities" means (i) securities having
any of the following ratings: at least BBB- or the equivalent
thereof by S&P or at least Baa3 or the equivalent thereof by
Moody's or at least BBB- or the equivalent thereof by Duff &
Phelps Inc. ("Duff & Phelps") or (ii) cash or Cash Equivalents.
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"Cash Equivalents" shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States or
any agency or instrumentality thereof, (ii) U.S. dollar
denominated time deposits, certificates of deposit, eurodollar
time deposits, eurodollar certificates of deposit, and bankers
acceptances of any domestic commercial bank of recognized
standing having capital and surplus in excess of $500 million,
(iii) commercial paper having a rating from S&P of at least A-2
or the equivalent thereof or from Moody's of at least P-2 or the
equivalent thereof or from Duff & Phelps of at least D-2 or the
equivalent thereof and maturing within nine months from the date
of acquisition, and (iv) tax-exempt commercial paper of United
States municipal, state or local governments rated at least A-2
or the equivalent thereof by S&P or at least P-2 or the
equivalent thereof by Moody's or at least D-2 or the equivalent
thereof by Duff & Phelps and maturing within nine months from the
date of acquisition.
Restricted Payments and Restricted Investments. The Company
shall not, and shall not permit any Subsidiary to, make, directly
or indirectly, any Restricted Payment or Restricted Investment
if, immediately after giving effect to such Restricted Payment or
Restricted Investment, as the case may be: (a) a Default or
Event of Default under the Indenture shall have occurred and be
continuing, (b) the Company's Consolidated Tangible Net Worth
would be less than $250 million, (c) the Company would not be
permitted to incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to the covenant
contained under "Restriction on Incurrence of Indebtedness by the
Company and on Incurrence of Indebtedness and Issuance of
Preferred Stock by Its Subsidiaries" above or (d) the sum of (x)
the aggregate amount expended for all Restricted Payments
subsequent to March 31, 1992 and (y) the aggregate amount of
Restricted Investments made subsequent to March 31, 1992 and then
outstanding reduced by any write down of any such Restricted
Investment to the extent that such write down otherwise reduced
Consolidated Net Income (the amount so expended for a Restricted
Payment or a Restricted Investment, if other than in cash, to be
determined by the Board of Directors of the Company, whose
determination shall be conclusive and evidenced by a Board
Resolution) would exceed the sum of (1) $35 million, (2) 50% of
the aggregate Consolidated Net Income of the Company (or minus
100% of the aggregate Consolidated Net Loss of the Company)
accrued on a cumulative basis subsequent to March 31, 1992, and
(3) the aggregate net proceeds, including the fair value of
property other than cash (as determined by the Board of Directors
of the Company, whose determination shall be conclusive and
evidenced by a Board Resolution), received by the Company in
respect of the issue or sale subsequent to March 31, 1992 of (i)
any shares of Capital Stock of the Company, or (ii) any
Indebtedness of the Company to the extent converted into or
exchanged for Capital Stock of the Company subsequent to March
31, 1992. The foregoing restrictions shall not prevent (x) the
payment of any dividend or distribution within 60 days after the
date of declaration thereof, if at such date of declaration such
payment complied with the foregoing provisions, or (y) the
retirement of any shares of the Company's Capital Stock by
exchange for, or upon conversion of, or out of the proceeds of
the substantially concurrent sale (other than to a Subsidiary)
of, other shares of the Capital Stock of the Company, and neither
such retirement, exchange or conversion nor the proceeds of any
such sale shall be included in any computation made above. On
the first day on which the aggregate Restricted Payments and
Restricted Investments exceed by $100 million (calculated on the
date of payment or investment) the amount of Restricted Payments
and Restricted Investments that could otherwise be made pursuant
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to this paragraph if gains on sales of segments, businesses or
major lines of business, net of losses on such sales (whether
sold as assets or stock), had been excluded from the definition
of "Consolidated Net Income," then each Noteholder shall have the
right, at such Noteholder's option, to require the Company to
purchase all or any portion (in integral multiples of $1,000) of
such Noteholder's Notes at 101% of the principal amount thereof,
plus accrued interest; provided, that the Company will not be
obligated to purchase any of such Notes unless Noteholders of at
least 10% of the Notes outstanding at the date of such Restricted
Payment or Restricted Investment (other than Notes held by the
Company and its Affiliates) shall have tendered their Notes for
repurchase. The mechanics, timing and other terms of the offer
will be substantially the same as those with respect to a "Change
of Control," as described below.
