AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1997
Registration No. 333-21195
333-21195-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
---------------
LEUCADIA NATIONAL CORPORATION LEUCADIA CAPITAL TRUST I
- ------------------------------------ -----------------------------------
(Exact name of registrant as (Exact name of registrant as
specified in its charter) specified in its Trust Agreement)
NEW YORK DELAWARE
- ------------------------------------ -----------------------------------
(State or other jurisdiction (State or other jurisdiction
of incorporation or organization of incorporation or organization)
6199 6199
- ------------------------------------ -----------------------------------
(Primary standard industrial (Primary standard industrial
classification code number) classification code number)
13-2615557 13-7110228
- ------------------------------------ -----------------------------------
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
c/o LEUCADIA NATIONAL CORPORATION
315 PARK AVENUE SOUTH 315 PARK AVENUE SOUTH
NEW YORK, N.Y. 10010-3607 NEW YORK, N.Y. 10010-3607
(212) 460-1900 (212) 460-1900
- ------------------------------------ -----------------------------------
(Address, Including Zip Code, (Address, Including Zip Code,
and Telephone Number, and Telephone Number,
including Area Code, of Registrant's including Area Code, of Registrant's
Principal Executive Offices) Principal Executive Offices)
JOSEPH A. ORLANDO
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
LEUCADIA NATIONAL CORPORATION
315 PARK AVENUE SOUTH
NEW YORK, N.Y. 10010-3607
(212) 460-1900
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(Name and Address, Including Zip Code,
and Telephone Number, Including Area Code, of Agent For Service)
with a copy to:
STEPHEN E. JACOBS, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
(212) 310-8000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As promptly as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this form are to be offered in
connection with the information of a holding company and there is compliance
with General Instruction G, check the following box. [_]
(Cover Page continued on next page)
<PAGE>
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Title of Each Class Proposed Minimum Proposed Maximum Amount of
of Securities Amount to Be Offering Aggregate Offering Registration
to Be Registered Registered Price(1) Price(1) Fee
================================================================================================================
<S> <C> <C> <C> <C>
8.65% Capital Trust Pass-through $150,000,000 100% $150,000,000 $45,455
SecuritiesSM of Leucadia Capital Trust I
- ----------------------------------------------------------------------------------------------------------------
8.65% Junior Subordinated Deferrable
Interest Debentures due 2027 of Leucadia N/A N/A N/A N/A
National Corporation (2)..................
================================================================================================================
Leucadia National Corporation Guarantee
with respect to the Capital Trust Pass- N/A N/A N/A N/A
through SecuritiesSM and certain back-up
undertakings (3)(4).......................
- ----------------------------------------------------------------------------------------------------------------
Total..................................... $150,000,000 100% $150,000,000(5) $45,455
================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) The Junior Subordinated Deferrable Interest Debentures were purchased by
Leucadia Capital Trust I with the proceeds of the sale of the Capital Trust
Pass-through SecuritiesSM (the "Old Capital Securities"). No separate
consideration will be received for the Junior Subordinated Deferrable
Interest Debentures distributed upon any liquidation of Leucadia Capital
Trust I.
(3) No separate consideration will be received for the Leucadia National
Corporation Guarantee.
(4) This Registration Statement is deemed to cover the Junior Subordinated
Deferrable Interest Debentures of Leucadia National Corporation, the rights
of holders of Junior Subordinated Deferrable Interest Debentures of Leucadia
National Corporation under the Indenture, the rights of holders of Capital
Securities of Leucadia Capital Trust I under a Declaration of Trust and the
rights of holders of the Capital Securities under the Guarantee of Leucadia
National Corporation, which taken together fully and unconditionally
guarantee the obligations of Leucadia Capital Trust I under the Capital
Securities.
(5) Such amount represents the aggregate liquidation amount of the Capital
Securities to be issued and exchanged hereunder and the principal amount of
Junior Subordinated Deferrable Interest Debentures that may be distributed
upon liquidation of Leucadia Capital Trust I.
--------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE OR UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
SUBJECT TO COMPLETION, DATED APRIL , 1997
PROSPECTUS AND CONSENT SOLICITATION
$150,000,000
LEUCADIA CAPITAL TRUST I
OFFER TO EXCHANGE ITS 8.65% CAPITAL TRUST
PASS-THROUGH SECURITIESSM (TRUPSSM)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 FOR ANY AND ALL OF ITS OUTSTANDING 8.65%
CAPITAL TRUST PASS-THROUGH SECURITIESSM (TRUPSSM)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
LEUCADIA NATIONAL CORPORATION
AND
SOLICITATION OF CONSENTS IN RESPECT OF
8.65% CAPITAL TRUST PASS-THROUGH SECURITIESSM (TRUPSSM)
OF LEUCADIA CAPITAL TRUST I
The Exchange Offer, the Consent Solicitation and Withdrawal Rights will
expire at 5:00 p.m., New York City time, on _______________, 1997, unless
extended.
Revocation rights for consents will expire at the time and date on which the
requisite consents to the Proposed Amendment are received.
Leucadia Capital Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby offers, upon the terms
and subject to the conditions set forth in this Prospectus and Consent
Solicitation (as the same may be amended or supplemented from time to time, the
"Prospectus") and in the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange up to $150,000,000 aggregate
liquidation amount of its 8.65% Capital Trust Pass-through SecuritiesSM
(TRUPSSM) (liquidation amount $1,000 per Capital Security) (the "New Capital
Securities"), which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement (as defined
herein) of which this Prospectus constitutes a part, for a like liquidation
amount of its outstanding 8.65% Capital Trust Pass-through SecuritiesSM
(TRUPSSM) (liquidation amount $1,000 per Capital Security) (the "Old Capital
Securities"), of which $150,000,000 aggregate liquidation amount is outstanding.
Pursuant to the Exchange Offer, Leucadia National Corporation, a New York
corporation (the "Company"), is also exchanging (i) its guarantee with respect
to the payment of distributions and other payments on liquidation or redemption
of
(i)
<PAGE>
(cover page continued)
the Old Capital Securities (the "Old Guarantee") for a like guarantee of the New
Capital Securities (the "New Guarantee"), and (ii) all of its outstanding 8.65%
Junior Subordinated Deferrable Interest Debentures due 2027 (the "Old
Subordinated Debt Securities"), of which $154,640,000 aggregate principal amount
is outstanding, for a like aggregate principal amount of its 8.65% Junior
Subordinated Deferrable Interest Debentures due 2027 (the "New Subordinated Debt
Securities"), which New Guarantee and New Subordinated Debt Securities also have
been registered under the Securities Act. The Old Capital Securities, the Old
Guarantee and the Old Subordinated Debt Securities are collectively referred to
herein as the "Old Securities" and the New Capital Securities, the New Guarantee
and the New Subordinated Debt Securities are collectively referred to herein as
the "New Securities."
The terms of the New Securities are identical in all material
respects to the respective terms of the Old Securities, except that (i) the New
Securities have been registered under the Securities Act and therefore will not
be subject to certain restrictions on transfer applicable to the Old Securities,
(ii) the New Capital Securities will not provide for any increase in the
distribution rate thereon, and (iii) the New Subordinated Debt Securities will
not provide for any increase in the interest rate thereon. See "Description of
the Capital Securities." The New Capital Securities are being offered for
exchange in order to satisfy certain obligations of the Company and the Trust
under the Registration Rights Agreement, dated January 21, 1997 (the
"Registration Rights Agreement"), among the Company, the Trust and Salomon
Brothers Inc, as representative of the Initial Purchasers (as defined herein) of
the Old Capital Securities. In the event that the Exchange Offer is consummated,
any Old Capital Securities which remain outstanding after consummation of the
Exchange Offer and the New Capital Securities issued in the Exchange Offer will
vote together as a single class for purposes of determining whether holders of
the requisite percentage in outstanding liquidation amount thereof have taken
certain actions or exercised certain rights under the Declaration (as defined
herein).
Concurrently with the Exchange Offer, the Company and the Trust are
soliciting consents (the "Consent Solicitation") from holders of the Old Capital
Securities to approve an amendment (the "Proposed Amendment") to the
Registration Rights Agreement. The Proposed Amendment to the Registration Rights
Agreement will delete the requirement that the Company use its reasonable best
efforts to cause the New Capital Securities to be duly authorized for listing on
the New York Stock Exchange and thereafter maintain such listing. The purpose of
the Proposed Amendment is to enable the Trust and the Company to consummate the
Exchange Offer. Based on interpretations by the staff of the Securities and
Exchange Commission (the "Commission"), as set forth in a recent no-action
letter to a third party, the Trust and the Company will be prohibited from
consummating the Exchange Offer unless the Proposed Amendment is effectuated.
A tender of Old Capital Securities for exchange pursuant to the
Exchange Offer also will constitute a consent to the Proposed Amendment with
respect to the Old Capital Securities so tendered.
Pursuant to Section 7(b) of the Registration Rights Agreement, the
Proposed Amendment requires the consent of the registered holders of a majority
in liquidation amount of the outstanding Capital Securities (as defined herein).
The Exchange Offer is conditioned upon, among other things, there
having been received and not revoked, the requisite consents to adopt the
Proposed Amendment, which condition may not be waived by the Company or the
Trust. Accordingly, unless valid consents of holders of a majority in
liquidation amount of the Old Capital Securities are received and not revoked,
the Company and the Trust will not accept and exchange the Old Capital
Securities pursuant to the Exchange Offer. In such event, the Company and the
Trust, pursuant to the Registration Rights Agreement, will, as promptly as
practicable after termination of the Exchange Offer, file with the Commission a
shelf registration statement (the "Shelf Registration Statement") covering
resales of the Old Capital Securities by the holders thereof from time to time
in accordance with the
(ii)
<PAGE>
(cover page continued)
methods of distribution elected by such holders and set forth in such Shelf
Registration Statement, and use their best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act by
August 19, 1997, the 210th day (or, if the Exchange Offer is terminated after
the 210th day after the initial issuance of the Old Capital Securities, by
September 18, 1997, the 240th day) after January 21, 1997, the date of initial
issuance of the Old Capital Securities.
SEE "RISK FACTORS" BEGINNING ON PAGE __ OF THIS PROSPECTUS FOR
CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE NEW SECURITIES, INCLUDING
THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE NEW
SUBORDINATED DEBT SECURITIES AND THE NEW CAPITAL SECURITIES MAY BE DEFERRED AND
THE RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ________ __, 1997.
The Old Capital Securities and the New Capital Securities are
referred to as the "Capital Securities." The Old Capital Securities represent
and the New Capital Securities when issued will represent undivided beneficial
interests in the assets of the Trust. The Company owns all of the common
securities of the Trust (the "Common Securities") representing undivided
beneficial interests in the assets of the Trust. The Trust exists for the sole
purpose of issuing the Common Securities and the Capital Securities (together,
the "Trust Securities") and investing the proceeds thereof in the Subordinated
Debt Securities (as defined herein) and certain other limited activities
described herein.
The Old Subordinated Debt Securities and the New Subordinated Debt
Securities are referred to as the "Subordinated Debt Securities" and the Old
Guarantee and the New Guarantee are referred to as the "Guarantee." The Old
Subordinated Debt Securities and the Old Guarantee are, and the New Subordinated
Debt Securities and the New Guarantee when issued will be, unsecured obligations
of the Company, and are or will be, as the case may be, subordinate and junior
in right of payment to other existing and future indebtedness of the Company, as
described herein. Upon a Declaration Event of Default (as defined herein), the
holders of the Capital Securities will have a preference over the holders of the
Common Securities with respect to payments in respect of redemption, liquidation
and otherwise.
Holders of the Capital Securities are entitled to receive cumulative
cash distributions at an annual rate of 8.65% per annum of the liquidation
amount of $1,000 per Capital Security, accruing from January 21, 1997, the date
of original issuance of the Old Capital Securities, and (subject to extension of
distribution payment periods described below) payable semiannually in arrears on
January 15 and July 15 of each year, commencing July 15, 1997 ("distributions").
The payment of distributions on the Capital Securities out of moneys held by the
Trust and payments on liquidation of the Trust or the redemption of the Capital
Securities, as set forth below, are guaranteed by the Company as described
herein. The Guarantee covers payments of distributions and other payments on the
Capital Securities only if and to the extent that the Trust has funds available
therefor, which funds will not be available except to the extent the Company has
made payments of interest or principal (or premium, if any) or other payments on
the Subordinated Debt Securities held by the Trust.
(iii)
<PAGE>
(cover page continued)
If the Company does not make interest payments on the Subordinated
Debt Securities held by the Trust, the Trust will have insufficient funds to pay
distributions on the Capital Securities. The Guarantee does not cover payment of
distributions when the Issuer does not have sufficient funds to pay such
distributions. In such event, a holder of Capital Securities may institute a
legal proceeding directly against the Company to enforce payment of such
distributions to such holder. See "Risk Factors -- Enforcement of Certain Rights
by Holders of Capital Securities," "Description of the Capital Securities,"
"Description of the Guarantee" and "Description of Subordinated Debentures."
The Guarantee, when taken together with the Company's obligations
under the Subordinated Debt Securities, the Declaration and the Indenture (as
defined herein), including its obligations to pay costs, expenses, debts and
other obligations of the Trust (other than with respect to the Trust
Securities), provides a full and unconditional guarantee on a subordinated basis
by the Company of amounts due on the Capital Securities. See "Risk Factors --
Guarantee Covers Distributions and Other Payments Only to the Extent the Trust
Has Available Funds; Related Remedies." The obligations of the Company under the
Guarantee and the Subordinated Debt Securities are subordinate and junior in
right of payment to all present and future Senior Indebtedness (as defined
herein) of the Company and are also effectively subordinate to claims of
creditors of the Company's subsidiaries. At December 31, 1996 the aggregate
amount of Senior Indebtedness and liabilities and obligations of the Company's
subsidiaries that would be effectively ranked senior to the Guarantee and the
Subordinated Debt Securities was approximately $3,836,115,000, exclusive of
customer banking deposits ("Deposits"). See "Capitalization." There are no terms
in the Subordinated Debt Securities, the Capital Securities or the Guarantee
that limit the ability of the Company or its subsidiaries to incur additional
indebtedness, liabilities and obligations, including such indebtedness that
ranks senior to the Subordinated Debt Securities and the Guarantee. The holders
of the Common Securities will be entitled to receive distributions upon any
liquidation of the Trust pro rata with the holders of the Capital Securities,
except that if a Declaration Event of Default has occurred and is continuing,
the Capital Securities shall have a priority over the Common Securities.
The distribution rate and the distribution payment dates and other
payment dates for the Capital Securities will correspond to the interest rate
and interest payment dates and other payment dates on the Subordinated Debt
Securities, which are the sole assets of the Trust.
The Company has the right, subject to the conditions set forth
herein, to defer payments of interest on the Subordinated Debt Securities by
extending the interest payment period on the Subordinated Debt Securities at any
time and from time to time for up to 10 consecutive semiannual periods (each
such extended interest payment period, an "Extension Period"), provided that no
Extension Period may extend beyond the maturity of the Subordinated Debt
Securities. If interest payments are so deferred, distributions on the Capital
Securities and the Common Securities will also be deferred and the Company
(subject to certain exceptions set forth herein) will not be permitted to
declare or pay any such distributions with respect to the Company's capital
stock (which currently consists of common shares) or to make any payment with
respect to debt securities of the Company that rank pari passu with or junior to
the Subordinated Debt Securities. During any such Extension Period, interest
will continue to accrue on the Subordinated Debt Securities for United States
federal income tax purposes in respect of such deferred interest. As a result,
during any Extension Period, holders of the Capital Securities will be required
to include deferred income in their gross income for United States federal
income tax purposes on the deferred amounts in advance of receipt of cash
distributions with respect to such deferred interest payments. There could be
multiple Extension Periods of varying lengths, each up to 10 consecutive
semiannual periods, throughout the term of the Subordinated Debt Securities. See
"Description of the Subordinated Debt Securities -- Option to Extend Interest
Payment Period," "Risk Factors -- Option to Extend Interest Payment Period for
Up to Five Years and Consequent Deferral of Distribution on Capital Securities"
and "Certain Federal Income Tax Consequences -- US Holders -- Original Issue
Discount."
(iv)
<PAGE>
(cover page continued)
The Subordinated Debt Securities are redeemable by the Company at
the Call Price (as defined herein), plus accrued and unpaid interest to the date
of redemption, in whole or in part, at any time and from time to time, on or
after January 15, 2007 (the "Optional Redemptions"). In certain limited
circumstances described herein, upon the occurrence of a Tax Event (as defined
herein), the Subordinated Debt Securities also are redeemable by the Company, in
whole or in part at any time, at par, together with accrued and unpaid interest
thereon to the date of the redemption. Upon redemption by the Company or at
maturity of the Subordinated Debt Securities, the Trust must redeem on a pro
rata basis its Trust Securities having an aggregate liquidation amount equal to
the aggregate principal amount of the Subordinated Debt Securities so redeemed
or matured at a redemption price (the "Redemption Price") equal to (i) $1,000
per Trust Security, if redeemed either upon the maturity of the Subordinated
Debt Securities or upon the occurrence and continuation of a Tax Event under
certain limited circumstances described herein, or (ii) in the case of Optional
Redemptions of the Subordinated Debt Securities, an amount per Trust Security
equal to the product of $1,000 and the applicable percentage used to determine
the Call Price for the Subordinated Debt Securities being redeemed, plus in all
cases, accrued and unpaid distributions on such Trust Securities to the date
fixed for redemption. See "Description of the Capital Securities -- Redemption."
The Capital Securities will be redeemed upon maturity of the Subordinated Debt
Securities, whereupon the Trust will be dissolved. See "Description of the
Capital Securities -- Tax Event Redemption" and "Description of the Subordinated
Debt Securities."
The Company, as the holder of all of the outstanding Common
Securities, has the right at any time to dissolve the Trust (including, without
limitation, upon the occurrence of a Tax Event) and, after satisfaction of
liabilities to creditors of the Trust (to the extent not satisfied by the
Company), the Subordinated Debt Securities must be distributed to the holders of
the Trust Securities, on a pro rata basis, in accordance with the aggregate
stated liquidation amount thereof, in liquidation of the Trust.
In the event of the involuntary or voluntary dissolution of the
Trust, other than in connection with a redemption or maturity of Subordinated
Debt Securities as described above, after satisfaction of liabilities to
creditors of the Trust (to the extent not satisfied by the Company), the holders
of the Capital Securities generally will be entitled to receive the stated
liquidation amount thereof plus accrued and unpaid distributions thereon to the
date of payment, unless, in connection with such dissolution, the Subordinated
Debt Securities held by the Trust are distributed to the holders of the Trust
Securities issued by the Trust as would be required in certain circumstances.
See "Description of the Capital Securities -- Liquidation Distribution Upon
Dissolution."
The Old Capital Securities have been issued and may be transferred
only in blocks having a stated liquidation amount or an aggregate principal
amount, as the case may be, of not less than $100,000 (100 Old Capital
Securities). Any transfer, sale or other disposition of Old Capital Securities
resulting in a block having a liquidation amount of less than $100,000 (100 Old
Capital Securities) shall be void and of no legal effect whatsoever. See
"Description of the Capital Securities -- Restrictions on Transfer." The New
Capital Securities will not be so restricted.