"Consolidated Net Income" and "Consolidated Net Loss" mean,
for any period, the net income or loss, as the case may be, of
the Company and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP (provided, that, for
periods ended prior to January 1, 1995, Consolidated Net Income
shall mean the reported income before cumulative effects of
changes in accounting principles of the Company and its
Subsidiaries); provided, that there shall be excluded therefrom
(to the extent otherwise included therein) (i) the net income (or
net loss) of any Person that is not the Company or a Subsidiary
of the Company, except net income of such Person may be included
to the extent of the amount of dividends or other distributions
actually paid or made to the Company or any of its Subsidiaries
by such other Person during such period, (ii) except to the
extent includible pursuant to the foregoing clause (i), the net
income (or net loss) of any other Person accrued prior to the
date it becomes a Subsidiary of the Company or is merged into or
consolidated with the Company or any of its Subsidiaries or such
other Person's assets are acquired by the Company or any of its
Subsidiaries, (iii) all extraordinary gains, to the extent they
exceed extraordinary losses, in each case, determined in
accordance with GAAP and (iv) all gains or losses resulting from
the effect of any accounting change.
"Consolidated Tangible Net Worth" with respect to the
Company means, as of any date, the total shareholders' equity of
the Company determined in accordance with GAAP less (a) (to the
extent not otherwise deducted from total shareholders' equity at
such date) the amount of Restricted Investments of the Company
and its Subsidiaries outstanding on such date and (b) any and all
goodwill and other intangible assets reflected on the
consolidated balance sheet of the Company as of such date.
Deferred policy acquisition costs ("DPAC") and that portion of
the value of insurance in force resulting from an acquisition and
equivalent to the amount of DPAC of the acquired entity
outstanding immediately prior to such acquisition shall not be
deemed goodwill or other intangible assets for purposes of
determining Consolidated Tangible Net Worth.
"Restricted Investment" means, with respect to the Company
or any Subsidiary of the Company, an Investment by such Person in
an Affiliate of the Company (other than (x) in the Company or a
Subsidiary of the Company or (y) in a Person that is an Affiliate
of the Company solely because of (i) the ownership of securities
of such Person by the Company or its Subsidiaries, (ii)
contractual arrangements between the Company and its Subsidiaries
and such Person or (iii) a combination of (i) and (ii)).
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"Restricted Payment" means (i) the declaration or making of
any dividend or of any other payment or distribution on or with
respect to the Company's Capital Stock (other than dividends,
payments or distributions payable solely in shares of the
Company's Capital Stock), (ii) any payment on account of the
purchase, redemption, retirement or other acquisition for value
of the Company's Capital Stock; provided, that so long as there
shall not be a Default or Event of Default under the Indenture any
payment to the estate of Ian M. Cumming or Joseph S. Steinberg
(or any trustee or other legal representative on behalf of the
legatees or heirs of such Persons) on account of the repurchase
or redemption of Voting Stock owned by such estates (or trustees
or legal representatives), solely from the net proceeds of any
life insurance maintained by the Company on either of such
Persons, shall not be a Restricted Payment and (iii) the
declaration or making of any dividend or any other payment or
distribution with respect to the Capital Stock of any Subsidiary
of the Company and any payment on account of the purchase,
redemption, retirement or other acquisition for value of the
Capital Stock of any Subsidiary of the Company but, with respect
to this clause (iii), only to the extent such dividend, payment
or distribution is received by an Affiliate of the Company (other
than (x) the Company or a Subsidiary of the Company or (y) a
Person that is an Affiliate of the Company solely because of (A)
the ownership of securities of such Person by the Company or its
Subsidiaries, (B) contractual arrangements between the Company
and its Subsidiaries and such Person or (C) a combination of (A)
and (B)).