Based on interpretations by the staff of the Commission, as set
forth in several no-action letters to third parties, and subject to the
immediately following sentence, the Company and the Trust believe that New
Securities issued pursuant to the Exchange Offer in exchange for Old Securities
may be offered for resale, resold and otherwise transferred by a holder thereof
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Securities are
acquired in the ordinary course of such holder's business and that such holder
is not participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Securities. However, any holder of Old Capital Securities who is an
"affiliate" of either the Company or
(v)
<PAGE>
(cover page continued)
the Trust, a broker-dealer that acquires the Old Capital Securities in a
transaction other than as a part of its market-making or other trading
activities or other holder who intends to participate in the Exchange Offer for
the purpose of distributing New Capital Securities (i) will not be able to rely
on the interpretations by the staff of the Commission set forth in the
above-mentioned interpretive letters, (ii) will not be able to tender such Old
Capital Securities in the Exchange Offer, and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities unless
such sale is made pursuant to an exemption from such requirements. Any
broker-dealer who holds Old Securities acquired for its own account as a result
of market-making activities or other trading activities, and who receives New
Securities in exchange for such Old Securities pursuant to the Exchange Offer
(an "Exchanging Dealer") may be a statutory underwriter and must deliver a
prospectus meeting the requirements of the Securities Act, which may be the
prospectus prepared for the Exchange Offer so long as it contains a plan of
distribution with respect to such resale transactions, in connection with any
resales of such New Securities. Neither the Company nor the Trust sought its own
no-action letter and there can be no assurance that the staff of the Commission
would make a similar determination with respect to the Exchange Offer as it has
in such no- action letters to third parties.
Each holder of Old Capital Securities (other than a broker-dealer)
who wishes to exchange Old Capital Securities for New Capital Securities in the
Exchange Offer will be required to represent that (i) it is not an "affiliate"
of the Company or the Trust, (ii) any New Capital Securities to be received by
it are being acquired in the ordinary course of its business and (iii) it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such New Capital Securities. The
Letter of Transmittal contains the foregoing representations. In addition, the
Company and the Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to the Company and
the Trust (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Exchange Act) on
behalf of whom such holder holds the Old Capital Securities to be exchanged in
the Exchange Offer. Each Exchanging Dealer will be deemed to have acknowledged
by execution of the Letter of Transmittal or delivery of an Agent's Message (as
defined herein) that it acquired the Old Capital Securities for its own account
as the result of market-making activities or other trading activities and must
agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, an Exchanging Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Commission in the no-action letters referred to above,
the Company and the Trust believe that Exchanging Dealers may fulfill their
prospectus delivery requirements with respect to the New Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from the original sale of the Old
Capital Securities) with a prospectus meeting the requirements of the Securities
Act, which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Subject to certain provisions set forth in the
Registration Rights Agreement and to the limitations set out herein, the Company
and the Trust have agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by an Exchanging Dealer in
connection with resales of such New Capital Securities for a period ending one
year after the Expiration Date (or longer, if required by the Registration
Rights Agreement). See "Plan of Distribution." Any person, including any
Exchanging Dealer, who is an "affiliate" of the Company or the Trust may not
rely on such no-action letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction.
Each broker-dealer that receives New Capital Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a
(vi)
<PAGE>
(cover page continued)
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Capital Securities received in exchange for Old Capital
Securities where such Old Capital Securities were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
and the Trust have agreed that, starting on the date on which the Exchange Offer
is consummated and ending on the close of business one year after such date,
they will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
In that regard, each Exchanging Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or by delivery of an Agent's Message in
lieu thereof, that, upon receipt of notice from the Company or the Trust of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in the light of the circumstances under which they were made, not
misleading, or of the occurrence of certain other events specified in the
Registration Rights Agreement, such Exchanging Dealer will suspend the sale of
New Securities pursuant to this Prospectus until the Company or the Trust has
amended or supplemented this Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such
Exchanging Dealer, or the Company or the Trust has given notice that the sale of
the New Securities may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary
market and no public market for the Old Capital Securities. The New Capital
Securities will be a new issue of securities for which there currently is no
market. Although Salomon Brothers Inc, Jefferies & Company, Inc. and Credit
Suisse First Boston Corporation, the initial purchasers of the Old Capital
Securities (the "Initial Purchasers") informed the Company and the Trust in
connection with the offering of the Old Capital Securities that they each
intended to make a market in the Old Capital Securities, they are not obligated
to make a market in the Old Capital Securities or the New Capital Securities,
and any such market-making may be discontinued at any time without notice in the
sole discretion of the Initial Purchasers. Accordingly, there can be no
assurance as to the development or liquidity of any market for the New Capital
Securities. The New Capital Securities will not be listed on the New York Stock
Exchange.
Any Old Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to all the same rights and
will be subject to the same limitations applicable thereto under the Declaration
(except for those rights which terminate upon consummation of the Exchange
Offer). Following consummation of the Exchange Offer, the holders of Old Capital
Securities will continue to be subject to all of the existing restrictions upon
transfer thereof and neither the Company nor the Trust will have any further
obligation to such holders (other than under certain limited circumstances) to
provide for registration under the Securities Act of the Old Capital Securities
held by them. To the extent that Old Capital Securities are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered Old
Capital Securities could be adversely affected. See "Risk Factors --
Consequences of a Failure to Exchange Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
(vii)
<PAGE>
(cover page continued)
The Exchange Offer and Consent Solicitation will expire at 5:00
p.m., New York City time, on ___________, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer and Consent
Solicitation are extended by the Company and the Trust (in which case the term
"Expiration Date" shall mean the latest date and time to which the Exchange
Offer and Consent Solicitation are extended). Tenders of Old Capital Securities
may be withdrawn at any time on or prior to the Expiration Date. The Exchange
Offer is not conditioned upon any minimum liquidation amount of Old Capital
Securities being tendered for exchange. However, the Exchange Offer is subject
to and conditioned upon there having been received and not revoked the requisite
consents to adopt the Proposed Amendment (which condition may not be waived by
the Company or the Trust), certain events and conditions which may be waived by
the Company or the Trust, and to the terms and provisions of the Registration
Rights Agreement. A tender of Old Capital Securities for exchange pursuant to
the Exchange Offer also will constitute a consent to the Proposed Amendment with
respect to such tendered Old Capital Securities. Consents to the Proposed
Amendment may be revoked at any time prior to the time and date of receipt of
the requisite consents to the Proposed Amendment (such time and date hereinafter
referred to as the "Consent Date"). See "Consent Solicitation -- Revocation of
Consents." Old Capital Securities may be tendered in whole or in part having a
liquidation amount of not less than $100,000 (100 Old Capital Securities) or any
integral multiple of $1,000 liquidation amount (1 Old Capital Security) in
excess thereof. The Company has agreed to pay all expenses of the Exchange Offer
and Consent Solicitation, except as otherwise specified herein. See "The
Exchange Offer -- Fees and Expenses." Each New Capital Security will pay
cumulative distributions from the most recent Distribution Payment Date (as
defined herein) on the Old Capital Securities surrendered in exchange for such
New Capital Securities or, if no distributions have been paid on such Old
Capital Securities, from January 21, 1997. Holders of the Old Capital Securities
whose Old Capital Securities are accepted for exchange will not receive
accumulated distributions on such Old Capital Securities for any period from and
after the last Distribution Payment Date on such Old Capital Securities prior to
the original issue date of the New Capital Securities or, if no such
distributions have been paid, will not receive any accumulated distributions on
such Old Capital Securities, and will be deemed to have waived the right to
receive any distributions on such Old Capital Securities accumulated from and
after such Distribution Payment Date or, if no such distribution has been paid
or duly provided for, from and after January 21, 1997. This Prospectus, together
with the Letter of Transmittal, is being sent to all registered holders of Old
Capital Securities as of ________ __, 1997.
Neither the Company nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. No
dealer-manager is being used in connection with the Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS
NOT APPROVED OR DISAPPROVED THIS OFFERING, NOR HAS THE COMMISSIONER PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), NO ENTITY WHOSE
UNDERLYING ASSETS INCLUDE "PLAN ASSETS" OF ANY SUCH PLAN BY REASON OF SUCH
PLAN'S INVESTMENT IN THE ENTITY (COLLECTIVELY, "PLANS"), AND NO PERSON INVESTING
"PLAN ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY
INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE
RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS
EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH
PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE CAPITAL SECURITIES OR ANY
INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND
(viii)
<PAGE>
(cover page continued)
HOLDING THEREOF THAT IT EITHER (A) IS NOT A PLAN AND IS NOT PURCHASING SUCH
SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN OR (B) IS ELIGIBLE FOR
THE EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14
WITH RESPECT TO SUCH PURCHASE OR HOLDING.
(ix)
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices in Chicago, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and in New York, Seven
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can also be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such information may also be accessed electronically by
means of the Commission's home page on the Internet (http://www.sec.gov). In
addition, such reports, proxy statements and other information can be inspected
at The New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005
and The Pacific Stock Exchange, Incorporated, 301 Pine Street, San Francisco,
California 94104 on which certain securities of the Company are listed.
The Company and the Trust have filed with the Commission a
Registration Statement on Form S-4 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act with respect to
the securities offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement. Such additional information
may be obtained from the Commission's principal office in Washington, D.C.
No separate financial statements of the Trust have been included
herein. The Company and the Trust do not consider that such financial statements
would be material to holders of the Capital Securities because the Trust is a
newly formed special purpose entity, has no operating history or independent
operations, is not engaged in and does not propose to engage in any activity
other than holding as trust assets the Subordinated Debt Securities and issuing
the Trust Securities. All of the Common Securities of the Trust are owned by the
Company and the Company's obligations described herein under the Indenture, the
Declaration (including its obligations to pay costs, expenses, debts and other
obligations of the Trust, other than with respect to the Trust Securities), the
Subordinated Debt Securities and the Guarantee, taken together, constitute a
full and unconditional guarantee on a subordinated basis by the Company of
amounts due on the Capital Securities. The Company represents that (a) it will
present the Capital Securities as a separate line item on its balance sheet
entitled "Company-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust Holding Solely Leucadia National Corporation Securities"; (b)
it will disclose in a footnote to its financial statements that the sole asset
of the Trust is $154,640,000 principal amount of 8.65% Junior Subordinated
Deferrable Interest Debentures due 2027 of Leucadia National Corporation; and
(c) it will disclose in an audited footnote to its audited financial statements
that (i) the Trust is wholly-owned, (ii) the sole asset of the Trust is the
$154,640,000 principal amount of 8.65% Junior Subordinated Deferrable Interest
Debentures due 2027 of Leucadia National Corporation, and (iii) considered
together, the "back-up undertakings" constitute a full and unconditional
guarantee by the Company of the Trust's obligations under the Capital
Securities. See "The Trust," "Description of the Capital Securities,"
"Description of the Subordinated Debt Securities" and "Description of the
Guarantee." In addition, the Company does not expect that the Trust will file
reports under the Exchange Act with the Commission.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the "Annual Report") and its Form 8-K dated April 8, 1997
filed by the Company (File No. 1-5721) with the Commission are incorporated by
reference into this Prospectus.
All documents filed by the Company pursuant to Sections 13(a), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated by reference or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for all purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document that is also incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this
Prospectus and Consent Solicitation, including the documents incorporated or
deemed to be incorporated herein by reference, as the same may be amended,
supplemented or otherwise modified from time to time. Statements contained in
this Prospectus as to the contents of any contract or other document referred to
herein do not purport to be complete, and where reference is made to the
particular provisions of such contract or other document, such provisions are
qualified in all respects by reference to all of the provisions of such contract
or other document.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A
COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF
SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE THAT HAVE
BEEN OR MAY BE INCORPORATED BY REFERENCE HEREIN, OTHER THAN EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
THEREIN. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE COMPANY AT 315 PARK
AVENUE SOUTH, NEW YORK, NY 10010 (TELEPHONE NUMBER (212) 460-1900), ATTENTION:
CORPORATE SECRETARY. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY __________, 1997.
3
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more
detailed information and the financial statements, including the notes
thereto, appearing elsewhere or incorporated by reference herein. Prospective
investors should consider carefully the factors set forth herein under "Risk
Factors." As used in this Prospectus, the "Company" means Leucadia National
Corporation and its subsidiaries, except as the context otherwise may require.
LEUCADIA CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law
pursuant to (i) a declaration of trust, dated as of January 10, 1997 (the
"Initial Declaration"), and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on January 10, 1997. The Trust's business and
affairs are conducted by its trustees: initially, The Chase Manhattan Bank, as
Institutional Trustee (as defined herein), and Chase Manhattan Bank Delaware,
as Delaware Trustee (as defined herein). The Trust exists for the exclusive
purposes of (i) issuing the Trust Securities, (ii) investing the gross
proceeds from the sale of the Common Securities and Capital Securities to
acquire the Subordinated Debt Securities, and (iii) engaging in only those
other activities necessary or incidental thereto, including engaging in the
Exchange Offer. Accordingly, the Subordinated Debt Securities are the sole
asset of the Trust, and payments under the Subordinated Debt Securities will
be the sole revenue of the Trust. All of the Common Securities are owned by
the Company. The principal place of business of the Trust is c/o Leucadia
National Corporation, 315 Park Avenue South, New York, New York 10010
(telephone number (212) 460-1900).
LEUCADIA NATIONAL CORPORATION
The Company is a diversified financial services holding company
principally engaged in personal and commercial lines of property and casualty
insurance, life and health insurance, banking and lending and manufacturing.
The Company concentrates on return on investment and cash flow to build
long-term shareholder value, rather than emphasizing volume or market share.
Additionally, the Company continuously evaluates the retention and disposition
of its existing operations and investigates possible acquisitions of new
businesses in order to maximize shareholder value.
The principal executive offices of the Company are located at 315
Park Avenue South, New York, New York 10010 (telephone number (212) 460-1900).
THE EXCHANGE OFFER AND CONSENT SOLICITATION
The Exchange Offer............. Up to $150,000,000 aggregate liquidation
amount of New Capital Securities are being
offered in exchange for a like aggregate
liquidation amount of Old Capital Securities.
Old Capital Securities may be tendered for
exchange in whole or in part in a liquidation
amount of $100,000 (100 Old Capital
Securities) or any integral multiple of
$1,000 in excess thereof provided that if any
Old Capital Securities are tendered in
exchange for part, the untendered liquidation
amount must be $100,000 or any integral
multiple of $1,000 in excess thereof. The
Company and the Trust are making the Exchange
Offer in order to satisfy their obligations
under the Registration Rights Agreement
relating to the Old Capital Securities. For a
description of the procedures for tendering
Old Capital
4
<PAGE>
Securities, see "The Exchange Offer --
Procedures for Tendering Old Capital
Securities."
The Consent Solicitation....... Concurrently with the Exchange Offer, the
Company and the Trust are soliciting consents
from holders of the Old Capital Securities to
approve the Proposed Amendment. The Exchange
Offer is conditioned upon, among other
things, there having been received and not
revoked, the consent of a majority in
liquidation amount of the Old Capital
Securities to the adoption of the Proposed
Amendment. A tender of Old Capital Securities
for exchange pursuant to the Exchange Offer
also will constitute a consent to the
Proposed Amendment with respect to such
tendered Old Capital Securities. See "The
Consent Solicitation."
The Proposed Amendment......... The Proposed Amendment to the Registration
Rights Agreement will delete the requirement
that the Company use its reasonable best
efforts to cause the New Capital Securities
to be duly authorized for listing on the New
York Stock Exchange and thereafter maintain
such listing. The purpose of the Proposed
Amendment is to enable the Trust and the
Company to consummate the Exchange Offer.
Based on interpretations by the staff of the
Commission, as set forth in a recent
no-action letter to a third party, the Trust
and the Company will be prohibited from
consummating the Exchange Offer unless the
Proposed Amendment is effectuated. See "The
Consent Solicitation -- Purpose and Effect of
the Consent Solicitation."
Expiration Date................ The Expiration Date of the Exchange Offer and
Consent Solicitation will be 5:00 p.m., New
York City time, on ___________, 1997, unless
the Exchange Offer and Consent Solicitation
are extended by the Company and the Trust.
See "The Exchange Offer -- Expiration Date;
Extensions; Amendments."
Conditions to
Exchange Offer................. The Exchange Offer is subject to and
conditioned upon, there having been received
and not revoked, the requisite consents to
adopt the Proposed Amendment, which condition
may not be waived by the Company and the
Trust and certain other conditions, which may
be waived by the Company and the Trust in
their reasonable discretion. The Exchange
Offer is not conditioned upon any minimum
liquidation amount of Old Capital Securities
being tendered. See "The Exchange Offer --
Conditions to Exchange Offer."
Unless valid consents of holders of a
majority in liquidation amount of the Old
Capital Securities are received and not
revoked, the Company and the Trust will not
accept and
5
<PAGE>
exchange the Old Capital Securities pursuant
to the Exchange Offer. In such event, the
Company and the Trust, pursuant to the
Registration Rights Agreement, will, as
promptly as practicable after termination of
the Exchange Offer, file with the Commission
the Shelf Registration Statement covering
resales of the Old Capital Securities by the
holders thereof from time to time in
accordance with the methods of distribution
elected by such holders and set forth in such
Shelf Registration Statement, and use their
best efforts to cause the Shelf Registration
Statement to be declared effective under the
Securities Act by August 19, 1997, the 210th
day (or, if the Exchange Offer is terminated
after the 210th day after the initial
issuance of the Old Capital Securities, by
September 18, 1997, the 240th day) after
January 21, 1997, the date of initial
issuance of the Old Capital Securities.
The Company and the Trust reserve the right,
subject to applicable law, at any time and
from time to time, (a) in their sole
discretion, to delay the acceptance of the
Old Capital Securities for exchange, (b) to
terminate the Exchange Offer and Consent
Solicitation if certain specified conditions
have not been satisfied, and/or (c) to extend
the Expiration Date of the Exchange Offer and
Consent Solicitation and retain all Old
Capital Securities tendered pursuant to the
Exchange Offer, subject, however, to the
right of holders of Old Capital Securities to
withdraw their tendered Old Capital
Securities, or (d) in their reasonable
discretion to waive any condition (except
with respect to the Proposed Amendment) or
otherwise amend the terms of the Exchange
Offer and Consent Solicitation in any
respect. See "The Exchange Offer --
Expiration Date; Extensions; Amendments."
Withdrawal Rights.............. Tenders of Old Capital Securities may be
withdrawn at any time on or prior to the
Expiration Date by delivering a written
notice of such withdrawal to The Chase
Manhattan Bank, as Exchange Agent (the
"Exchange Agent"), in conformity with certain
procedures set forth below under "The
Exchange Offer -- Withdrawal Rights."
Consents to the Proposed Amendment may be
revoked at any time prior to the Consent
Date. A holder of Old Capital Securities
shall be deemed to have revoked his consent
to the Proposed Amendments if, and only if,
such holder effectively withdraws his tender
of Old Capital Securities prior to the
Consent Date in accordance with the
instructions set forth under "The Exchange
Offer -- Withdrawal Rights." See "The Consent
Solicitation -- Revocation of Consents."
6
<PAGE>
Procedures for Tendering
Old Capital Securities......... Tendering holders of Old Capital Securities
must complete and sign a Letter of
Transmittal in accordance with the
instructions contained therein and forward
the same by mail, facsimile or hand delivery,
together with any other required documents,
to the Exchange Agent, either with the Old
Capital Securities to be tendered or in
compliance with the specified procedures for
guaranteed delivery of Old Capital
Securities. Certain brokers, dealers,
commercial banks, trust companies and other
nominees may also effect tenders by
book-entry transfer, including an Agent's
Message in lieu of the Letter of Transmittal.
Holders of Old Capital Securities registered
in the name of a broker, dealer, commercial
bank, trust company or other nominee are
urged to contact such person promptly if they
wish to tender Old Capital Securities
pursuant to the Exchange Offer. See "The
Exchange Offer -- Procedures for Tendering
Old Capital Securities."
Letters of Transmittal and certificates
representing Old Capital Securities should
not be sent to the Company or the Trust. Such
documents should only be sent to the Exchange
Agent. Questions regarding how to tender and
requests for information should be directed
to the Exchange Agent. See "The Exchange
Offer -- Exchange Agent."
Procedure for Consenting
to the Proposed
Amendment...................... A tender of Old Capital Securities for
exchange pursuant to the Exchange Offer also
will constitute a consent to the Proposed
Amendment with respect to such tendered Old
Capital Securities. See "The Exchange Offer
-- Procedure for Tendering Old Capital
Securities" and "The Consent Solicitation --
Procedure for Consenting to the Proposed
Amendment."
Consents Required.............. Pursuant to Section 7(b) of the Registration
Rights Agreement, the Proposed Amendment
requires the consent of the registered
holders of a majority in liquidation amount
of the outstanding Capital Securities.
Resales of New
Capital Securities............. Based on interpretations by the staff of the
Commission as set forth in no-action letters
issued to third parties, the Company and the
Trust believe that the New Securities issued
pursuant to the Exchange Offer may be offered
for resale, resold or otherwise transferred
by holders thereof (other than any holder
that is an "affiliate" of the Company or the
Trust as defined under Rule 405 of the
Securities Act) without compliance with the
registration and prospectus delivery
provisions of the Securities Act; provided
that such New Securities are acquired
7
<PAGE>
in the ordinary course of such holders'
business and such holders are not engaged in,
and do not intend to engage in, a
distribution of such New Securities and have
no arrangement or understanding with any
person to participate in the distribution of
such New Securities. However, the staff of
the Commission has not considered the
Exchange Offer in the context of a no-action
letter, and there can be no assurance that
the staff of the Commission would make a
similar determination with respect to the
Exchange Offer as in such other
circumstances. By tendering the Old Capital
Securities in exchange for New Capital
Securities, each holder, other than a
broker-dealer, will represent to the Company
and the Trust that: (i) it is not an
affiliate of the Company or the Trust (as
defined under Rule 405 of the Securities
Act); (ii) any New Capital Securities to be
received by it were acquired in the course of
its ordinary business; and (iii) it is not
engaged in, and does not intend to engage in,
a distribution of the New Capital Securities
and has no arrangement or understanding with
any person to participate in a distribution
(within the meaning of the Securities Act) of
the New Capital Securities.
Each broker-dealer that receives New Capital
Securities for its own account pursuant to
the Exchange Offer must acknowledge that it
will deliver a prospectus in connection with
any resale of such New Capital Securities.
The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit
that it is an "underwriter" within the
meaning of the Securities Act. This
Prospectus, as it may be amended or
supplemented from time to time, may be used
by a broker-dealer in connection with resales
of New Capital Securities received in
exchange for Old Capital Securities where
such Old Capital Securities were acquired by
such broker-dealer as a result of
market-making activities or other trading
activities. The Company and the Trust have
agreed that, starting on the date on which
the Exchange Offer is consummated and ending
on the close of business one year after such
date, they will make this Prospectus
available to any broker-dealer for use in
connection with any such resale. See "Plan of
Distribution."
In that regard, each Exchanging Dealer who
surrenders Old Capital Securities pursuant to
the Exchange Offer will be deemed to have
agreed, by execution of the Letter of
Transmittal or delivery of an Agent's
Message, that, upon receipt of notice from
the Company or the Trust of the occurrence of
any event or the discovery of any fact which
makes any statement contained or incorporated
by reference in this Prospectus untrue in any
material respect or which causes this
Prospectus to omit to state a material fact
necessary in order to make the statements
contained or incorporated by
8
<PAGE>
reference herein, in the light of the
circumstances under which they were made, not
misleading, or of the occurrence of certain
other events specified in the Registration
Rights Agreement, such Exchanging Dealer will
suspend the sale of New Securities pursuant
to this Prospectus until the Company or the
Trust has amended or supplemented this
Prospectus to correct such misstatement or
omission and has furnished copies of the
amended or supplemented Prospectus to such
Exchanging Dealer, or the Company or the
Trust has given notice that the sale of the
New Securities may be resumed, as the case
may be.
Exchange Agent................. The Exchange Agent is The Chase Manhattan
Bank. The address and telephone and facsimile
numbers of the Exchange Agent are set forth
under "The Exchange Offer -- Exchange Agent"
and in the Letter of Transmittal.
Use of Proceeds................ Neither the Company nor the Trust will
receive any cash proceeds from the issuance
of the New Capital Securities offered hereby.
See "Use of Proceeds."
Certain Federal Income
Tax Consequences; ERISA
Considerations................. Holders of Old Capital Securities should
review the information set forth under
"Certain Federal Income Tax Consequences" and
"Certain ERISA Considerations" prior to
tendering Old Capital Securities in the
Exchange Offer.
THE CAPITAL SECURITIES
The Exchange Offer applies to the Old Securities. The terms of the
New Securities are identical in all material respects to the respective terms
of the Old Securities, except that (i) the New Securities have been registered
under the Securities Act and therefore will not be subject to certain
restrictions on transfer applicable to the Old Securities, (ii) the New
Capital Securities will not provide for any increase in the distribution rate
thereon, and (iii) the New Subordinated Debt Securities will not provide for
any increase in the interest rate thereon. In the event that the Exchange
Offer is consummated, any Old Capital Securities which remain outstanding
after consummation of the Exchange Offer and the New Capital Securities issued
in the Exchange Offer will vote together as a single class for purposes of
determining whether holders of the requisite percentage in outstanding
liquidation amount thereof have taken certain actions or exercised certain
rights under the Declaration.
Securities Offered............. $150,000,000 aggregate liquidation amount of
the Capital Securities (liquidation amount
$1,000 per Capital Security).
General........................ The Capital Securities represent undivided
beneficial interests in the Trust's assets,
which consist solely of the Subordinated Debt
Securities. The Subordinated Debt Securities,
in which the proceeds of the Trust Securities
are invested, mature on January 15, 2027,
unless the Subordinated Debt Securities are
redeemed by the Company prior to such
maturity as described
9
<PAGE>
under "Description of the Capital
Securities-Redemption" and "Description of
the Capital Securities-Tax Event Redemption."
Distributions.................. The distributions payable on the Capital
Securities are fixed at a rate per annum of
8.65% of the stated liquidation amount of
$1,000 per Capital Security and will be
cumulative, will accrue from January 21,
1997, the date of original issuance of the
Old Capital Securities, and (subject to the
extensions of distribution payment periods
described below) are payable semiannually, in
arrears, on January 15 and July 15 of each
year, commencing July 15, 1997. See
"Description of the Capital
Securities-Distributions."
Option to Extend Interest
Payment Period................. The Company has the right, at any time,
subject to certain conditions, to defer
payments of interest on the Subordinated Debt
Securities for Extension Periods, each not
exceeding 10 consecutive semiannual periods;
provided that no Extension Period may extend
beyond the maturity date of the Subordinated
Debt Securities. As a consequence of the
Company's extension of the interest payment
period on the Subordinated Debt Securities,
distributions on the Capital Securities would
be deferred (though such distributions would
continue to accrue interest at a rate of
8.65% per annum compounded semiannually (to
the extent permitted by law)). In the event
the Company exercises its right to extend an
interest payment period, then during any
Extension Period, subject to certain
exceptions, (i) the Company shall not declare
or pay any dividend on, make any
distributions with respect to, or redeem,
purchase, acquire or make a liquidation
payment with respect to, any of its capital
stock or rights to acquire such capital stock
or make any guarantee payments with respect
to any guarantee by the Company of the debt
securities of any subsidiary of the Company
if such guarantee ranks pari passu with or
junior in interest to the Subordinated Debt
Securities (other than payments on the
Guarantee and the Common Securities Guarantee
(as defined herein)) and (ii) the Company
shall not make any payment of interest on or
principal of (or premium, if any, on), or
repay, repurchase or redeem, any debt
securities issued by the Company which rank
pari passu with or junior to the Subordinated
Debt Securities. Upon the termination of any
Extension Period and the payment of all
amounts then due, the Company may commence a
new Extension Period, subject to certain
requirements. See "Description of the
Subordinated Debt Securities -- Option to
Extend Interest Payment Period." Should an
Extension Period occur with respect to the
Capital Securities, holders of the Capital
Securities will continue to recognize
interest income for United States federal
income tax purposes, notwithstanding the
10
<PAGE>
deferred receipt of payments which accrue
during the Extension Period. As a result,
such holders will be required to include such
income in gross income for United States
federal income tax purposes in advance of the
receipt of cash, and such holders will not
receive the cash from the Trust related to
such income if such holders dispose of the
Capital Securities prior to the record date
for payment of distributions. See "Certain
Federal Income Tax Consequences -- US Holders
-- Original Issue Discount."
Liquidation.................... The Company, as the holder of all of the
Common Securities, has the right at any time
to dissolve and liquidate the Trust
(including, without limitation, upon the
occurrence of a Tax Event) with the result
that, after satisfaction of liabilities to
creditors of the Trust (to the extent not
satisfied by the Company), the Subordinated
Debt Securities would be distributed to the
holders of the Trust Securities on a pro rata
basis in accordance with the respective
stated liquidation amounts thereof, in
liquidation of the Trust. In addition, the
Trust will be dissolved and liquidated under
certain other circumstances. See "Description
of the Capital Securities -- Liquidation
Distribution upon Dissolution."
Liquidation Amount............. In the event of the dissolution of the Trust,
after satisfaction of liabilities to
creditors of the Trust (to the extent not
satisfied by the Company) holders of the
Capital Securities issued by the Trust will
be entitled to receive $1,000 per Capital
Security plus an amount equal to accrued and
unpaid distributions thereon to the date of
payment, unless the Subordinated Debt
Securities are distributed to holders of
Trust Securities in exchange therefor. If
such liquidation distribution can be paid
only in part because the Trust has
insufficient assets available to pay in full
the aggregate liquidation distribution, then
the amounts payable directly by the Trust on
the Capital Securities shall be paid on a pro
rata basis. The holders of the Common
Securities will be entitled to receive
distributions upon any such liquidation pro
rata with the holders of the Capital
Securities, except that if a Declaration
Event of Default has occurred and is
continuing, the Capital Securities shall have
a priority over the Common Securities. See
"Description of the Capital Securities --
Liquidation Distribution Upon Dissolution."
Maturity....................... Upon the repayment of the Subordinated Debt
Securities at maturity, the proceeds from
such repayment will be applied by the
Institutional Trustee to redeem a like amount
of Trust Securities, upon the terms and
conditions described herein. See "Description
of the Capital Securities -- Redemption."
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Optional Redemption............ The Company has the right to redeem the
Subordinated Debt Securities on or after
January 15, 2007, in whole or in part, at any
time from time to time, subject to the
conditions described in "Description of the
Subordinated Debt Securities -- Redemption,"
at the Call Prices described herein, together
with accrued and unpaid interest to the date
of redemption. Upon the redemption of the
Subordinated Debt Securities, the proceeds of
such redemption will be applied by the
Institutional Trustee to redeem a like amount
of the Trust Securities pro rata at the
applicable Redemption Price, upon the terms
and conditions described herein. See
"Description of the Capital Securities --
Redemption."
Tax Event Redemption........... If at any time a Tax Event should occur and
would continue despite dissolution of the
Trust and distribution of the Subordinated
Debt Securities to the holders of the Trust
Securities, the Company may, within 90 days
of the occurrence of such Tax Event, redeem
the Subordinated Debt Securities in whole or
in part in certain limited circumstances at a
redemption price equal to the aggregate of
the principal amount to be redeemed plus any
accrued and unpaid interest to the redemption
date. See "Description of the Capital
Securities -- Tax Event Redemption." Upon the
redemption of the Subordinated Debt
Securities, the proceeds of such redemption
will be applied by the Institutional Trustee
to redeem a like amount of the Trust
Securities pro rata at the applicable
Redemption Price, upon the terms and
conditions described herein. See "Description
of the Capital Securities -- Redemption."
The Guarantee.................. The payment of distributions out of moneys
held by the Trust, payments on liquidation of
the Trust and payment upon the redemption of
Capital Securities, in each case, if required
under the Declaration, are guaranteed by the
Company as described herein under
"Description of the Guarantee." The Guarantee
covers payments of distributions and other
payments on the Capital Securities only if
and to the extent that the Trust has funds
available therefor, which funds will not be
available except to the extent the Company
has made payments of interest or principal
(or premium, if any) or other payments on the
Subordinated Debt Securities. If the Company
does not make interest payments on the
Subordinated Debt Securities held by the
Issuer, the Trust will have insufficient
funds to pay distributions on the Capital
Securities. The Guarantee does not cover
payment of distributions when the Trust does
not have sufficient funds to pay such
distributions. In such event, a holder of
Capital Securities may institute a legal
proceeding directly against the Company to
enforce payment of such distributions to such
holder. See "Risk Factors -- Enforcement of
Certain Rights by Holders of Capital
Securities,"
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<PAGE>
"Description of the Capital Securities,"
"Description of the Guarantee" and
"Description of Subordinated Debentures." The
Guarantee, when taken together with the
Company's obligations under the Subordinated
Debt Securities, the Declaration and the
Indenture (including its obligations to pay
costs, expenses, debts and other obligations
of the Trust (other than with respect to the
Trust Securities)), provides a full and
unconditional guarantee on a subordinated
basis by the Company of amounts due on the
Capital Securities. The Company has also
agreed separately to guarantee the
obligations of the Trust with respect to the
Common Securities as described herein under
"Description of the Guarantee -- General."
Ranking........................ The Common Securities rank pari passu with,
and payments thereon will be made pro rata
with, the Capital Securities, except that
upon the occurrence and during the
continuance of a Declaration Event of
Default, the rights of the holders of the
Common Securities to receive payment of
periodic distributions and payments upon
liquidation, redemption or otherwise will be
subordinated to the rights of the holders of
the Capital Securities. See "Description of
the Capital Securities -- General." The
Subordinated Debt Securities are unsecured
and subordinate and junior in right of
payment to the extent and in the manner set
forth in the Indenture to all Senior
Indebtedness of the Company. See "Description
of the Subordinated Debt Securities." The
Guarantee constitutes an unsecured obligation
of the Company and ranks subordinate and
junior in right of payment to the extent and
in the manner set forth in the Guarantee to
all Senior Indebtedness of the Company. The
Company's obligations under the Guarantee and
the Subordinated Debt Securities are also
effectively subordinate to claims of
creditors of the Company's subsidiaries. See
"Description of the Guarantee."
Voting Rights.................. Holders of the Capital Securities will have
limited voting rights relating generally to
the modification of the Capital Securities
and the Guarantee and the exercise of the
Trust's rights as the holder of the
Subordinated Debt Securities. Holders of the
Capital Securities will not be entitled to
appoint, remove or replace the Institutional
Trustee or the Delaware Trustee except upon
the occurrence of certain events described
herein. See "Description of the Capital
Securities -- Voting Rights" and " -- Removal
of Trustees; Appointment of Successors."
Absence of Market
for the New Capital
Securities..................... The New Capital Securities will be a new
issue of securities for which there is
currently no market. Although the Initial
Purchasers informed the Company and the Trust
in connection
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<PAGE>
with the offering of the Old Capital
Securities that they each intended to make a
market in the Old Capital Securities, they
are not obligated to make a market in the Old
Capital Securities or the New Capital
Securities, and any such market-making may be
discontinued at any time without notice.
Accordingly, there can be no assurance as to
the development or liquidity of any market
for the New Capital Securities. The New
Capital Securities will not be listed on the
New York Stock Exchange.
Trading Price.................. The Capital Securities are expected to trade
in the secondary market at a price per
Capital Security plus accrued and unpaid
distributions, if any, to the date of
settlement. Because the Capital Securities
pay distributions at a fixed rate based on
the fixed interest rate payable on the
Subordinated Debt Securities, the trading
price on the Capital Securities may decline
if interest rates rise.
Transfer....................... The Old Capital Securities have been issued,
and may be transferred, only in blocks having
a liquidation amount of not less than
$100,000 (100 Old Capital Securities). Any
transfer, sale or other disposition of Old
Capital Securities resulting in a block
having a liquidation amount of less than
$100,000 shall be deemed to be void and of no
legal effect whatsoever. The New Capital
Securities will not be so restricted.
For additional information with respect to the Capital Securities,
see "Description of the Capital Securities," "Description of the Subordinated
Debt Securities," "Description of the Guarantee" and "Certain Federal Income Tax
Consequences."
RISK FACTORS
Prospective investors should carefully consider the matters set
forth under "Risk Factors" beginning on Page __ of this Prospectus.
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<PAGE>
RISK FACTORS
Holders of the Old Capital Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters prior to tendering Old Capital Securities in the
Exchange Offer and Consent Solicitation.
ABSENCE OF PUBLIC TRADING MARKET; TRANSFER RESTRICTIONS
There is no existing trading market for the Capital Securities and
there can be no assurance as to the liquidity of any such market that may
develop, the ability of the holders of the Capital Securities to sell such
securities or whether a trading market, if it develops, will continue to exist.
If such a market were to exist, the Capital Securities could trade at prices
higher or lower than their liquidation amounts, depending on many factors,
including prevailing interest rates, the market for similar securities and the
operating results of the Company. In the event that the Subordinated Debt
Securities are distributed by the Trust to the holders of the Capital
Securities, the preceding considerations would be equally applicable to the
Subordinated Debt Securities. The Company and the Trust were advised by the
Initial Purchasers in connection with the offering of the Old Capital Securities
that they intended to make a market in the Old Capital Securities. However, the
Initial Purchasers are not obligated to make a market in the Old Capital
Securities or the New Capital Securities and any such market-making activity may
be discontinued at any time without notice in the sole discretion of the Initial
Purchasers. In addition, such market-making activity will be subject to the
limits imposed by the Securities Act and the Exchange Act and may be limited
during the Exchange Offer. The Old Capital Securities have not been registered
under the Securities Act, and are subject to significant restrictions on resale
(including a prohibition on transfers resulting in blocks having a stated
liquidation amount of less than $100,000 (100 Old Capital Securities)).
Notwithstanding the registration of the New Capital Securities in the Exchange
Offer, holders who are "affiliates" of the Company or the Trust as defined under
Rule 405 of the Securities Act may publicly offer for sale or resell the New
Capital Securities only in compliance with the provisions of Rule 144 under the
Securities Act. Each tendering holder of the Old Capital Securities will be
deemed to have made certain acknowledgments, representations and agreements. In
addition, each broker-dealer that receives New Capital Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. Any
broker-dealer that acquires Old Capital Securities in a transaction other than
as a part of its market making or other ordinary trading activities (i) will not
be able to rely on the interpretations of the staff of the Commission set forth
in certain no-action letters to third parties referenced under "The Exchange
Offer -- Resales of Capital Securities," (ii) will not be able to tender such
Old Capital Securities in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities unless
such sale is made pursuant to an exemption from such requirement. See "Plan of
Distribution."
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED
DEBT SECURITIES
The obligations of the Company under the Guarantee and the
Subordinated Debt Securities are subordinate and junior in right of payment to
all present and future Senior Indebtedness of the Company. No payment of
principal of (including redemption payments, if any) or premium, if any, or
interest on the Subordinated Debt Securities may be made if (i) any Senior
Indebtedness of the Company is not paid when due and any applicable grace period
with respect to such default has ended with such default not having been cured
or waived or ceasing to exist or (ii) the maturity of any Senior Indebtedness of
the Company has been accelerated because of a default. The Subordinated Debt
Securities and the Guarantee also are effectively subordinated to all existing
and future indebtedness, liabilities and obligations, including trade payables
and Deposits, of the Company's subsidiaries, except to the extent that the
Company is a creditor of the subsidiaries and is recognized as such. At December
31, 1996, the aggregate amount of Senior Indebtedness and liabilities and
obligations of the Company's subsidiaries that would be effectively ranked
senior to the Guarantee and the
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<PAGE>
Subordinated Debt Securities was approximately $3,836,115,000, exclusive of
Deposits. See "Capitalization." There are no terms in the Capital Securities,
the Subordinated Debt Securities or the Guarantee that limit the ability of the
Company or its subsidiaries to incur additional indebtedness, liabilities and
obligations including such indebtedness that ranks senior to the Subordinated
Debt Securities and the Guarantee. See "Description of the Guarantee -- Status
of the Guarantee" and "Description of the Subordinated Debt Securities."