Maintenance of Consolidated Tangible Net Worth. The Company
is required to furnish the Trustee with an Officers' Certificate
within 55 days after the end of any fiscal quarter (100 days
after the end of any fiscal year) notifying the Trustee that the
Company's Consolidated Tangible Net Worth has declined below the
Minimum Tangible Net Worth at the end of any fiscal quarter in
which the Company's Consolidated Tangible Net Worth has so
declined. If, on the last day of each of any two consecutive
fiscal quarters (the last day of the second fiscal quarter being
referred to herein as a "Deficiency Date"), the Company's
Consolidated Tangible Net Worth is less than the Minimum Tangible
Net Worth, then the Company is required, no later than 65 days
after each such Deficiency Date (110 days if such Deficiency Date
is the last day of the Company's fiscal year), to make an offer
to all Noteholders to purchase (an "Offer") 10% of the aggregate
principal amount of the Notes originally issued (the "Offer
Amount") at a purchase price of 100% of the principal amount of
the Notes, plus accrued interest to the date of purchase. The
Offer is required to remain open for a period of 20 business days
following its commencement (unless required to remain open for a
longer period by applicable law) and the Company is required to
purchase the Offer Amount of the Notes on a designated date no
later than five business days after the termination of the Offer
or, if less than the Offer Amount has been tendered, all Notes
then tendered; provided, however, that the Company will not be
obligated to purchase any of such Notes unless Noteholders holding
at least 10% of the Offer Amount of Notes shall have tendered and
not subsequently withdrawn their Notes for repurchase. If the
aggregate principal amount of Notes tendered to the Company
exceeds the Offer Amount, the Company is required to purchase the
Notes tendered to it pro rata among the Notes tendered (with such
adjustments as may be appropriate so that only Notes in
denominations of $1,000 and integral multiples thereof shall be
purchased). The Company will comply with all applicable Federal
and state securities laws in connection with each Offer. In no
event will the failure of the Company's Consolidated Tangible Net
Worth to equal or exceed the Minimum Tangible Net Worth at the
end of any fiscal quarter be counted toward the making of more
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than one Offer. The Company may reduce the principal amount of
Notes to be purchased pursuant to the Offer by subtracting 100%
of the principal amount of Notes acquired by the Company
subsequent to the Deficiency Date through purchase or exchange
and surrendered for cancellation. The Company, however, may not
credit Notes that have been previously used as a credit against
any obligation to repurchase Notes pursuant to this provision,
pursuant to a Change of Control offer or pursuant to the
repurchase obligation described under "Restricted Payments and
Restricted Investments."
"Minimum Tangible Net Worth" means $250 million.
Limitation on Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any Subsidiary to,
directly or indirectly, create or otherwise cause to exist or
become effective any encumbrance or restriction on the ability of
any Subsidiary to (a) pay dividends or make any other
distributions on its Capital Stock or any other interest or
participation in, or measured by, its profits, owned by the
Company or any Subsidiary, or pay any Indebtedness owed to the
Company or any Subsidiary, (b) make loans or advances to the
Company or any Subsidiary or (c) transfer any of its properties
or assets to the Company, except for such encumbrances or
restrictions existing under or by reasons of (i) applicable law,
(ii) the Indenture, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold
interest of the Company or any Subsidiary, (iv) any instrument
governing Acquired Indebtedness, which encumbrance or restriction
is not applicable to any Person, or the properties or assets of
any Person, other than such Person and its Subsidiaries, or the
property or assets of such Person and its Subsidiaries, so
acquired, (v) Indebtedness existing on the date of the Indenture
and any refinancing of such existing Indebtedness so long as the
terms and conditions of any such refinancing agreements are no
less favorable to the Company than those contained in the
agreements governing the Indebtedness being refinanced or (vi)
other Indebtedness; provided, that the Board of Directors of the
Company shall have concluded, in good faith, that the terms
thereof do not have a materially adverse effect on the Company,
on a stand-alone basis, or the Company's ability, on a stand-
alone basis, to meet its obligations.