GUARANTEE COVERS DISTRIBUTIONS AND OTHER PAYMENTS ONLY TO THE EXTENT THE TRUST
HAS AVAILABLE FUNDS; RELATED REMEDIES
The terms of the Guarantee are those set forth in the Guarantee and
those made part of the Guarantee by the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), under which The Chase Manhattan Bank is acting as
trustee (the "Guarantee Trustee"). The New Guarantee has been qualified under
the Trust Indenture Act. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Capital Securities.
The Guarantee guarantees to the holders of the Capital Securities
the following payments, to the extent not paid by the Trust: (i) any accrued and
unpaid distributions required to be paid on the Capital Securities, to the
extent the Trust has funds available therefor, (ii) the Redemption Price, to the
extent the Trust has funds available therefor, with respect to the Capital
Securities called for redemption by the Trust, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of Subordinated Debt Securities to the holders
of the Capital Securities in exchange therefor), the lesser of (a) the aggregate
of the liquidation amount and all accrued and unpaid distributions on the
Capital Securities to the date of the payment, to the extent the Trust has funds
available therefor and (b) the amount of assets of the Trust remaining available
for distribution to holders of the Capital Securities in liquidation of the
Trust. The Guarantee is subordinated as described under "-- Ranking of
Subordinate Obligations Under the Guarantee and the Subordinated Debt
Securities." The holders of a majority in liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under the
Guarantee. A holder of record of the Capital Securities may institute a legal
proceeding directly against the Company to enforce the Guarantee Trustee's
rights without first instituting any legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity. If the Company were to default
on its obligation to pay amounts payable on the Subordinated Debt Securities,
the Trust would lack available funds for the payment of distributions or amounts
payable on redemption of the Capital Securities or otherwise, and, in such
event, holders of the Capital Securities would not be able to rely upon the
Guarantee for payment of such amounts. Instead, each holder of the Capital
Securities would rely on the enforcement (i) by the Institutional Trustee of its
rights as registered holder of the Subordinated Debt Securities against the
Company pursuant to the terms of the Subordinated Debt Securities or (ii) by
such holder of the Capital Securities of its right against the Company to
enforce payments of principal (and premium, if any) and interest on the
Subordinated Debt Securities having an aggregate principal amount equal to the
aggregate liquidation amount of the Capital Securities of such holder as
described below under "-- Enforcement of Certain Rights By Holders of Capital
Securities." See "Description of the Capital Securities," "Description of the
Guarantee" and "Description of the Subordinated Debt Securities." The
Declaration provides that each holder of the Capital Securities, by acceptance
thereof, agrees to the provisions of the Guarantee, including the subordination
provisions thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Declaration Event of Default with respect to the Trust occurs
and is continuing, then the holders of the Capital Securities would, except as
provided below, rely on the enforcement by the Institutional Trustee of its
rights as holder of the Subordinated Debt Securities against the Company. The
holders of a majority in liquidation amount of the Capital Securities will have
the right to direct the time, method, and place
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<PAGE>
of conducting any proceeding for any remedy available to the Institutional
Trustee with respect to the Capital Securities or to direct the exercise of any
trust or power conferred upon the Institutional Trustee under the Declaration,
including the right to direct the Institutional Trustee to exercise the remedies
available to it as holder of the Subordinated Debt Securities. If the
Institutional Trustee fails to enforce its rights under the Subordinated Debt
Securities after the holders of a majority in liquidation amount of the Capital
Securities have so directed such Institutional Trustee, a holder of record of
the Capital Securities may, to the fullest extent permitted by law, institute a
legal proceeding directly against the Company to enforce the rights of the
Institutional Trustee under the Subordinated Debt Securities, without first
instituting any legal proceeding against such Institutional Trustee or any other
person.
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal (or premium, if any) on the Subordinated
Debt Securities on the respective dates such interest or principal (or premium,
if any) is payable, after giving effect to any Extension Period (or in the case
of redemption, on the redemption date), then a holder of record of the Capital
Securities may institute directly against the Company a proceeding for
enforcement of payment, on or after the respective due dates specified in the
Subordinated Debt Securities, to such holder directly of the principal of (or
premium, if any) or interest on the Subordinated Debt Securities having an
aggregate principal amount equal to the aggregate liquidation amount of the
Capital Securities of such holder (a "Direct Action"). In connection with such
Direct Action, the Company will be subrogated to the rights of such holder of
the Capital Securities under the Declaration to the extent of any payment made
by the Company to such holder of the Capital Securities in such Direct Action;
provided, however, that no such subrogation right may be exercised so long as a
Declaration Event of Default has occurred and is continuing. The holders of the
Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Subordinated Debt Securities. See "Description
of the Capital Securities -- Declaration Events of Default" and "Effect of
Obligations Under the Declaration, the Subordinated Debt Securities and the
Guarantee."
OPTION TO EXTEND INTEREST PAYMENT PERIOD FOR UP TO FIVE YEARS AND CONSEQUENT
DEFERRAL OF DISTRIBUTIONS ON CAPITAL SECURITIES
The Company has the right under the Indenture to defer payments of
interest on the Subordinated Debt Securities by extending the interest payment
period, at any time and from time to time, subject to certain conditions, for
Extension Periods, each not exceeding 10 consecutive semiannual periods,
provided that no Extension Period may extend beyond the stated maturity of the
Subordinated Debt Securities. During each such Extension Period, semiannual
distributions on the Capital Securities would also be deferred (but would
continue to accrue, despite such deferral, with interest thereon compounded
semiannually (to the fullest extent permitted by law)) by the Trust. In the
event that the Company exercises this right to defer interest payments on the
Subordinated Debt Securities, and such deferral is continuing, or if there shall
have occurred and be continuing any event of default under the Indenture or if
the Company shall be in default with respect to the payment of its obligations
under the Guarantee, (a) the Company shall not declare or pay dividends on, or
make a distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or
rights to acquire such capital stock (other than (i) purchases or acquisitions
of shares of any such capital stock or rights to acquire such capital stock in
connection with the satisfaction by the Company of its obligations under any
employee benefit plans or any other contractual obligations of the Company
(other than a contractual obligation ranking pari passu with or junior to the
Subordinated Debt Securities), (ii) as a result of a reclassification of the
Company's capital stock or rights to acquire such capital stock or the exchange
or conversion of one class or series of capital stock of the Company or rights
to acquire such capital stock for another class or series of the Company's
capital stock or rights to acquire such capital stock, (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) dividends and distributions made on the Company's
capital stock or rights to acquire such
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<PAGE>
capital stock with the Company's capital stock or rights to acquire such capital
stock or (v) any declaration of a dividend in connection with the implementation
of a shareholder rights plan, or the issuance of stock under any such plan in
the future, or the redemption or repurchase of any such rights pursuant
thereto), or make guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior to the Subordinated Debt Securities
(other than payments under the Guarantee and the Common Securities Guarantee)
and (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Company that rank pari passu with or junior to the Subordinated Debt
Securities. Prior to the termination of any such Extension Period, the Company
may further extend the interest payment period, provided that each such
Extension Period, together with all such previous and further extensions
thereof, may not exceed 10 consecutive semiannual periods or extend beyond the
maturity of the Subordinated Debt Securities. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the terms set forth herein. See
"Description of the Capital Securities" and "Description of the Subordinated
Debt Securities."
During each Extension Period, if any, each holder of Capital
Securities will continue to accrue income (as original issue discount ("OID"))
in respect of the deferred interest allocable to its Capital Securities for
United States federal income tax purposes. In such event, each holder of the
Capital Securities will recognize income for United States federal income tax
purposes in advance of the receipt of cash, and will not receive cash related to
such income from the Trust if such holder disposes of its Capital Securities
prior to the record date for payment of such deferred interest. See "Certain
Federal Income Tax Consequences."
The Company has no current intention of exercising its right to
defer payments of interest on the Subordinated Debt Securities. However, should
the Company determine to exercise such right in the future, the market price of
the Capital Securities is likely to be affected. A holder that disposes of its
Capital Securities during an Extension Period, therefore, might not receive the
same return on its investment as a holder that continues to hold its Capital
Securities. In addition, as a result of the existence of the Company's right to
defer interest payments, the market price of the Capital Securities (which
represent undivided beneficial interests in the Subordinated Debt Securities)
may be more volatile than the market price of other similar securities where the
issuer does not have such right to defer interest payments.
PROPOSED TAX LEGISLATION
On February 6, 1997, President Clinton submitted to Congress a
proposal to implement tax legislation (the "Proposal"). As explained in the
Joint Committee on Taxation Description and Analysis (JCX- 10-97) of Certain
Revenue-Raising Provisions Contained in President Clinton's Fiscal 1998 Budget
Proposal Prepared for House Ways and Means Committee, issued March 11, 1997 (the
"Joint Committee Description"), the Proposal contains a provision which
generally would deny a deduction for interest on an instrument which (a) is
issued by a corporation, (b) has a maximum term of more than 15 years and (c) is
not shown as indebtedness on the separate balance sheet of the issuer (or, if
the instrument is issued to a related party other than a corporation and the
holder or some other related party issues a related instrument, such instrument
is not shown as indebtedness on the issuer's consolidated balance sheet). As
explained in the Joint Committee Description, legislation enacted under the
Proposal would be effective generally for instruments issued on or after the
date of first congressional committee action. To date there has been no
congressional committee action on the Proposal.
While the Company expects to be able to deduct interest on the
Subordinated Debt Securities, see "Certain Federal Income Tax Consequences --
Characterization of the Subordinated Debt Securities," there can be no assurance
that the Proposal, if implemented, will not result in legislation having a
retroactive effect and applicable to the Subordinated Debt Securities.
Furthermore, there can be no assurance that other legislation enacted after the
date hereof will not otherwise adversely affect the ability of the Company to
deduct
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<PAGE>
the interest payable on the Subordinated Debt Securities. Accordingly, there can
be no assurance that a Tax Event will not occur. See "-- Redemption;
Distribution" and "Description of the Subordinated Debt Securities -- Proposed
Tax Legislation" and "Certain Federal Income Tax Consequences -- Proposed Tax
Legislation."
REDEMPTION; DISTRIBUTION
The Company, as the holder of all of the outstanding Common
Securities, has the right at any time (including, without limitation, upon the
occurrence of a Tax Event) to dissolve the Trust, and, after satisfaction of
liabilities to creditors of the Trust (to the extent not paid by the Company),
cause the Subordinated Debt Securities to be distributed to the holders of the
Trust Securities on a pro rata basis in accordance with the respective
liquidation amounts thereof, in liquidation of the Trust. See "Description of
the Capital Securities -- Liquidation Distribution Upon Dissolution." Upon the
occurrence of a Tax Event, in certain circumstances described herein, the
Company will have the right to redeem the Subordinated Debt Securities, in whole
or in part, in which event the Trust will redeem the Trust Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Subordinated Debt Securities redeemed by the Company on a pro rata basis. See
"Description of the Capital Securities -- Tax Event Redemption" and "--
Liquidation Distribution Upon Dissolution."
Under current United States federal income tax law, a distribution
of the Subordinated Debt Securities upon the dissolution of the Trust generally
would not be a taxable event to holders of the Capital Securities. However, a
dissolution of the Trust in which holders of the Capital Securities receive cash
would be a taxable event to such holders. See "Certain Federal Income Tax
Consequences -- US Holders -- Receipt of Subordinated Debt Securities or Cash
Upon Liquidation of the Trust."
There can be no assurance as to the market prices for the Capital
Securities or the Subordinated Debt Securities that may be distributed in
exchange for the Capital Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Capital Securities that an investor may
purchase, whether in the secondary market or otherwise, or the Subordinated Debt
Securities that a holder of the Capital Securities may receive on dissolution
and liquidation of the Trust, may trade at a discount to the price paid to
purchase the Capital Securities. Because the ability of the Trust to pay amounts
due on the Capital Securities is wholly dependent upon the Company's making
payments on the Subordinated Debt Securities as and when required, and because
holders of the Capital Securities may receive the Subordinated Debt Securities
upon dissolution and liquidation of the Trust, purchasers of the Capital
Securities are also making an investment decision with regard to the
Subordinated Debt Securities and should carefully review all the information
regarding the Subordinated Debt Securities contained herein and evaluate the
credit risk of the Company. See "Description of the Capital Securities" and
"Description of the Subordinated Debt Securities."
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
The Indenture does not contain any provisions that afford holders of
the Subordinated Debt Securities protection in the event of a highly leveraged
transaction, including a change of control, or other similar transactions
involving the Company that may adversely affect such holders. See "Description
of the Subordinated Debt Securities."
LIMITED VOTING RIGHTS
Holders of the Capital Securities will have limited voting rights
relating generally to the modification of the Capital Securities and the
Guarantee and the exercise of the Trust's rights as the holder of the
Subordinated Debt Securities. Holders of the Capital Securities will not be
entitled to appoint, remove or replace the Institutional Trustee or the Delaware
Trustee except upon the occurrence of certain events described herein. The
Institutional Trustee and the holders of a majority of the Common Securities may
amend the
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Declaration without the consent of the holders of the Capital Securities to
ensure that the Trust will be classified for United States federal income tax
purposes as a grantor trust and will not be required to register as an
"investment company" under the 1940 Act (as defined herein) even if such action
adversely affects the interests of such holders. See "Description of the Capital
Securities -- Voting Rights" and "-- Removal of Trustees; Appointment of
Successors."
TRADING PRICE
Because the Capital Securities pay distributions at a fixed rate
based upon the fixed interest rate payable on the Subordinated Debt Securities,
the trading price of the Capital Securities may decline if interest rates rise.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD CAPITAL SECURITIES AND TO CONSENT TO THE
PROPOSED AMENDMENT
The Old Capital Securities have not been registered under the
Securities Act or any state securities laws and therefore may not be offered,
sold or otherwise transferred except in compliance with the registration
requirements of the Securities Act and any other applicable securities laws, or
pursuant to an exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with certain other conditions and restrictions. Old
Capital Securities which remain outstanding after consummation of the Exchange
Offer will continue to bear a legend reflecting such restrictions on transfer.
In addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). The Company and the Trust do not intend to register under
the Securities Act any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer (subject to such limited exceptions, if
applicable).
To the extent that Old Capital Securities are tendered and accepted
in the Exchange Offer, a holder's ability to sell untendered Old Capital
Securities could be adversely affected. In addition, any trading market for Old
Capital Securities which remain outstanding after the Exchange Offer could be
adversely affected.
The New Capital Securities and any Old Capital Securities which
remain outstanding after consummation of the Exchange Offer will constitute a
single series of Capital Securities under the Declaration and, accordingly, will
vote together as a single class for purposes of determining whether holders of
the requisite percentage in outstanding liquidation amount thereof have taken
certain actions or exercised certain rights under the Declaration. See
"Description of New Securities -- Description of Capital Securities -- General."
The Old Capital Securities provide that, if the Exchange Offer is
not consummated by August 19, 1997 (subject to extension in certain
circumstances), the distribution rate borne by the Old Capital Securities will
increase by 0.25% per annum until the Exchange Offer is consummated. See
"Description of Old Capital Securities." Following consummation of the Exchange
Offer, the Old Capital Securities will not be entitled to any increase in the
distribution rate thereon. The New Capital Securities will not be entitled to
any such increase in the distribution rate thereon.
Unless valid consents of holders of a majority in liquidation amount
of the Old Capital Securities are received and not revoked, the Company and the
Trust will not accept and exchange the Old Capital Securities pursuant to the
Exchange Offer. In such event, all of the Old Capital Securities will remain
outstanding and continue to bear a legend reflecting the restrictions on
transfer discussed above. The Registration Rights Agreement provides in such
event that the Company and the Trust will, as promptly as practicable after
termination of the Exchange Offer, file with the Commission the Shelf
Registration Statement
20
<PAGE>
covering resales of the Old Capital Securities by the holders thereof from time
to time in accordance with the methods of distribution elected by such holders
and set forth in such Shelf Registration Statement, and use their best efforts
to cause the Shelf Registration Statement to be declared effective under the
Securities Act by the 210th day (or, if the Exchange Offer is terminated after
the 210th day after the initial issuance of the Old Capital Securities, by the
240th day) after the initial issuance of the Old Capital Securities.
EXCHANGE OFFER PROCEDURES
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Exchange Agent of such Old Capital Securities, a properly
completed and duly executed Letter of Transmittal or Agent's Message in lieu
thereof and all other required documents. Therefore, holders of the Old Capital
Securities desiring to tender such Old Capital Securities in exchange for New
Capital Securities should allow sufficient time to ensure timely delivery.
Neither the Company, the Trust, nor the Exchange Agent is under any duty to give
notification of defects or irregularities with respect to the tenders of Old
Capital Securities for exchange.
LEUCADIA NATIONAL CORPORATION
The Company is a diversified financial services holding company
principally engaged in personal and commercial lines of property and casualty
insurance, life and health insurance, banking and lending and manufacturing. The
Company concentrates on return on investment and cash flow to build long-term
shareholder value, rather than emphasizing volume or market share. Additionally,
the Company continuously evaluates the retention and disposition of its existing
operations and investigates possible acquisitions of new businesses in order to
maximize shareholder value.
Shareholders' equity has grown from a deficit of $7,657,000 at
December 31, 1978 (prior to the acquisition of a controlling interest in the
Company by the Company's Chairman and President), to a positive shareholders'
equity of $1,118,107,000 at December 31, 1996, equal to a book value per common
share of negative $.11 at December 31, 1978 and $18.51 at December 31, 1996. The
Company's Chairman and President and their families beneficially own in the
aggregate approximately 35% of the Company's outstanding Common Shares.
The Company's principal operations are its insurance businesses,
where it is a specialty markets provider of property and casualty and life and
health insurance products to niche markets. The Company's principal personal
lines insurance products are automobile insurance, homeowners insurance, graded
benefit life insurance marketed primarily to the age 50-and-over population and
Medicare supplement and variable annuity products. The Company's principal
commercial lines are property and casualty products provided for workers'
compensation, multi-family residential real estate, retail establishments and
livery vehicles in the New York metropolitan area. For the year ended December
31, 1996, the Company's insurance segments contributed 83% of total revenue and,
at December 31, 1996, constituted 77% of consolidated assets.
The property and casualty insurance industry, which is highly
regulated and competitive, has historically been cyclical in nature, with
periods of less intense price competition and high underwriting standards
generating significant profits, followed by periods of increased price
competition and lower underwriting standards resulting in reduced profitability
or loss. The current cycle of intense price competition has continued for a
longer period than in the past, suggesting that the significant infusion of
capital into the industry in recent years, coupled with larger investment
returns has been, and may continue to be, a depressing influence on policy
rates. As indicated in the Selected Financial Data included herein, the
statutory combined ratios for the Company's property and casualty business have
been better than the industry averages for each of the past five years. This has
been due, in part, to the Company's low expense ratio.
21
<PAGE>
The Company's insurance subsidiaries have a diversified investment
portfolio of securities, substantially all of which are issued or guaranteed by
the U.S. Treasury or by U.S. governmental agencies or are rated "investment
grade" by Moody's Investors Service Inc. and/or Standard & Poor's Corporation.
Investments in mortgage loans, real estate and non-investment grade securities
represented 5.1% of the insurance subsidiaries' portfolio at December 31, 1996.