Limitation on Issuance of Other Subordinated Debt. The
Company shall not issue, assume, guarantee, incur or otherwise
become liable, directly or indirectly, for any Indebtedness
subordinate or junior in ranking in any respect to any Senior
Indebtedness but senior in right of payment to the Notes.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE OF CONTROL
In the event of any Change of Control, each Noteholder shall
have the right, at such Noteholder's option, to require the
Company to purchase all or any portion (in integral multiples of
$1,000) of such Noteholder's Notes on the date (the "Change of
Control Payment Date") which is 20 business days after the date
the Change of Control Notice (as defined below) is mailed (or
such later date as is required by applicable law) at 101% of the
principal amount thereof, plus accrued interest to the Change of
Control Payment Date; provided that the Company will not be
obligated to purchase any of such Notes unless Noteholders holding
at least 10% of the Notes outstanding at the Change of Control
Payment Date (other than Notes held by the Company and its
Affiliates) shall have tendered their Notes for repurchase. In
addition, in the event of any Change of Control, the Company will
not, and will not permit any of its Subsidiaries to, purchase or
redeem any Indebtedness ranking junior to the Notes pursuant to
any analogous provisions on or prior to the Change of Control
Payment Date.
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The Company is obligated to send to all Noteholders, within
five business days after the occurrence of each Change of
Control, a notice of the occurrence of such Change of Control
(the "Change of Control Notice"), specifying a date by which a
Noteholder must notify the Company of such Noteholder's intention
to exercise the repurchase right and describing the procedure
that such Noteholder must follow to exercise such right. The
Company is required to deliver a copy of such notice to the
Trustee and to cause a copy of such notice to be published in a
daily newspaper of national circulation. To exercise the
repurchase right, the Noteholder must deliver, on or before the
fifth calendar day prior to the Change of Control Payment Date,
written notice (which shall be irrevocable, except as provided
below) to the Company (or an agent designated by the Company for
such purpose) of the Noteholder's exercise of such right,
together with (i) the Note or Notes with respect to which the
right is being exercised, duly endorsed for transfer with the
form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, and (ii) if the Change of Control Payment
Date falls between any record date for the payment of interest on
the Notes and the next succeeding interest payment date, an
amount equal to the interest which the Noteholder is entitled to
receive on such interest payment date. The Company will comply
with all applicable Federal and state securities laws in
connection with each Change of Control Notice.
A "Change of Control" shall be deemed to occur if (i) the
Company has any other Indebtedness outstanding (other than
Indebtedness under a bank credit agreement or similar bank
financing) which provides for a Change of Control (as defined in
the instrument governing such Indebtedness) if Ian M. Cumming or
Joseph S. Steinberg ceases to beneficially own, in the aggregate,
a certain percentage of the outstanding Common Shares, which
percentage ownership requirement is in excess of 10%, and a
Change of Control (as defined in the instrument governing such
Indebtedness) occurs under such Indebtedness or (ii) at any time
when the Company does not have any other Indebtedness outstanding
of the type referred to in clause (i), Ian M. Cumming or Joseph
S. Steinberg, individually or in the aggregate, sells, transfers
or otherwise disposes of (a "Disposition"), after the date of the
Indenture, Common Shares so that, after giving effect thereto,
the sole beneficial ownership of outstanding Common Shares by Mr.
Cumming and/or Mr. Steinberg would, in the aggregate, fall below
10% of the then outstanding Common Shares; provided, that no
Change of Control shall be deemed to have occurred under clause
(ii) if the Notes are rated by Moody's or S&P as Investment Grade
both at the time of such Disposition and for a period of 90 days
from the date of such Disposition (it being understood that, with
respect to the foregoing proviso, a Change of Control shall be
deemed to occur on the first date during such 90-day period when
the Notes are rated below Investment Grade by both Moody's and
S&P). The term "Common Shares" shall include any securities
issued as dividends or distributions on the Common Shares. For
purposes hereof, "sole beneficial ownership" of Common Shares
shall be deemed to include (i) all Common Shares received after
June 15, 1992 from Mr. Cumming or Mr. Steinberg by any member of
their respective immediate families or by any trust for the
benefit of either of them or any member of their respective
immediate families (a "Recipient"), which Common Shares remain
held by a Recipient during the lifetime of Mr. Cumming or Mr.
Steinberg (unless sold, transferred or disposed of by such
Recipient during the lifetime of Mr. Cumming or Mr. Steinberg, as
the case may be, in which case such Disposition by such Recipient
shall constitute a Disposition by Mr. Cumming or Mr. Steinberg,
as the case may be) and (ii) after the death of Mr. Cumming
and/or Mr. Steinberg, all Common Shares owned as of the date of
death by the decedent, and any Recipient of the decedent,
regardless of whether such Recipient continues to own such Common
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Shares after the date of death. In determining the number of
outstanding Common Shares then held by Messrs. Cumming and
Steinberg and the total number of outstanding Common Shares,
there shall be excluded Common Shares issued by the Company after
December 31, 1991, or the conversion into or exchange for, after
December 31, 1991, Common Shares or securities convertible into
or exchangeable for Common Shares. As calculated pursuant to
this provision, Messrs. Cumming and Steinberg beneficially owned,
in the aggregate, approximately 46% of the Common Shares as of
March 31, 1995.