From time to time several companies have expressed interest in the
acquisition of certain of the Company's insurance operations. Recently, the
Company has responded to certain of these overtures, conveying a willingness to
consider the sale of one or more of these operations in the appropriate context
and under acceptable circumstances. Presently the Company is in discussions with
certain interested parties. Although there can be no assurance that any
transaction will be entered into or that, if entered into, any such transaction
will be consummated, the price ranges being discussed for such insurance
operations are substantially in excess of the book value of these operations.
Unless and until a definitive agreement is executed concerning any such
transaction, the Company does not intend to update the status of any discussions
concerning any possible transaction.
The Company's banking and lending operations principally consist of
making instalment loans to niche markets primarily funded by customer banking
deposits insured by the Federal Deposit Insurance Corporation. One of the
Company's principal lending activities is providing automobile loans to
individuals with poor credit histories. The Company's manufacturing operations
primarily manufacture products for the "do-it-yourself" home improvement market
and for industrial markets.
Starting in 1994, the Company has made investments outside the
United States in Russia and Argentina. For more information concerning these
investments see Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," of the Annual Report.
The Company and certain of its subsidiaries have substantial tax
loss carryforwards. The amount and availability of the tax loss carryforwards
are subject to certain qualifications, limitations and uncertainties as more
fully discussed in the Notes to the Consolidated Financial Statements contained
in the Annual Report, incorporated by reference herein.
22
<PAGE>
LEUCADIA NATIONAL CORPORATION
SELECTED FINANCIAL DATA
The following selected financial data have been summarized from the
Company's consolidated financial statements and are qualified in their entirety
by reference to, and should be read in conjunction with, such consolidated
financial statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," contained in the Company's Annual Report,
incorporated by reference herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ----------- ---------- ------------ -----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
SELECTED INCOME STATEMENT DATA: (a)
Revenues $1,506,557 $1,558,314 $1,384,385 $1,408,058 $1,573,015
Net securities gains (losses) 39,429 20,027 (12,004) 51,923 51,778
Interest expense (b) 53,996 52,871 44,003 39,465 38,507
Insurance losses, policy benefits and
amortization of deferred acquisition costs 962,001 942,803 819,010 789,752 896,673
Income before income taxes,
cumulative effects of changes
in accounting principles and
extraordinary loss 78,512 132,182 100,318 176,868 143,553
Income before cumulative effects of
changes in accounting principles
and extraordinary loss 55,515 107,503 70,836 116,259 130,607
Cumulative effects of changes in
accounting principles - - - 129,195 -
Extraordinary loss from early
extinguishment of debt, net of
income tax benefit (6,838) - - - -
Net income 48,677 107,503 70,836 245,454 130,607
Per share:
Primary earnings (loss) per common and
dilutive common equivalent share:
Income before cumulative effects
of changes in accounting principles
and extraordinary loss $ .91 $1.81 $1.22 $1.98 $2.67
Cumulative effects of changes in
accounting principles - - - 2.21 -
Extraordinary loss (.11) - - - -
----- ----- ----- ----- -----
Net income $ .80 $1.81 $1.22 $4.19 $2.67
===== ===== ===== ===== =====
Fully diluted earnings (loss) per common share:
Income before cumulative effects
of changes in accounting principles
and extraordinary loss $ .91 $1.77 $1.21 $1.94 $2.66
Cumulative effects of changes in
accounting principles - - - 2.10 -
Extraordinary loss (.11) - - - -
----- ----- ----- ----- -----
Net income $ .80 $1.77 $1.21 $4.04 $2.66
===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA: (a)
Cash and investments $3,176,927 $3,146,639 $2,764,890 $2,989,384 $3,371,624
Total assets 5,193,936 5,107,874 4,674,046 4,689,272 4,330,580
Debt, including current maturities 525,719 520,862 425,848 401,335 225,588
Customer banking deposits 209,261 203,061 179,888 173,365 186,339
Common shareholders' equity 1,118,107 1,111,491 881,815 907,856 618,161
Book value per common share $18.51 $18.47 $15.72 $16.27 $11.06
</TABLE>
Footnotes on following page.
23
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
SELECTED INFORMATION ON PROPERTY AND CASUALTY
INSURANCE OPERATIONS (Unaudited): (a)(c)
GAAP Combined Ratio 105.0% 103.5% 99.1% 96.9% 101.7%
SAP Combined Ratio 101.5% 101.2% 98.8% 93.7% 102.8%
Industry SAP Combined Ratio (d) N/A 106.4% 108.4% 106.9% 115.7%
Premium to Surplus Ratio (e) 1.6x 1.8x 1.9x 1.6x 2.0x
</TABLE>
- -----------------------------
(a) Data includes acquired companies from date of acquisition.
(b) Includes interest on customer banking deposits.
(c) Certain accident and health insurance business, which is included in
the statutory results of operations of the property and casualty
insurance segment and is reflected in the SAP Combined Ratio, is
reported in the life insurance segment for financial reporting purposes
and therefore is not included in the GAAP Combined Ratios reflected
herein. The Combined Ratio does not reflect the effect of investment
income. For 1996 and 1995, a change in the statutory accounting
treatment for retrospectively rated reinsurance agreements was the
principal reason for the difference between the GAAP Combined Ratios
and the SAP Combined Ratios. Additionally in 1996, the difference
relates to the accounting for certain expenses which are treated
differently under SAP and GAAP. For 1993, the difference reflects the
different treatment of certain costs for GAAP and SAP purposes. For
1992, the results of certain accident and health insurance business had
a non-recurring income item which reduced the SAP Combined Ratio. In
addition, in 1992 certain income credits were recognized only for GAAP
purposes.
(d) Source: Best's Aggregates & Averages, Property/Casualty, 1996 Edition.
Industry Combined Ratios may not be fully comparable as a result of,
among other things, differences in geographical concentration and in
the mix of property and casualty insurance products.
(e) Premium to Surplus Ratio was calculated by dividing statutory property
and casualty insurance premiums written by statutory capital at the end
of the year.
24
<PAGE>
CAPITALIZATION
The following table sets forth the December 31, 1996 consolidated
capitalization of the Company and its subsidiaries (a) as reported and (b) as
adjusted for the Offering (unaudited). This table should be read in conjunction
with the Company's consolidated financial statements and the notes thereto
incorporated by reference herein. See "Incorporation of Certain Documents by
Reference."
DECEMBER 31, 1996
--------------------------
AS
ADJUSTED
AS FOR THE
REPORTED OFFERING
---------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
Long-term debt (a):
Revolving bank credit agreement
borrowings............................... $ -- $ --
Term loans with banks, due in 1999......... 50,000 50,000
7 3/4% Senior Notes due 2013, less
debt discount of $831.................... 99,169 99,169
Industrial revenue bonds................... 4,900 4,900
Other senior debt.......................... 15,076 15,076
7 7/8% Senior Subordinated Notes
due 2006, less debt discount of $678..... 134,322 134,322
8 1/4% Senior Subordinated Notes due 2005.. 100,000 100,000
10 3/8% Senior Subordinated Notes due 2002,
less debt discount of $92................ 22,252 22,252
5 1/4% Convertible Subordinated
Debentures due 2003(b)................... 100,000 100,000
------- -------
Total long-term debt, including
current maturities..................... 525,719 525,719
------- -------
Company-Obligated Mandatorily
Redeemable Preferred Securities of
Subsidiary Trust Holding Solely
Leucadia National Corporation
Securities(c)(d)........................... -- 150,000
------- -------
Shareholders' Equity (e):
Common shares, par value $1 per share,
authorized 150,000,000 shares;
60,417,579 shares issued and outstanding,
after deducting shares held in treasury. 60,418 60,418
Additional paid-in capital............... 161,026 161,026
Net unrealized gain on
investments............................. 1,759 1,759
Retained earnings........................ 894,904 894,904
Total shareholders' equity............. 1,118,107 1,118,107
---------- ----------
Total................................. $1,643,826 $1,793,826
========== ==========
25
<PAGE>
(a) Excludes Deposits of approximately $209,261,000. For information with
respect to interest rates, maturities, priorities and restrictions related
to outstanding long-term debt, see Note 10 of Notes to Consolidate
Financial Statements contained in the Annual Report.
(b) On March 12, 1997, the Company called for redemption on April 11, 1997 all
of its outstanding $100,000,000 5-1/4% Debentures, at a redemption price
of 102.625% of the principal amount of the Debentures, plus accrued
interest. The Capitalization table is not adjusted to reflect such
redemption.
(c) The sole asset of the Trust consists of approximately $154,640,000 in
aggregate principal amount of the 8.65% Junior Subordinated Deferrable
Interest Debentures due 2027 of Leucadia National Corporation with an
interest rate of 8.65% and a maturity date of January 15, 2027.
(d) The Trust is wholly-owned, and considered together, the "back-up
undertakings" constitute a full and unconditional guarantee by the Company
of the Trust's obligations under the Capital Securities.
(e) For information with respect to stock options and contingent obligations,
see Notes 11 and 16 of Notes to Consolidated Financial Statements
contained in the Annual Report.
26
<PAGE>
ACCOUNTING TREATMENT
The financial statements of the Trust will be reflected in the
Company's consolidated financial statements, with the Capital Securities shown
as "Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary
Trust Holding Solely Leucadia National Corporation Securities." In a footnote to
the Company's audited financial statements there will be included a statement
that the Trust is wholly-owned, the sole asset of the Trust is the Subordinated
Debt Securities (indicating the principal amount, interest rate and maturity
date thereof) and that, considered together, the "back-up undertakings"
constitute a full and unconditional guarantee by the Company of the Trust's
obligation under the Capital Securities. See "Capitalization."
USE OF PROCEEDS
Neither the Company nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. In consideration
for issuing the New Capital Securities in exchange for Old Capital Securities as
described in this Prospectus, the Trust will receive Old Capital Securities in
like liquidation amount. The Old Capital Securities surrendered in exchange for
the New Capital Securities will be retired and cancelled.
All of the proceeds from the sale of the Old Capital Securities and
the Common Securities were invested by the Trust in Subordinated Debt Securities
of the Company issued pursuant to the Indenture. The Company applied the net
proceeds from the sale of the Old Subordinated Debt Securities (approximately
$148 million) to its general funds to be used for general corporate purposes,
which may include, from time to time, the redemption or the purchase, in the
open market or in privately negotiated transactions or otherwise, of outstanding
indebtedness of the Company, or for working capital, acquisitions or investment
opportunities. Although the Company from time to time evaluates potential
acquisitions and investment opportunities, it currently has no understandings,
commitments or agreements with respect thereto. Pending such application, the
net proceeds have been invested in domestic and foreign, short/intermediate-term
obligations which are primarily investment grade.
THE TRUST
The Trust is a statutory business trust created under Delaware law
pursuant to (i) the Initial Declaration (as such Initial Declaration has been
amended and restated, the "Declaration") and (ii) the filing of a certificate of
trust for the Trust with the Delaware Secretary of State on January 10, 1997.
The Trust"s business and affairs are conducted by its trustees, each appointed
by the Company as the holder of the Common Securities. At least one trustee of
the Trust is required to be an entity that maintains its principal place of
business in the State of Delaware (the "Delaware Trustee") and at least one
trustee is required to be a financial institution that is unaffiliated with the
Company and is eligible to act as property trustee and as indenture trustee
pursuant to the terms set forth therein (the "Institutional Trustee" and
together with the Delaware Trustee, the "Trustees").
The Chase Manhattan Bank initially is serving as Institutional
Trustee and Chase Manhattan Bank Delaware initially is serving as Delaware
Trustee. In addition, three individuals who are employees or officers of or
affiliated with the holder of the majority of the Common Securities are acting
as administrators with respect to the Trust (the "Administrators"). The
Administrators have been selected by the holders of a majority of the Common
Securities. See "Description of the Capital Securities -- Miscellaneous." The
Trust exists for the exclusive purposes of (i) issuing the Trust Securities
representing undivided beneficial interests in the assets of the Trust, (ii)
investing the gross proceeds of such Trust Securities in the Subordinated Debt
Securities, and (iii) engaging in only those other activities necessary or
incidental thereto, including engaging in the Exchange Offer. All of the Common
Securities of the Trust are directly owned by the Company. The
27
<PAGE>
Common Securities of the Trust rank pari passu, and payments are made thereon
pro rata, with the Capital Securities of the Trust except that upon the
occurrence and continuation of a Declaration Event of Default, the rights of the
holders of the Common Securities to payment from the Trust in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Capital Securities. The Company
has acquired Common Securities in an aggregate liquidation amount equal to
approximately 3% of the total capital of the Trust. The Trust has a term of
approximately 55 years, but may earlier dissolve as provided in the Declaration.
The Company, as the holder of all of the outstanding Common Securities, has the
right at any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Tax Event) and, after satisfaction of liabilities to creditors
of the Trust, cause the Subordinated Debt Securities to be distributed to the
holders of the Trust Securities on a pro rata basis in accordance with the
respective liquidation amounts thereof, in liquidation of the Trust.
The Institutional Trustee holds title to the Subordinated Debt
Securities for the benefit of the holders of the Trust Securities and has the
power to exercise all rights, powers and privileges under the Indenture as the
holder of the Subordinated Debt Securities. In addition, the Institutional
Trustee maintains exclusive control of a separate, segregated, non-interest
bearing trust account (the "Property Account") to hold all payments made in
respect of the Subordinated Debt Securities for the benefit of the holders of
the Trust Securities issued by the Trust. The Institutional Trustee will make
payments of distributions and payments on liquidation, redemption and otherwise
to the holders of record of the Trust Securities out of funds from the Property
Account. Holders of Capital Securities are not and will not be entitled to
appoint, remove or replace the Institutional Trustee or the Delaware Trustee
except upon the occurrence of certain events described herein. See "Description
of the Capital Securities -- Voting Rights" and "-- Removal of Trustees;
Appointment of Successors." The Company, as borrower under the Indenture, has
covenanted to pay all costs, expenses, debts and other obligations related to
the Trust (other than in respect of the Trust Securities) and the offering and
sale of the Trust Securities. See "Description of the Subordinated Debt
Securities -- Miscellaneous." The rights of the holders of the Capital
Securities of the Trust, including economic rights, rights to information and
voting rights, are set forth in the Declaration with respect to the Trust, the
Delaware Business Trust Act, as amended (the "Trust Act"), and the Trust
Indenture Act. See "Description of the Capital Securities."
28
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the
Company and the Trust entered into the Registration Rights Agreement with the
Initial Purchasers, pursuant to which the Company and the Trust agreed to file
and to use their reasonable best efforts to cause to be declared effective by
the Commission a registration statement with respect to the exchange of the Old
Capital Securities for capital securities with terms identical in all material
respects to the terms of the Old Capital Securities (except as described below).
A copy of the Registration Rights Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual
obligations of the Company and the Trust under the Registration Rights
Agreement. The form and terms of the New Capital Securities are the same as the
form and terms of the Old Capital Securities, except that the New Capital
Securities (i) have been registered under the Securities Act and therefore will
not be subject to certain restrictions on transfer applicable to the Old Capital
Securities and (ii) will not provide for any increase in the distribution rate
thereon. In that regard, the Old Capital Securities provide, among other things,
that, if the Exchange Offer is not consummated by August 19, 1997 (subject to
extension in certain circumstances), the distribution rate borne by the Old
Capital Securities will increase by 0.25% per annum until the Exchange Offer is
consummated. Upon consummation of the Exchange Offer, holders of Old Capital
Securities will not be entitled to any increase in the distribution rate thereon
or any further registration rights under the Registration Rights Agreement,
except under limited circumstances. If the Exchange Offer is not consummated for
any reason, including the failure to receive valid consents to the Proposed
Amendment from holders of a majority in liquidation amount of the Old Capital
Securities, the Company and the Trust, pursuant to the Registration Rights
Agreement, will, as promptly as practicable after termination of the Exchange
Offer, file with the Commission the Shelf Registration Statement covering
resales of the Old Capital Securities by the holders thereof from time to time
in accordance with the methods of distribution elected by such holders and set
forth in such Shelf Registration Statement, and use their best efforts to cause
the Shelf Registration Statement to be declared effective under the Securities
Act by August 19, 1997, the 210th day (or, if the Exchange Offer is terminated
after the 210th day after the initial issuance of the Old Capital Securities, by
September 18, 1997, the 240th day) after January 21, 1997, the date of the
initial issuance of the Old Capital Securities. See "Risk Factors --
Consequences of a Failure to Exchange Old Capital Securities" and "Description
of the Capital Securities."
The Exchange Offer is not being made to, nor will the Trust or the
Company accept tenders for exchange from, holders of Old Capital Securities in
any jurisdiction in which the Exchange Offer or the acceptance thereof would not
be in compliance with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with
respect to the Exchange Offer means any person in whose name the Old Capital
Securities are registered on the books of the Trust or any other person who has
obtained a properly completed bond power from the registered holder, or any
person whose Old Capital Securities are held of record by The Depository Trust
Company ("DTC") who desires to deliver such Old Capital Securities by book entry
transfer at DTC.
Pursuant to the Exchange Offer, the Company will exchange as soon as
practicable after the date hereof, the Old Guarantee for the New Guarantee and
all of the Old Subordinated Debt Securities, of which $154,640,000 aggregate
principal amount is outstanding, for a like aggregate principal amount of the
New Subordinated Debt Securities. The New Guarantee has been registered, and New
Subordinated Debt Securities have been registered to the extent required to be
registered, under the Securities Act.
29
<PAGE>
TERMS OF EXCHANGE
The Trust hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal, to exchange up to $150,000,000 aggregate liquidation amount of New
Capital Securities for a like aggregate liquidation amount of Old Capital
Securities properly tendered on or prior to the Expiration Date and not properly
withdrawn in accordance with the procedures described below. The Trust will
issue, promptly after the Expiration Date, an aggregate liquidation amount of up
to $150,000,000 of New Capital Securities in exchange for a like aggregate
liquidation amount of outstanding Old Capital Securities tendered and accepted
in connection with the Exchange Offer. Holders may tender their Old Capital
Securities in whole or in part in a liquidation amount of not less than $100,000
or any integral multiple of $1,000 in excess thereof provided that if any Old
Capital Securities are tendered in exchange for part, the untendered liquidation
amount must be $100,000 or any integral multiple of $l,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum liquidation
amount of Old Capital Securities being tendered. As of the date of this
Prospectus, $150,000,000 aggregate liquidation amount of the Old Capital
Securities is outstanding.
Holders of Old Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Old Capital Securities
which are not tendered for or are tendered but not accepted in connection with
the Exchange Offer will remain outstanding and be entitled to the benefits of
the Declaration, but will not be entitled to any further registration rights
under the Registration Rights Agreement, except under limited circumstances. See
"Risk Factors -- Consequences of a Failure to Exchange Old Capital Securities"
and "Description of the Capital Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of Old Capital Securities in connection with the
Exchange Offer. The Company will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the Exchange Offer.
See "-- Fees and Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR ANY ADMINISTRATOR
OR ANY TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL
SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION
OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO
ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL
SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO
TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND
CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION
AND REQUIREMENTS.
30
<PAGE>
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
___________, 1997, unless the Exchange Offer and Consent Solicitation are
extended by the Company and the Trust (in which case the term "Expiration Date"
shall mean the latest date and time to which the Exchange Offer and Consent
Solicitation are extended).