As of the date hereof, the Company's most restrictive
outstanding Indebtedness that contains a change of control
provision requires that Mr. Cumming and/or Mr. Steinberg continue
to have sole beneficial ownership of outstanding Common Shares
equal to at least 32% of the then outstanding Common Shares;
provided that, under such Indebtedness, Messrs. Cumming and/or
Steinberg may sell, transfer or otherwise dispose of additional
Common Shares if, after giving effect thereto, they would, in the
aggregate, then have sole beneficial ownership of Common Shares
equal to at least 23% of the then outstanding Common Shares, but
only if, after giving effect to any such Disposition, the
aggregate market value of the Common Shares then so owned by Mr.
Cumming and/or Mr. Steinberg on the date of such Disposition
would be at least $200 million; provided, further, that, under
such Indebtedness, upon the death of either Mr. Cumming or Mr.
Steinberg, the aggregate market value of the Common Shares then
so owned by the survivor on the date of such Disposition would be
at least $100 million. There can be no assurance that the
Company will have sufficient funds or the financing to satisfy
its obligations to repurchase the Notes and other Indebtedness
that may come due upon a Change of Control. In such case, the
Company's failure to purchase tendered Notes would constitute an
Event of Default under the Indenture.
The Noteholders holding a majority in principal amount of Notes
then outstanding may waive compliance by the Company of its
obligation to repurchase Notes upon a Change of Control. The
Company may not waive such provisions. See "Modification of the
Indenture."
The term "Investment Grade" is defined as BBB- or higher by
S&P or Baa3 or higher by Moody's or the equivalent of such
ratings by Moody's or S&P.
TRANSACTIONS WITH AFFILIATES
The Company shall not, and shall not permit any Subsidiary
to, directly or indirectly, enter into any transaction or series
of related transactions with any Affiliate (other than (a) with
the Company or a Wholly Owned Subsidiary or (b) the making of a
Restricted Payment or Restricted Investment otherwise permitted
by the covenant described under "Restricted Payments and
Restricted Investments" above), including, without limitation,
any loan, advance or investment or any purchase, sale, lease or
exchange of property or the rendering of any service, unless such
transaction or series of transactions is in good faith and at
arm's-length and on terms which are at least as favorable as
those available in a comparable transaction from an unrelated
Person. Any such transaction that involves in excess of $10
million shall be approved by a majority of the Independent
Directors on the Board of Directors of the Company; or, in the
event that at the time of any such transaction or series of related
transactions there are no Independent Directors serving on the Board
of Directors of the Company, such transaction or series of related
transactions shall be approved by a nationally recognized expert with
experience in appraising the terms and conditions of the type of
transaction for which approval is required.
SUCCESSOR CORPORATION
The Company may not consolidate with, merge into or transfer
all or substantially all of its assets (i.e., 90% or more) to
another corporation unless (a) the successor corporation shall be
existing under the laws of the United States, any state thereof
or the District of Columbia, (b) there shall not be any Default
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or Event of Default under the Indenture, (c) such successor
corporation assumes all of the Obligations of the Company under
the Notes and the Indenture, (d) after giving effect to such
transaction, such successor corporation shall have a Consolidated
Net Worth equal to or greater than the Company and (e) after
giving effect to such transaction, the Company or such successor
corporation is permitted to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) as provided in
the Indenture. Thereafter all such obligations of the Company
will terminate.
REPORTS TO NOTEHOLDERS
The Company will mail copies of its annual reports and
quarterly reports mailed to its shareholders to Noteholders. If
the Company is not required to furnish annual or quarterly
reports to its shareholders, the Company will, upon request, mail
to each Noteholder, at such Noteholder's address as appearing on
the Note register, audited annual financial statements and
unaudited condensed quarterly financial statements. Such
financial statements shall be accompanied by management's
discussion and analysis of the results of operations and
financial condition of the Company for the period reported upon
in substantially the form required under the rules and
regulations of the Commission in effect from time to time.