The Company and the Trust expressly reserve the right in their sole
discretion, subject to applicable law, at any time and from time to time, (i) to
delay the acceptance of the Old Capital Securities for exchange, (ii) to
terminate the Exchange Offer (whether or not any Old Capital Securities have
theretofore been accepted for exchange) if the Company and the Trust determine,
in their sole discretion, that any of the events or conditions referred to under
"-- Conditions to the Exchange Offer" have occurred or exist or have not been
satisfied, (iii) to extend the Expiration Date of the Exchange Offer and retain
all Old Capital Securities tendered pursuant to the Exchange Offer, subject,
however, to the right of holders of Old Capital Securities to withdraw their
tendered Old Capital Securities as described under "-- Withdrawal Rights," and
(iv) in their reasonable discretion, to waive any condition (except with respect
to the Proposed Amendment) or otherwise amend the terms of the Exchange Offer in
any respect. If the Exchange Offer is amended in a manner determined by the
Company and the Trust to constitute a material change, or if the Company and the
Trust waive a material condition of the Exchange Offer, the Company and the
Trust will promptly disclose such amendment by means of an amended or
supplemented Prospectus that will be distributed to the registered holders of
the Old Capital Securities, and the Company and the Trust will extend the
Exchange Offer, to the extent required by Rule 14e-l under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment
will be followed promptly by oral or written notice thereof to the Exchange
Agent and by making a public announcement thereof, and such announcement in the
case of an extension will be made no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. Without
limiting the manner in which the Company and the Trust may choose to make any
public announcement and subject to applicable law, the Company and the Trust
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to an appropriate news
agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer,
the Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "-- Withdrawal Rights")
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of Old
Capital Securities into the Exchange Agent's account at DTC, including an
Agent's Message if the tendering holder has not delivered a Letter of
Transmittal, (ii) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees or (in the
case of a book-entry transfer) an Agent's Message in lieu of the Letter of
Transmittal and (iii) any other documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgement from the tendering
Participant
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(as defined herein), which acknowledgement states that such Participant has
received and agrees to be bound by the Letter of Transmittal and that the Trust
and the Company may enforce such Letter of Transmittal against such Participant.
Subject to the terms and conditions of the Exchange Offer, the
Company and the Trust will be deemed to have accepted for exchange, and thereby
exchanged, Old Capital Securities validly tendered and not withdrawn as, if and
when the Trust gives oral or written notice to the Exchange Agent of the
Company's and the Trust's acceptance of such Old Capital Securities for exchange
pursuant to the Exchange Offer. The Exchange Agent will act as agent for the
Company and the Trust for the purpose of receiving tenders of Old Capital
Securities, Letters of Transmittal and related documents, and as agent for
tendering holders for the purpose of receiving Old Capital Securities, Letters
of Transmittal and related documents and transmitting New Capital Securities to
validly tendering holders. Such exchange will be made promptly after the
Expiration Date. If for any reason whatsoever, acceptance for exchange or the
exchange of any Old Capital Securities tendered pursuant to the Exchange Offer
is delayed (whether before or after the Company's and the Trust's acceptance for
exchange of Old Capital Securities) or the Company and the Trust extend the
Exchange Offer or are unable to accept for exchange or exchange Old Capital
Securities tendered pursuant to the Exchange Offer, then, without prejudice to
the Company's and the Trust's rights set forth herein, the Exchange Agent may,
nevertheless, on behalf of the Company and the Trust and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Old Capital Securities and such
Old Capital Securities may not be withdrawn except to the extent tendering
holders are entitled to withdrawal rights as described under "-- Withdrawal
Rights."
Pursuant to the Letter of Transmittal or Agent's Message in lieu
thereof, a holder of Old Capital Securities will warrant and agree in the Letter
of Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer Old Capital Securities, that the Trust will acquire good,
marketable and unencumbered title to the tendered Old Capital Securities, free
and clear of all liens, restrictions, charges and encumbrances, and the Old
Capital Securities tendered for exchange are not subject to any adverse claims
or proxies. The holder also will warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by the Company, the Trust or
the Exchange Agent to be necessary or desirable to complete the exchange, sale,
assignment, and transfer of the Old Capital Securities tendered pursuant to the
Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees or (in the case of a book-entry tender) an
Agent's Message in lieu of the Letter of Transmittal and any other required
documents, must be received by the Exchange Agent at its address set forth under
"--Exchange Agent," on or prior to the Expiration Date and (i) tendered Old
Capital Securities must be received by the Exchange Agent, or (ii) such Old
Capital Securities must be tendered pursuant to the procedures for book-entry
transfer set forth below and a book-entry confirmation, including an Agent's
Message if the tendering holder has not delivered a Letter of Transmittal, must
be received by the Exchange Agent, in each case on or prior to the Expiration
Date, or (iii) the guaranteed delivery procedures set forth below must be
complied with.
If less than all of the Old Capital Securities are tendered, a
tendering holder should fill in the amount of Old Capital Securities being
tendered in the appropriate box on the Letter of Transmittal or so indicate in
an Agent's Message in lieu of the Letter of Transmittal. The entire amount of
Old Capital Securities delivered to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE
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TENDERING HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer. The Exchange Agent will establish an account
with respect to the Old Capital Securities at DTC for purposes of the Exchange
Offer within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in lieu of a Letter of Transmittal, and any
other required documents, must in any case be delivered to and received by the
Exchange Agent at its address set forth under "-- Exchange Agent" on or prior to
the Expiration Date, or the guaranteed delivery procedure set forth below must
be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital Securities
need not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (i) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (ii) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (i) or (ii) above, such certificates for Old Capital Securities
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule l7Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital
Securities pursuant to the Exchange Offer and the certificates for such Old
Capital Securities are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or before the Expiration Date,
or the procedures for book-entry transfer cannot be completed on a timely basis,
such Old Capital Securities may nevertheless be tendered, provided that all of
the following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of
Transmittal, is received by the Exchange Agent, as provided below, on or
prior to Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing
all tendered Old Capital Securities, in proper form for transfer, together
with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof or Agent's Message in lieu thereof), with any required
signature guarantees and any other documents required by the Letter of
Transmittal are received by the Exchange
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Agent within three New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New
Capital Securities in exchange for Old Capital Securities tendered and accepted
for exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile thereof
or an Agent's Message in lieu thereof), together with any required signature
guarantees and any other documents required by the Letter of Transmittal.
Accordingly, the delivery of New Capital Securities might not be made to all
tendering holders at the same time, and will depend upon when Old Capital
Securities, book-entry confirmations or an Agent's Message in lieu thereof with
respect to Old Capital Securities and other required documents are received by
the Exchange Agent.
The Company and the Trust's acceptance for exchange of Old Capital
Securities tendered pursuant to any of the procedures described above will
constitute a binding agreement among the tendering holder, the Company and the
Trust upon the terms and subject to the conditions of the Exchange Offer.
Determination Of Validity. All questions as to the form of
documents, validity, eligibility (including time of receipt) and acceptance for
exchange of any tendered Old Capital Securities will be determined by the
Company and the Trust, in their sole discretion, whose determination shall be
final and binding on all parties. The Company and the Trust reserve the absolute
right, in their sole discretion, to reject any and all tenders determined by
them not to be in proper form or the acceptance of which, or exchange for, may,
in the view of counsel to the Company or the Trust, be unlawful. The Company and
the Trust also reserve the absolute right, subject to applicable law, to waive
any of the conditions of the Exchange Offer as set forth under "-- Conditions to
Exchange Offer" or any condition or irregularity in any tender of Old Capital
Securities of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders.
The Company's and the Trust's interpretation of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither the Company, the
Trust, any affiliates or assigns of the Company or the Trust, the Exchange Agent
nor any other person shall be under any duty to give any notification of any
irregularities in tenders or incur any liability for failure to give any such
notification.
If any Letter of Transmittal, endorsement, bond power, power of
attorney, or any other document required by the Letter of Transmittal is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Trust,
proper evidence satisfactory to the Company and the Trust, in their sole
discretion, of such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
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RESALES OF NEW CAPITAL SECURITIES
Based on existing interpretations by the staff of the Commission set
forth in several no-action letters to third parties, and subject to the
immediately following sentence, the Company and the Trust believe that New
Securities issued pursuant to the Exchange Offer in exchange for Old Securities
may be offered for resale, resold and otherwise transferred by a holder thereof
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Securities are
acquired in the ordinary course of such holder's business and that such holder
is not participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Securities. However, any holder of Old Capital Securities who is an
"affiliate" of either the Company or the Trust, a broker-dealer that acquires
the Old Capital Securities in a transaction other than a part of its
market-making or other trading activities or other holder who intends to
participate in the Exchange Offer for the purpose of distributing New Capital
Securities (i) will not be able to rely on the interpretations by the staff of
the Commission set forth in the above-mentioned interpretive letters, (ii) will
not be able to tender such Old Capital Securities in the Exchange Offer, and
(iii) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or other transfer of such Old
Capital Securities unless such sale is made pursuant to an exemption from such
requirements. Any broker-dealer who holds Old Securities acquired for its own
account as a result of market-making activities or other trading activities, and
who receives New Securities in exchange for such Old Securities pursuant to the
Exchange Offer may be a statutory underwriter and must deliver a prospectus
meeting the requirements of the Securities Act, which may be the prospectus
prepared for the Exchange Offer so long as it contains a plan of distribution
with respect to such resale transactions, in connection with any resales of such
New Securities. Neither the Company nor the Trust sought its own no-action
letter and there can be no assurance that the staff of the Commission would make
a similar determination with respect to the Exchange Offer as it has in such
no-action letters to third parties.
Each holder of Old Capital Securities (other than a broker-dealer)
who wishes to exchange Old Capital Securities for New Capital Securities in the
Exchange Offer will be required to represent that (i) it is not an "affiliate"
of the Company or the Trust, (ii) any New Capital Securities to be received by
it are being acquired in the ordinary course of its business and (iii) it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such New Capital Securities. The
Letter of Transmittal contains the foregoing representations. In addition, the
Company and the Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to the Company and
the Trust (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Exchange Act) on
behalf of whom such holder holds the Old Capital Securities to be exchanged in
the Exchange Offer. Each Exchanging Dealer will be deemed to have acknowledged
by execution of the Letter of Transmittal or delivery of an Agent's Message that
it acquired the Old Capital Securities for its own account as the result of
market-making activities or other trading activities and must agree that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, an
Exchanging Dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. Based on the position taken by the staff of
the Commission in the no-action letters referred to above, the Company and the
Trust believe that Exchanging Dealers may fulfill their prospectus delivery
requirements with respect to the New Capital Securities received upon exchange
of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Subject to certain provisions set forth in the
Registration Rights Agreement and to the limitations set out herein, the Company
and the Trust have agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by an Exchanging Dealer in
connection with resales of such New Capital Securities for a period ending one
year after the Expiration Date (or longer, if required by the Registration
Rights Agreement). See "Plan of Distribution." Any person,
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including any Exchanging Dealer, who is an "affiliate" of the Company or the
Trust may not rely on such no- action letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
In that regard, each Exchanging Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an Agent's Message in lieu
thereof, that, upon receipt of notice from the Company or the Trust of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in light of the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the Registration
Rights Agreement, such Exchanging Dealer will suspend the sale of New Securities
pursuant to this Prospectus until the Company or the Trust has amended or
supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such Exchanging
Dealer or the Company or the Trust has given notice that the sale of the New
Securities may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital
Securities may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective, a written, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at its address set forth under "-- Exchange
Agent" on or prior to the Expiration Date. Any such notice of withdrawal must
specify the name of the person who tendered the Old Capital Securities to be
withdrawn, the aggregate liquidation amount of Old Capital Securities to be
withdrawn, and (if certificates for such Old Capital Securities have been
tendered) the name of the registered holder of the Old Capital Securities as set
forth on the Old Capital Securities, if different from that of the person who
tendered such Old Capital Securities. If Old Capital Securities have been
delivered or otherwise identified to the Exchange Agent, then prior to the
physical release of such Old Capital Securities, the tendering holder must
submit the certificate numbers shown on the particular Old Capital Securities to
be withdrawn and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution, except in the case of Old Capital Securities tendered
for the account of an Eligible Institution. If Old Capital Securities have been
tendered pursuant to the procedures for book-entry transfer set forth in "--
Procedures for Tendering Old Capital Securities," the notice of withdrawal must
specify the name and number of the account at DTC to be credited with the
withdrawal of Old Capital Securities, in which case a notice of withdrawal will
be effective if delivered to the Exchange Agent by written, telegraphic, telex
or facsimile transmission. Withdrawals of tenders of Old Capital Securities may
not be rescinded. Old Capital Securities properly withdrawn will not be deemed
validly tendered for purposes of the Exchange Offer, but may be retendered at
any subsequent time on or prior to the Expiration Date by following any of the
procedures described above under "-- Procedures for Tendering Old Capital
Securities."
All questions as to the validity, form and eligibility (including
time of receipt) of such withdrawal notices will be determined by the Company
and the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. Neither the Company, the Trust, any affiliates or
assigns of the Company or the Trust, the Exchange Agent nor any other person
shall be under any duty to give any notification of any irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification. Any Old Capital Securities which have been tendered but which are
withdrawn will be returned to the holder thereof promptly after withdrawal.
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DISTRIBUTIONS ON NEW CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive accumulated distributions on such Old
Capital Securities for any period from and after the last Distribution Payment
Date with respect to such Old Capital Securities prior to the original issue
date of the New Capital Securities or, if no such distributions have been made,
will not receive any accumulated distributions on such Old Capital Securities,
and will be deemed to have waived the right to receive any distributions on such
Old Capital Securities accumulated from and after such Distribution Payment Date
or, if no such distributions have been made, from and after January 21, 1997.
CONDITIONS TO EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company and the Trust will not be permitted
to accept for exchange, or to exchange, any Old Capital Securities for any New
Capital Securities, and may terminate the Exchange Offer (whether or not any Old
Capital Securities have theretofore been accepted for exchange) if the
registered holders of less than a majority in liquidation amount of the Old
Capital Securities consent to the Proposed Amendment. This condition shall not
be waived.
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company and the Trust will not be required
to accept for exchange, or to exchange, any Old Capital Securities for any New
Capital Securities, and, as described below, may terminate the Exchange Offer
(whether or not any Old Capital Securities have theretofore been accepted for
exchange) or may waive any conditions to or amend the Exchange Offer, if any of
the following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued
pursuant to the Exchange Offer in exchange for Old Capital Securities to
be offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an "affiliate" of
the Company or the Trust within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Capital
Securities are acquired in the ordinary course of such holders' business
and such holders have no arrangement or understanding with any person to
participate in the distribution of such New Capital Securities;
(b) any action or proceeding shall have been instituted or
threatened in any court or by or before any governmental agency or body
with respect to the Exchange Offer which, in the Company's and the Trust's
judgment, would reasonably be expected to impair the ability of the Trust
or the Company to proceed with the Exchange Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Company's and the Trust's judgment, would reasonably
be expected to impair the ability of the Trust or the Company to proceed
with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or New York State authorities which, in the Company's and the
Trust's judgment, would reasonably be expected to impair the ability of
the Trust or the Company to proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the
United States over-the-counter market shall have been suspended by order
of the Commission or any other governmental
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authority which, in the Company's and the Trust's judgment, would
reasonably be expected to impair the ability of the Trust or the Company
to proceed with the Exchange Offer;
(f) a stop order shall have been issued by the Commission or any
state securities authority suspending the effectiveness of the
Registration Statement or proceedings shall have been initiated or, to the
knowledge of the Company or the Trust, threatened for that purpose or that
any governmental approval has not been obtained, which approval the
Company and the Trust shall, in their sole discretion, deem necessary for
the consummation of the Exchange Offer as contemplated hereby; or
(g) any change, or any development involving a prospective change,
in the business or financial affairs of the Trust or the Company or any of
its subsidiaries has occurred which, in the sole judgment of the Company
and the Trust, might materially impair the ability of the Trust or the
Company to proceed with the Exchange Offer.
If the Company and the Trust determine in the reasonable exercise of
their discretion that any of the foregoing events or conditions listed above in
subparagraphs (a) through (g) hereof has occurred or exists or has not been
satisfied, the Company and the Trust may, subject to applicable law, terminate
the Exchange Offer (whether or not any Old Capital Securities have theretofore
been accepted for exchange) or may waive any such condition or otherwise amend
the terms of the Exchange Offer in any respect. If such waiver or amendment
constitutes a material change to the Exchange Offer, the Company and the Trust
will promptly disclose such waiver by means of an amended or supplemented
Prospectus that will be distributed to the registered holders of the Old Capital
Securities, and the Company and the Trust will extend the Exchange Offer to the
extent required by Rule 14e-1 under the Exchange Act.
Unless valid consents of holders of a majority in liquidation amount
of the Old Capital Securities are received and not revoked, the Company and the
Trust will not accept and exchange the Old Capital Securities pursuant to the
Exchange Offer. In such event, the Company and the Trust, pursuant to the
Registration Rights Agreement, will, as promptly as practicable after
termination of the Exchange Offer, file with the Commission the Shelf
Registration Statement covering resales of the Old Capital Securities by the
holders thereof from time to time in accordance with the methods of distribution
elected by such holders and set forth in such Shelf Registration Statement, and
use their best efforts to cause the Shelf Registration Statement to be declared
effective under the Securities Act by August 19, 1997, the 210th day (or, if the
Exchange Offer is terminated after the 210th day after initial issuance of the
Old Capital Securities, by September 18, 1997, the 240th day) after January 21,
1997, the date of the initial issuance of the Old Capital Securities.
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed as Exchange Agent for
the Exchange Offer. Delivery of the Letters of Transmittal and any other
required documents, questions, requests for assistance, and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent as follows:
The Chase Manhattan Bank
55 Water Street, Room 234
New York, New York 10001
Attention: Lewis Padilla
Telephone: (212) 638-7375 or (212) 344-9367
Facsimile: (212) 638-0458
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Delivery to other than the above address or facsimile number will
not constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Company will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Old Capital Securities, and in
handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will
not be obligated to pay any transfer taxes in connection therewith. If, however,
New Capital Securities are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
Neither the Company nor the Trust will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
THE CONSENT SOLICITATION
Concurrently with the Exchange Offer, the Company and the Trust are
soliciting consents from holders of the Old Capital Securities to approve the
Proposed Amendment. If the Proposed Amendment is approved and the Exchange Offer
is consummated, all shares of Old Capital Securities not exchanged in the
Exchange Offer and remaining outstanding thereafter will be subject to the
Proposed Amendment.
THE PROPOSED AMENDMENTS
The Proposed Amendment to the Registration Rights Agreement will
delete the requirement that the Company use its reasonable best efforts to cause
the New Capital Securities to be duly authorized for listing on the New York
Stock Exchange and thereafter maintain such listing.
PURPOSE AND EFFECT OF THE CONSENT SOLICITATION
The purpose of the Proposed Amendment is to enable the Trust and the
Company to consummate the Exchange Offer. Based on interpretations by the staff
of the Commission, as set forth in a no-action letter to a third party issued
after the date of the Registration Rights Agreement, the Trust and the Company
will be prohibited from consummating the Exchange Offer unless the Proposed
Amendment is effectuated.
Unless valid consents of holders of a majority in liquidation amount
of the Old Capital Securities are received and not revoked, the Company and the
Trust will not accept and exchange the Old Capital Securities pursuant to the
Exchange Offer. In such event, all of the Old Capital Securities will remain
outstanding and continue to bear a legend reflecting the restrictions on
transfer discussed above. The Registration Rights Agreement provides in such
event that the Company and the Trust will, as promptly as practicable after
termination of the Exchange Offer, file with the Commission the Shelf
Registration Statement covering resales of the Old Capital Securities by the
holders thereof from time to time in accordance with the
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methods of distribution elected by such holders and set forth in such Shelf
Registration Statement, and use their best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act by the
210th day (or, if the Exchange Offer is terminated after the 210th day after the
initial issuance of the Old Capital Securities, by the 240th day) after the
initial issuance of the Old Capital Securities.
CONSENTS REQUIRED TO ADOPT THE PROPOSED AMENDMENTS
Pursuant to Section 7(b) of the Registration Rights Agreement, the
Proposed Amendment requires the consent of the registered holders of a majority
in liquidation amount of the outstanding Capital Securities.
PROCEDURE FOR CONSENTING TO THE PROPOSED AMENDMENT
A tender of Old Capital Securities for exchange pursuant to the
Exchange Offer also will constitute a consent to the Proposed Amendment with
respect to such tendered Old Capital Securities. See "The Exchange Offer --
Procedures for Tendering Old Capital Securities."
REVOCATION OF CONSENTS
Consents to the Proposed Amendment may be revoked at any time prior
to the Consent Date. A holder of Old Capital Securities shall be deemed to have
revoked his consent to the Proposed Amendments if, and only if, such holder
effectively withdraws his tender of Old Capital Securities prior to the Consent
Date in accordance with the instructions set forth under "The Exchange Offer --
Withdrawal Rights."
DESCRIPTION OF THE CAPITAL SECURITIES
The Old Capital Securities have been issued and the New Capital
Securities will be issued pursuant to the terms of the Declaration. The
Institutional Trustee, The Chase Manhattan Bank, is acting as trustee for the
Capital Securities under the Declaration. The Declaration has been qualified
under the Trust Indenture Act. The following summary of the material terms and
provisions of the Capital Securities does not purport to be complete and is
subject to, and qualified in its entirety by reference to the Declaration (a
copy of which has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part), the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Administrators to issue, on behalf of
the Trust, the Trust Securities, which represent undivided beneficial interests
in the assets of the Trust. All of the Common Securities are owned by the
Company. The Common Securities have equivalent terms to and rank pari passu, and
payments will be made thereon on a pro rata basis, with the Capital Securities,
except that upon the occurrence and during the continuance of a Declaration
Event of Default, the rights of the holders of the Common Securities to receive
payment of periodic distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Capital
Securities. The Declaration does not permit the issuance by the Trust of any
securities other than the Trust Securities or the incurrence of any indebtedness
by the Trust. Pursuant to the Declaration, the Institutional Trustee holds legal
title to the Subordinated Debt Securities for the benefit of the holders of the
Trust Securities. The payment of distributions out of money held by the Trust,
and payments upon redemption of the Capital Securities upon liquidation of the
Trust, are guaranteed by the Company as described under "Description of the
Guarantee." The Guarantee is held by The Chase Manhattan Bank, the Guarantee
Trustee, for the benefit of the holders of the Capital Securities. The Guarantee
does not cover payment of distributions in respect of the Capital Securities to
the extent the Trust does not have available funds to pay distributions. In such
event, the remedy of holders of the
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Capital Securities would be, through the vote of holders of a majority in
liquidation amount of the Capital Securities, to direct the Institutional
Trustee to enforce the Institutional Trustee's rights under the Subordinated
Debt Securities except in the circumstances in which a holder of such Capital
Securities may take Direct Action. See "-- Voting Rights" and "-- Declaration
Events of Default."
DISTRIBUTIONS
Distributions on the Capital Securities are fixed at a rate per
annum of 8.65% of the stated liquidation amount of $1,000 per Capital Security,
compounded semiannually (to the extent permitted by law). The term
"distribution" as used herein includes cash distributions and any such
compounded distributions payable unless otherwise stated. The amount of
distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months and the actual number of days elapsed per 30-day
month.
Distributions on the Capital Securities are cumulative from January
21, 1997, the date of original issuance of the Old Capital Securities, and will
be payable (subject to extensions of distribution payment periods as described
herein) semiannually in arrears on January 15 and July 15 of each year (each, a
"Distribution Payment Date"), commencing July 15, 1997, when, as and if
available for payment. Distributions will be made by the Institutional Trustee,
except as otherwise described below.
The Company has the right under the Indenture to defer payments of
interest on the Subordinated Debt Securities by extending the interest payment
period at any time and from time to time, subject to the conditions described
below, although such interest will continue to accrue on the Subordinated Debt
Securities at a rate of 8.65% per annum, compounded semiannually (to the extent
permitted by law) during any Extension Period. If such right is exercised,
semiannual distributions on the Capital Securities will also be deferred (though
such distributions will continue to accrue at the distribution rate of 8.65% per
annum compounded semiannually (to the extent permitted by law)), during any
Extension Period. Such right to extend any interest payment period for the
Subordinated Debt Securities is limited to Extension Periods, each not exceeding
10 consecutive semiannual periods, and no Extension Period may be initiated
while accrued interest from a prior, completed Extension Period is unpaid or
while the Company is in default on the payment of interest that has become due
and payable on the Subordinated Debt Securities, and no Extension Period may
extend beyond the maturity of the Subordinated Debt Securities. In the event
that the Company exercises this right, then during any Extension Period (a) the
Company shall not declare or pay dividends on, make a distribution with respect
to, or redeem, purchase or acquire, or make a liquidation payment with respect
to, any of its capital stock or rights to acquire such capital stock (other than
(i) purchases or acquisitions of shares of any such capital stock or rights to
acquire such capital stock in connection with the satisfaction by the Company of
its obligations under any employee benefit plans or any other contractual
obligations of the Company (other than a contractual obligation ranking pari
passu with or junior to the Subordinated Debt Securities), (ii) as a result of a
reclassification of the Company's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or series of the
Company's capital stock or rights to acquire such capital stock for another
class or series of the Company's capital stock or rights to acquire such capital
stock, (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) dividends and
distributions made on the Company's capital stock or rights to acquire such
capital stock with the Company's capital stock or rights to acquire the capital
stock, or (v) any declaration of a dividend in connection with the
implementation of a shareholder rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto), or make any guarantee payments with respect to any guarantee
by the Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior to the Subordinated Debt Securities
(other than payments under the Guarantee and the Common Securities Guarantee)
and (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Company that rank pari passu with or junior to the Subordinated Debt
Securities. Prior to the termination of any such Extension Period in respect of
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the Subordinated Debt Securities, the Company may further extend the interest
payment period; provided that each such Extension Period in respect of the
Subordinated Debt Securities, together with all such previous and further
extensions thereof, may not exceed 10 consecutive semiannual periods or extend
beyond the maturity of the Subordinated Debt Securities. Upon the termination of
any Extension Period in respect of the Subordinated Debt Securities and the
payment of all amounts then due, the Company may commence a new Extension
Period, subject to the above requirements. See "Description of the Subordinated
Debt Securities -- Interest," "-- Option to Extend Interest Payment Period" and
"-- Certain Covenants." If distributions are deferred, the distributions due on
such Capital Securities shall be paid on the date that the related Extension
Period terminates, or, if such date is not a Distribution Payment Date, on the
immediately following Distribution Payment Date, to holders of applicable
Capital Securities as they appear on the books and records of the Trust on the
record date immediately preceding such date.
Distributions on the Capital Securities must be paid on the dates
payable (after giving effect to any Extension Period) to the extent that the
Trust has funds available for the payment of such distributions in the Property
Account. The Trust's funds available for distribution to the holders of the
Capital Securities will be limited to payments received from the Company on the
Subordinated Debt Securities. See "Description of the Subordinated Debt
Securities." The payment of distributions out of moneys held by the Trust is
guaranteed by the Company to the extent set forth under "Description of the
Guarantee."
Distributions on the Capital Securities will be payable to the
holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which, as long as the Capital Securities are held solely
in book-entry only form, will be one Business Day (as defined below) prior to
the relevant payment dates. Such distributions will be paid through the
Institutional Trustee who will hold amounts received in respect of the
Subordinated Debt Securities in the Property Account for the benefit of the
holders of the Trust Securities. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment will be made as
described under "-- Book-Entry Only Issuance -- The Depository Trust Company."
At any time when the Capital Securities are not held solely in book-entry only
form, the Administrators shall select record dates, which shall be 15 days prior
to the relevant payment date. In the event that any date on which distributions
are to be made on the Capital Securities is not a Business Day, then payment of
the distributions payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay) with the same force and effect as if made on such payment date.
A "Business Day" shall mean any day other than Saturday, Sunday or any other day
on which banking institutions in New York City (in the State of New York) are
permitted or required by any applicable law to close.
REDEMPTION
The Subordinated Debt Securities will mature on January 15, 2027 and
may be redeemed by the Company at par, together with accrued and unpaid interest
thereon to the date of redemption, in whole or in part, at any time in certain
circumstances upon the occurrence of a Tax Event. In addition, the Subordinated
Debt Securities may be redeemed by the Company, in whole or in part, at anytime
and from time to time on or after January 15, 2007, other than upon the
occurrence of a Tax Event, at the call prices (expressed as a percentage of the
principal amount) specified below:
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If redeemed during the
12-month period beginning
January 15, Call Price
----------- ----------
2007................................ 104.2790%
2008................................ 103.8511
2009................................ 103.4232
2010................................ 102.9953
2011................................ 102.5674
2012................................ 102.1395
2013................................ 101.7116
2014................................ 101.2837
2015................................ 100.8558
2016................................ 100.4279
and thereafter at 100% of the principal amount (each a "Call Price"), together,
in each case, with accrued and unpaid interest thereon to the date of
redemption.
Upon the repayment in full at maturity or redemption in whole or in
part of the Subordinated Debt Securities (other than following the distribution
of the Subordinated Debt Securities to the holders of the Trust Securities), the
proceeds from such repayment or payment shall concurrently be applied to redeem
on a pro rata basis (i) at $1,000 per Trust Security, plus accrued and unpaid
distributions to the date of repayment (in the case of repayment at maturity) or
(ii) at the applicable Redemption Price (in the case of payment on redemption),
Trust Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Subordinated Debt Securities so repaid or redeemed;
provided, however, that holders of such Trust Securities shall be given not less
than 30 nor more than 60 days' notice of such redemption (other than at the
scheduled maturity of the Subordinated Debt Securities). See "Description of the
Subordinated Debt Securities -- Redemption." In the event that fewer than all of
the outstanding Capital Securities are to be redeemed, Capital Securities held
in book-entry form will be redeemed in accordance with the procedures of DTC as
described under " -- Book-Entry Only Issuance -- The Depository Trust Company."
TAX EVENT REDEMPTION
"Tax Event" means the receipt by the Trustees of an opinion of a
nationally recognized independent tax counsel to the Company experienced in such
matters to the effect that, as a result of (a) any amendment to, clarification
of or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) any judicial decision or official
administrative pronouncement, ruling, regulatory procedure, notice or
announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action") or (c) any amendment to,
clarification of or change in the administrative position or interpretation of
any Administrative Action or judicial decision that differs from the theretofore
generally accepted position, in each case, by any legislative body, court,
governmental agency or regulatory body, irrespective of the manner in which such
amendment, clarification or change is made known, which amendment, clarification
or change is effective or such Administrative Action or decision is announced,
in each case, on or after the date of this Prospectus, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the date
thereof, subject to United States federal income tax with respect to interest
accrued or received on the Subordinated Debt Securities or subject to more than
a de minimis amount of other taxes, duties or other governmental charges, (ii)
any portion of interest payable by the Company to the Trust on the Subordinated
Debt Securities is not, or within 90 days of the date thereof will not be,
deductible by the Company for United States federal income tax purposes, or
(iii) the Company could become liable to pay, on the next date on which any
amount would be payable with respect to the Subordinated Debt Securities, any
Additional Interest (as defined herein).
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If, at any time, a Tax Event should occur and be continuing, and the
Company receives an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such matters that, as a result
of such Tax Event, there is more than an insubstantial risk that the Company
would be precluded from deducting the interest on the Subordinated Debt
Securities for United States federal income tax purposes, even if the
Subordinated Debt Securities were distributed to the holders of Trust Securities
in liquidation of such holders' interests in the Trust as described in "--
Liquidation Distribution Upon Dissolution," the Company shall have the right at
any time, within 90 days following the occurrence of such Tax Event, upon not
less than 30 nor more than 60 days' notice, to redeem the Subordinated Debt
Securities, in whole or in part, for cash so long as such Tax Event is
continuing, at par plus any accrued and unpaid interest thereon to the date of
redemption (the "Tax Event Redemption") and, following such redemption, Trust
Securities with an aggregate liquidation amount equal to the aggregate principal
amount of the Subordinated Debt Securities so redeemed shall be redeemed by the
Trust at the applicable Redemption Price; provided, however, that if at the time
there is available to the Company or the Trust the opportunity to eliminate,
within such 90-day period and before any such notice is given, the adverse
effects of the Tax Event by taking some ministerial action, such as filing a
form or making an election or pursuing some other similar reasonable measure
that will have no adverse effect on the Trust, the Company or the holders of the
Trust Securities, the Company or the Trust will pursue such measure in lieu of
redemption.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid distributions have been paid on all
such Capital Securities for all semiannual distribution periods terminating on
or prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Capital
Securities (which notice will be irrevocable), then on the redemption date,
provided that the Institutional Trustee has a sufficient amount of cash in
connection with the related redemption or maturity of the Subordinated Debt
Securities, the Institutional Trustee will irrevocably deposit with the
Depositary or its nominee funds sufficient to pay the applicable Redemption
Price and will give the Depositary irrevocable instructions and authority to pay
such Redemption Price to the holders of such Capital Securities. See "--
Book-Entry Only Issuance -- The Depository Trust Company." With respect to
Capital Securities that are certificated securities, provided that the Company
has paid to the Institutional Trustee a sufficient amount of cash in connection
with the related redemption or maturity of the Subordinated Debt Securities, the
Institutional Trustee will pay the applicable Redemption Price to the holders of
such Capital Securities by check mailed to the address of each such holder
appearing on the books and records of the Trust on the redemption date. If
notice of redemption shall have been given and funds deposited as required,
then, immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue on the Capital Securities and all rights of
holders of such Capital Securities will cease, except the right of the holders
of such Capital Securities to receive the applicable Redemption Price but
without interest on such Redemption Price. In the event that any date fixed for
redemption of Capital Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of Capital Securities is
improperly withheld or refused and not paid either by the Institutional Trustee
or by the Company pursuant to the Guarantee, distributions on such Capital
Securities will continue to accrue at the then applicable rate from the original
redemption date to the actual date of payment, in which case the actual payment
date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
In the event that fewer than all of the outstanding Trust Securities
are to be redeemed, Trust Securities will be redeemed on a pro rata basis in
accordance with the procedures of DTC as described under "-- Book-Entry Only
Issuance -- The Depository Trust Company."
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In the event of any redemption of Capital Securities in part, the
Trust shall not be required to (i) issue, register the transfer of or exchange
any certificated security during a period beginning at the opening of business
15 days before any selection for redemption of Capital Securities and ending at
the close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of Capital Securities to
be so redeemed or (ii) register the transfer of or exchange any certificated
securities so selected for redemption, in whole or in part, except for the
unredeemed portion of any certificated securities being redeemed in part.
Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), provided that the acquiror
is not the holder of the Common Securities or the obligor under the Subordinated
Debt Securities, the Company or its subsidiaries may at any time, and from time
to time, purchase outstanding Capital Securities by tender, in the open market
or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of the voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Trust (each a "Liquidation") other
than in connection with a redemption of the Subordinated Debt Securities as
previously described, the holders of the Capital Securities will be entitled to
receive out of the assets of the Trust, after satisfaction of liabilities to
creditors of the Trust (to the extent not satisfied by the Company),
distributions in an amount equal to the aggregate of the stated liquidation
amount of $1,000 per Capital Security plus accrued and unpaid distributions
thereon to the date of payment (the "Liquidation Distribution"), unless, in
connection with such Liquidation, Subordinated Debt Securities in an aggregate
stated principal amount equal to the aggregate stated liquidation amount of the
Trust Securities have been distributed on a pro rata basis to the holders of the
Trust Securities in exchange for the Trust Securities. Upon any Liquidation in
which the Subordinated Debt Securities are distributed, if at the time of such
Liquidation the Capital Securities are rated by at least one nationally
recognized statistical rating organization, the Company will use its best
efforts to obtain from at least one nationally recognized statistical rating
organization a rating for the Subordinated Debt Securities.
The Company, as the holder of all of the Common Securities, has the
right at any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Tax Event) and, after satisfaction of liabilities to creditors
of the Trust (to the extent not satisfied by the Company), cause the
Subordinated Debt Securities to be distributed to the holders of the Trust
Securities on a pro rata basis in accordance with the aggregate stated
liquidation amount thereof, in liquidation of the Trust.
Pursuant to the Declaration, the Trust shall dissolve on the first
to occur of (i) January 15, 2052, the expiration of the term of the Trust, (ii)
the bankruptcy of the Company, (iii) (other than in connection with a merger,
consolidation or similar transaction not prohibited by the Indenture, the
Declaration or the Guarantee, as the case may be) the filing of a certificate of
dissolution or its equivalent with respect to the Company, upon the consent of
the holders of at least a majority in liquidation amount of the Trust Securities
voting together as a single class to file a certificate of cancellation with
respect to the Trust, or upon the revocation of the charter of the Company and
the expiration of 90 days after the date of revocation without a reinstatement
thereof, (iv) the distribution of the Subordinated Debt Securities to the
holders of the Trust Securities upon exercise of the right of the holder of all
of the outstanding Common Securities of the Trust to dissolve the Trust as
described above, (v) the entry of a decree of judicial dissolution of the
Company or the Trust, or (vi) upon the redemption of all of the Trust
Securities. Pursuant to the Declaration, as soon as practicable after the
dissolution of the Trust and upon completion of the winding up of the Trust, the
Trust shall terminate upon the filing of a certificate of cancellation.
If a Liquidation occurs as described in clause (i), (ii), (iii) or
(v) of the preceding paragraph, the Trust shall be liquidated by the Trustees as
expeditiously as such Trustees determine to be possible by
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distributing to the holders of the Trust Securities, after satisfaction of
liabilities to creditors of the Trust, to the extent not satisfied by the
Company, the Subordinated Debt Securities, unless such distribution is
determined by the Institutional Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of the Trust available for
distribution to holders, after satisfaction of liabilities to creditors of the
Trust, to the extent not satisfied by the Company, an amount equal to the
Liquidation Distribution. An early Liquidation of the Trust pursuant to clause
(iv) above shall occur only if the Institutional Trustee determines that such
Liquidation is possible by distributing the Subordinated Debt Securities to the
holders of the Trust Securities, after satisfaction of liabilities of creditors
of the Trust, to the extent not satisfied by the Company.
If, upon any such Liquidation, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on such Capital Securities shall be paid to the holders of the
Trust Securities on a pro rata basis. The holders of the Common Securities
issued by the Trust will be entitled to receive distributions upon any such
Liquidation pro rata with the holders of such Capital Securities, except that if
a Declaration Event of Default has occurred and is continuing in respect of the
Trust, the Capital Securities shall have a preference over the Common Securities
with regard to such distributions.
After the date for any distribution of Subordinated Debt Securities
upon dissolution of the Trust, (i) the Trust Securities will be deemed to be no
longer outstanding, (ii) the Depositary (as defined herein) or its nominee, as
the record holder of the Capital Securities issued in book-entry form, will
receive a registered Global Certificate (as defined herein) or Certificates
representing the Subordinated Debt Securities to be delivered upon such
distribution, and (iii) any certificates representing Capital Securities not
held by the Depositary or its nominee will be deemed to represent undivided
beneficial interests in Subordinated Debt Securities having an aggregate
principal amount equal to the aggregate stated liquidation amount of such
Capital Securities until such certificates are presented to the Company or its
agent for transfer or reissuance.