THE TRUSTEE
The First National Bank of Boston will be the Trustee under the
Indenture.
The Noteholders holding a majority in principal amount of all
outstanding Notes will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy
available to the Trustee. The Indenture will provide that, in
case an Event of Default thereunder shall occur and be
continuing, the Trustee will be required to use the degree of
care of a prudent person in the conduct of his own affairs in the
exercise of its power. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or
powers under the Indenture at the request of any of the
Noteholders, unless they shall have offered to the Trustee
security and indemnity satisfactory to it.
EVENTS OF DEFAULT AND NOTICE THEREOF
The term "Event of Default" when used in the Indenture shall
mean any one of the following: (i) failure to pay (whether or
not prohibited by the subordination provisions) interest for 30
days or principal; (ii) failure to perform any covenants not
described in clause (i) for 30 days after receipt of notice;
(iii) the occurrence of any event of default under an instrument
evidencing or securing other indebtedness of the Company or any
Material Subsidiary of the Company for borrowed money in excess
of $15 million resulting in the acceleration of such
indebtedness, which acceleration is not rescinded or annulled
pursuant to the terms of such instrument; and (iv) certain events
of bankruptcy, insolvency or reorganization relating to the
Company or any Material Subsidiary of the Company.
The term "Material Subsidiary" means (i) any Subsidiary of
the Company which at December 31, 1994 was a "significant
subsidiary" under Regulation S-X promulgated by the Commission or
any successor to such Subsidiary and (ii) any other Subsidiary of
the Company; provided that the Company's investments in and
advances to such Subsidiary at the date of determination thereof,
without giving effect to any write-downs in such investments or
advances taken within the prior 12 months, represent 20% or more
of the Company's Consolidated Tangible Net Worth as of such time;
provided, however, that this clause (ii) shall not include any
Subsidiary if, at the time that it became a Subsidiary, the
Company contemplated commencing a voluntary case or proceeding
under the Bankruptcy Law with respect to such Subsidiary.
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The Indenture will provide that the Trustee shall, within 90
days after the occurrence of a default, provide to the
Noteholders notice of all uncured defaults known to it (the term
default to include the events specified above without grace or notice);
provided, that, except in the case of default in the payment of
principal of or interest on any of the Notes, the Trustee shall
be protected in withholding such notice if and so long as a
committee of its Trust Officers in good faith determines that the
withholding of such notice is in the interests of the
Noteholders.
In case an Event of Default shall have occurred and be
continuing, the Trustee or the Noteholders holding at least 25% in
aggregate principal amount of the Notes then outstanding, by
notice in writing to the Company and to the Trustee, may declare
to be due and payable immediately the outstanding principal
amount and accrued interest, premiums, penalties and other
amounts in respect of the Notes and the Indenture. Such
declaration may be annulled and past defaults (except, unless
theretofore cured, a default in payment of principal of or
interest on the Notes) may be waived by the holders of a majority
in principal amount of the Notes, upon the conditions provided in
the Indenture.
The Indenture will include a covenant that the Company will
file annually with the Trustee a statement regarding compliance
by the Company with the terms thereof and specifying any defaults
of which the signers may have knowledge.
MODIFICATION OF THE INDENTURE
Under the Indenture, the rights and obligations of the
Company and the rights of Noteholders may be modified by the
Company and the Trustee only with the consent of the Noteholders
holding a majority in principal amount of the Notes then
outstanding; but no extension of the maturity of any Notes, or
reduction in the interest rate or extension of the time of
payment of principal of or interest on, or any change in the
subordination of the Notes that is adverse to the Noteholders, or
any other modification in the terms of payment of the principal
of or interest on the Notes or reduction of the percentage
required for modification will be effective against any
Noteholder without its consent. The Noteholders holding a majority
in principal amount of Notes then outstanding may waive compliance
by the Company with certain covenants, including those described
under "Certain Covenants-Maintenance of Consolidated Tangible Net
Worth" and "Repurchase at Option of Holders Upon a Change of
Control."
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture will be discharged and cancelled upon payment
of all the Notes or upon deposit with the Trustee, within not
more than one year prior to the maturity of the Notes, of funds
sufficient for such payment.