There can be no assurance as to the market prices for either the
Capital Securities or the Subordinated Debt Securities that may be distributed
in exchange for the Capital Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Capital Securities that an investor may
purchase, whether in the secondary market or otherwise, or the Subordinated Debt
Securities that an investor may receive if a dissolution and liquidation of the
Trust were to occur, may trade at a discount to the price paid to purchase the
Capital Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture in respect of the
Subordinated Debt Securities (an "Indenture Event of Default") constitutes an
event of default under the Declaration with respect to the Trust Securities
(each a "Declaration Event of Default"); provided that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to such Common Securities until
all Declaration Events of Default with respect to the Capital Securities have
been cured, waived or otherwise eliminated. Until such Declaration Events of
Default have been so cured, waived, or otherwise eliminated, the Institutional
Trustee will be deemed to be acting solely on behalf of the holders of the
Capital Securities and only the holders of such Capital Securities will have the
right to direct the Institutional Trustee with respect to certain matters under
the Declaration, and therefore the Indenture. The holders of a majority in
liquidation amount of the Capital Securities will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Institutional Trustee or to direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee to exercise the remedies available to
it as holder of the Subordinated Debt Securities. If the Institutional Trustee
fails to enforce its rights under the Subordinated Debt Securities after the
holders of a majority in liquidation amount of such Capital Securities have so
directed the Institutional Trustee, a holder of record of such Capital
Securities may, to the fullest extent permitted by law, institute a legal
proceeding against
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the Company to enforce the Institutional Trustee's rights under the Subordinated
Debt Securities without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest or
principal (or premium, if any) on the Subordinated Debt Securities on the
respective dates such interest or principal (or premium, if any) is payable (or
in the case of redemption, the redemption date), then a holder of record of such
Capital Securities may institute a Direct Action against the Company for
payment, on or after the respective due dates specified in the Subordinated Debt
Securities, to such holder directly of the principal of (or premium, if any) or
interest on Subordinated Debt Securities having an aggregate principal amount
equal to the aggregate liquidation amount of the Capital Securities of such
holder. In connection with such Direct Action, the Company will be subrogated to
the rights of such holder of Capital Securities under the Declaration to the
extent of any payment made by the Company to such holder of Capital Securities
in such Direct Action; provided, however, that no such subrogation right may be
exercised so long as a Declaration Event of Default has occurred and is
continuing. The holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Subordinated Debt
Securities.
Upon the occurrence of a Declaration Event of Default, the
Institutional Trustee, so long as it is the sole holder of the Subordinated Debt
Securities, will have the right under the Indenture to declare the principal of
(or premium, if any) and interest on the Subordinated Debt Securities to be
immediately due and payable. The Company and the Trust are each required to file
annually with the Institutional Trustee an officer's certificate as to its
compliance with all conditions and covenants under the Declaration.
VOTING RIGHTS
Except as described below, under the Trust Act and under " --
Removal of Trustees; Appointment of Successors" and "Description of the
Guarantee -- Modification of the Guarantee; Assignment," and as otherwise
required by law and the Declaration, the holders of the Capital Securities will
have no voting rights.
Subject to the requirements set forth in this paragraph, the holders
of a majority in aggregate liquidation amount of the Capital Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Institutional Trustee, or exercising any trust or power
conferred upon such Institutional Trustee under the Declaration, including the
right to direct such Institutional Trustee, as holder of the Subordinated Debt
Securities, to (i) exercise the remedies available to it under the Indenture as
a holder of the Subordinated Debt Securities, (ii) waive any past default that
is waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Debt Securities shall be
due and payable or (iv) consent on behalf of all the holders of the Capital
Securities of the Trust to any amendment, modification or termination of the
Indenture or the Subordinated Debt Securities where such consent shall be
required; provided, however, that where a consent or action under the Indenture
would require the consent or act of holders of more than a majority in principal
amount of the Subordinated Debt Securities (a "Super-Majority") affected
thereby, the Institutional Trustee may only give such consent or take such
action at the written direction of the holders of at least the proportion in
aggregate liquidation amount of the Capital Securities outstanding which the
relevant Super-Majority represents of the aggregate principal amount of the
Subordinated Debt Securities outstanding. If the Institutional Trustee fails to
enforce its rights under the Subordinated Debt Securities after the holders of a
majority in liquidation amount of such Capital Securities have so directed the
Institutional Trustee, a holder of record of the Capital Securities may, to the
fullest extent permitted by law, institute a legal proceeding directly against
the Company to enforce the Institutional Trustee's rights under the Subordinated
Debt Securities without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest or
principal (or premium, if any) on the Subordinated Debt Securities on the
respective dates such interest or principal (or premium, if any) is payable (or
in the case of redemption, the redemption date), then a
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holder of record of Capital Securities may institute a Direct Action against the
Company for payment, on or after the respective due dates specified in the
Subordinated Debt Securities, to such holder directly of the principal of (or
premium, if any) or interest on the Subordinated Debt Securities having an
aggregate principal amount equal to the aggregate liquidation amount of the
Capital Securities of such holder. The Institutional Trustee shall notify all
holders of the Capital Securities of any default actually known to the
Institutional Trustee with respect to the Subordinated Debt Securities unless
(x) such default has been cured prior to the giving of such notice or (y) the
Institutional Trustee determines in good faith that the withholding of such
notice is in the interest of the holders of such Capital Securities, except
where the default relates to the payment of interest or principal of (or
premium, if any) on any of the Subordinated Debt Securities. Such notice shall
state that such Indenture Event of Default also constitutes a Declaration Event
of Default. Except with respect to directing the time, method and place of
conducting a proceeding for a remedy, the Institutional Trustee shall not take
any of the actions described in clauses (i), (ii) or (iii) above unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that,
as a result of such action, the Trust will not be classified as other than a
grantor trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder
of the Subordinated Debt Securities, is required under the Indenture with
respect to any amendment, modification or termination of the Indenture, such
Institutional Trustee shall request the direction of the holders of the Trust
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by
a majority in liquidation amount of such Trust Securities voting together as a
single class; provided, however, that where a consent under the Indenture would
require the consent of a Super-Majority, the Institutional Trustee may only give
such consent at the direction of the holders of at least the proportion in
liquidation amount of such Trust Securities outstanding which the relevant
Super-Majority represents of the aggregate principal amount of the Subordinated
Debt Securities outstanding. The Institutional Trustee shall not take any such
action in accordance with the directions of the holders of such Trust Securities
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that, as a result of such action, the Trust will not be classified as
other than a grant or trust for United States federal income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver
of the corresponding Declaration Event of Default.
Any required approval or direction of holders of Capital Securities
may be given at a separate meeting of such holders convened for such purpose, at
a meeting of all of the holders of Trust Securities or pursuant to written
consent. The Institutional Trustee will cause a notice of any meeting at which
holders of Capital Securities are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be mailed to each
holder of record of the Capital Securities. Each such notice will include a
statement setting forth the following information: (i) the date of such meeting
or the date by which such action is to be taken; (ii) a description of any
resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Capital Securities will be required for the Trust to redeem
and cancel the Capital Securities or distribute the Subordinated Debt Securities
in accordance with the Declaration.
Notwithstanding that holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned at such time by the Company or any entity
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, the Company, shall not entitle the holders thereof to vote
or consent and shall, for purposes of such vote or consent, be treated as if
such Capital Securities were not outstanding.
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The procedures by which holders of Capital Securities issued in
book-entry form may exercise their voting rights are described below. See "--
Book-Entry Only Issuance -- The Depository Trust Company" below.
REMOVAL OF TRUSTEES; APPOINTMENT OF SUCCESSORS
Unless an Indenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time and its successor appointed
by the holder of a majority of the Common Securities. If an Indenture Event of
Default has occurred and is continuing, a Trustee may be removed and its
successor appointed by the holders of at least a majority in liquidation amount
of Capital Securities. In no event will the holders of the Capital Securities
have the right to vote to appoint, remove or replace the Administrators, which
voting rights are vested exclusively in the Company as the holder of the Common
Securities. No resignation or removal of a Trustee and no appointment of a
successor trustee shall be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the Declaration.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust's
property may at the time be located, the Company, as the holder of a majority of
the Common Securities, and the Administrators shall have power to appoint one or
more persons either to act as a co-trustee, jointly with the Institutional
Trustee, of all or any part of such Trust's property, or to act as a separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the Declaration. In case an Indenture Event of
Default has occurred and is continuing, the Institutional Trustee alone shall
have power to make such appointment.
MODIFICATION OF THE DECLARATION
The Declaration may be amended from time to time by the
Institutional Trustee and the holders of a majority of the Common Securities
without the consent of the holders of the Capital Securities to: (i) cure any
ambiguity; (ii) correct or supplement any provision in such Declaration that may
be defective or inconsistent with any other provision of such Declaration; (iii)
add to the covenants, restrictions or obligations of the Company; (iv) modify,
eliminate or add to any provision of the Declaration to such an extent as may be
necessary to ensure that the Trust will be classified for United States federal
income tax purposes at all times as a grantor trust and will not be required to
register as an "investment company" under the Investment Company Act of 1940, as
amended (the "1940 Act"); and (v) modify, eliminate and add to any provision of
such Declaration, provided that no such modification, elimination or addition
referred to in clauses (i), (ii) and (iii) hereof shall adversely affect the
powers, preferences or special rights of the holders of such Capital Securities
so long as they remain outstanding.
In addition, the Declaration may be modified and amended if approved
by the Institutional Trustee and the holders of a majority of the Common
Securities (and in certain circumstances the Delaware Trustee), provided that,
if any proposed amendment provides for, or the Institutional Trustee otherwise
proposes to effect, (i) any action that would materially adversely affect the
powers, preferences or special rights of the Trust Securities, whether by way of
amendment to the Declaration or otherwise or (ii) the Liquidation of the Trust
other than pursuant to the terms of the Declaration, then the holders of the
Trust Securities voting together as a single class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the holders of at least a majority in liquidation
amount of the Trust Securities affected thereby; provided that if any amendment
or proposal referred to in clause (i) above would materially adversely affect
only the Capital Securities or only the Common Securities, then only the
affected
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class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of a majority in
liquidation amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be
made to the Declaration if such amendment or modification would (i) cause the
Trust to be classified for purposes of United States federal income taxation as
other than a grantor trust or (ii) cause the Trust to be deemed an "investment
company" which is required to be registered under the 1940 Act.
Notwithstanding any provision of the Declaration, the provisions of
Section 316(b) of the Trust Indenture Act incorporated by reference into the
Declaration provides that the right of any holder of Capital Securities to
receive payments of distributions and other payments upon redemption or
otherwise on or after their respective due dates, or to institute suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such holder.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below or as otherwise described in "-- Liquidation Distribution upon
Dissolution." The Trust may, at the request of the holders of a majority of the
Common Securities without the consent of the holders of the Capital Securities,
consolidate, amalgamate, merge with or into, or be replaced by, a trust
organized as such under the laws of any State of the United States; provided
that (i) if the Trust is not the survivor, such successor entity either (x)
expressly assumes all of the obligations of the Trust under the Trust Securities
or (y) substitutes for the Trust Securities other securities having
substantially the same terms as the Trust Securities (the "Successor
Securities"), so that the Successor Securities rank the same as the Trust
Securities rank with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) a trustee of such successor entity possessing the
same powers and duties as the Institutional Trustee is appointed as the holder
of the Subordinated Debt Securities, (iii) the Capital Securities or any
Successor Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or with another
organization on which such Capital Securities are then listed or quoted, if any,
(iv) such merger, consolidation, amalgamation or replacement does not cause the
Capital Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of such Trust Securities (including
any Successor Securities) in any material respect (other than with respect to
any dilution of the holders' interest in such successor entity), (vi) such
successor entity has a purpose substantially identical to that of the Trust,
(vii) prior to such merger, consolidation, amalgamation or replacement, the
Trust has received an opinion of a nationally recognized independent counsel to
the Trust experienced in such matters to the effect that (A) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in such successor entity), (B) following such
merger, consolidation, amalgamation or replacement, neither the Trust nor such
successor entity will be required to register as an investment company under the
1940 Act and (C) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor such successor entity will be classified as
other than a grantor trust for United States federal income tax purposes, and
(viii) the Company guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
holders of 100% in liquidation amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by, any other entity or permit
any other entity to consolidate, amalgamate, merge with or into, or replace it,
if such consolidation, amalgamation, merger or replacement would cause the Trust
or the successor entity to be classified as other than a grantor trust for
United States federal income tax purposes.
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BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The description of book-entry procedures in this Prospectus includes
summaries of certain rules and operating procedures of DTC that affect transfers
of interests in the global certificate or certificates issued in connection with
sales of Capital Securities. Except as described in the next paragraph, the
Capital Securities will be issued only as fully registered securities registered
in the name of Cede & Co. (as nominee for DTC). One or more fully registered
global Capital Security certificates (the "Global Certificates") will be issued,
representing, in the aggregate, the New Capital Securities, and will be
deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Capital
Securities as represented by a Global Certificate.
DTC has advised the Company and the Trust that it is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Exchange Act. DTC holds securities that
its participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants" accounts, thereby eliminating the need for physical
movement of securities certificates. Participants in DTC include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others, such as securities brokers and
dealers, banks and trust companies that clear transactions through or maintain a
direct or indirect custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.
Purchases of Capital Securities within the DTC system must be made
by or through Direct Participants, which will receive a credit for the Capital
Securities on DTC's records. The ownership interest of each actual purchaser of
each Capital Security ("Beneficial Owner") is in turn to be recorded on the
Direct Participants' and Indirect Participants' records. Beneficial Owners will
not receive written confirmation from DTC of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Director Indirect Participants through which the Beneficial Owners purchased
Capital Securities. Transfers of ownership interests in the Capital Securities
are to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the Capital Securities, except in the
event that use of the book-entry system for the Capital Securities is
discontinued.
To facilitate subsequent transfers, all the Capital Securities
deposited by Participants with DTC will be registered in the name of DTC's
nominee, Cede & Co. The deposit of Capital Securities with DTC and their
registration in the name of Cede & Co. will effect no change in beneficial
ownership. DTC will have no knowledge of the actual Beneficial Owners of the
Capital Securities. DTC's records will reflect only the identity of the Direct
Participants to whose accounts such Capital Securities are credited, which may
or may not be the Beneficial Owners. The Direct Participants and Indirect
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of
a Global Certificate in respect of the Capital Securities, DTC or such nominee,
as the case may be, will be considered the sole owner
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or holder of the Capital Securities represented thereby for all purposes under
the Declaration and such Capital Securities. No Beneficial Owner of an interest
in a Global Certificate will be able to transfer that interest except in
accordance with DTC's applicable procedures.
DTC has advised the Company that it will take any action permitted
to be taken by a holder of Capital Securities (including the presentation of
Capital Securities for exchange as described below) only at the direction of one
or more Participants to whose accounts the DTC interests in the Global
Certificates are credited and only in respect of such portion of the aggregate
liquidation amount of Capital Securities as to which such Participant or
Participants has or have given such direction. However, if there is a
Declaration Event of Default with respect to the Capital Securities, DTC will,
upon notice, exchange the Global Certificates in respect of such Capital
Securities for certificated securities, which it will distribute to its
Participants.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices in respect of the Capital Securities held in
book-entry form will be sent to Cede & Co. If less than all of the Capital
Securities are being redeemed, the Capital Securities will be redeemed on a pro
rata basis.
Although voting with respect to the Capital Securities is limited,
in those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to the Capital Securities. Under its usual
procedures, DTC would mail an omnibus proxy to the Trust as soon as possible
after the record date. The omnibus proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the Capital
Securities are credited on the record date (identified in a listing attached to
the omnibus proxy).
Distributions on the Capital Securities held in book-entry form will
be made to DTC in immediately available funds. DTC's practice is to credit
Direct Participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Direct Participants and Indirect Participants and not of
DTC, the Trust or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of distributions to
DTC is the responsibility of the Trust, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct Participants and Indirect
Participants.
Except as provided herein, a Beneficial Owner of an interest in a
Global Certificate will not be entitled to receive physical delivery of Capital
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC, the Direct Participants and the Indirect Participants to exercise any
rights under the Capital Securities.
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Certificates among Participants
of DTC, DTC is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. None of the
Company, the Trust or the Trustees will have any responsibility for the
performance by DTC or its Direct Participants or Indirect Participants under the
rules and procedures governing DTC. DTC may discontinue providing its services
as a securities depositary with respect to the Capital Securities at any time by
giving notice to the Trust. Under such circumstances, in the event that a
successor securities depositary is not
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obtained, Capital Security certificates will be required to be printed and
delivered. Additionally, the Trust (with the consent of the Company) may decide
to discontinue use of the system of book-entry transfers through DTC (or a
successor depositary) with respect to the Capital Securities of the Trust. In
that event, certificates for such Capital Securities will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Company and the Trust believes to
be reliable, but neither the Company nor the Trust takes responsibility for the
accuracy thereof.
RESTRICTIONS ON TRANSFER
The Old Capital Securities have been issued and may be transferred
only in blocks having a stated liquidation amount of not less than $100,000 (100
Old Capital Securities). Any such transfer of Old Capital Securities in a block
having a stated liquidation amount of less than $100,000 shall be deemed to be
void and of no legal effect whatsoever. Any such transferee shall be deemed not
to be the holder of such Old Capital Securities for any purpose, including but
not limited to the receipt of distributions on such Old Capital Securities, and
such transferee shall be deemed to have no interest whatsoever in such Old
Capital Securities.
The New Capital Securities will not be so restricted.
PAYMENT AND PAYING AGENCY
Payments in respect of the Capital Securities represented by the
Global Certificates shall be made to DTC, which shall credit the relevant
accounts at DTC on the applicable distribution payment dates or, in the case of
certificated securities in non-book entry form, such payments shall be made by
check mailed to the address of the holder entitled thereto as such address shall
appear on books and records of the Trust. The paying agent for the Trust
Securities (the "Paying Agent") shall initially be The Chase Manhattan Bank. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Institutional Trustee, the Administrators and the Company. In the
event that The Chase Manhattan Bank shall no longer be the Paying Agent, the
Administrators shall appoint a successor to act as Paying Agent (which shall be
a bank or trust company acceptable to the Company).
REGISTRAR AND TRANSFER AGENT
The Institutional Trustee will act as registrar and transfer agent
for the Capital Securities of the Trust.
Registration of transfers or exchanges of Capital Securities will be
effected without charge by or on behalf of the Trust, but upon payment (with the
giving of such indemnity as the Trust or the Company may require) in respect of
any tax or other government charges which may be imposed in relation to it.
The Trust will not be required to register or cause to be registered
the transfer or exchange of Capital Securities after such Capital Securities
have been called for redemption.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities and after the curing of any defaults that may
have occurred, undertakes to perform only such duties as are specifically set
forth in the Declaration and, after default, shall exercise such of the rights
and powers vested in it by such Declaration, and use the same degree of care and
skill in their exercise, as a prudent individual would exercise or use in the
conduct of his or her own affairs. Subject to such provisions, the Institutional
Trustee is under no obligation to exercise any of the powers vested in it by the
Declaration at the
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request of any holder of Capital Securities, unless offered reasonable indemnity
by such holder against the costs, expenses and liabilities which might be
incurred thereby. The holders of Capital Securities will not be required to
offer such indemnity in the event such holders, by exercising their voting
rights, direct the Institutional Trustee to take any action it is empowered to
take under the Declaration following a Declaration Event of Default. The
Institutional Trustee also serves as trustee under the Guarantee and the
Indenture.
Whenever in the exercise of its rights or powers or the performance
of its duties under the Declaration the Institutional Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or right
or taking any other action thereunder, the Institutional Trustee (i) may request
instructions from the holders of the Capital Securities, which instructions may
only be given by the holders of a majority, or such other proportion, in
liquidation amount of the Capital Securities as would be entitled to direct the
Institutional Trustee under the terms of such Capital Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting on or in
accordance with such instructions.
The Company and certain of its affiliates maintain a banking
relationship with the Institutional Trustee and its affiliates.
GOVERNING LAW
The Declaration and the Capital Securities are governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to principles of conflict of laws.
MISCELLANEOUS
The Administrators, the holders of a majority of the Common
Securities and the Institutional Trustee are authorized and directed to operate
the Trust in such a way so that the Trust will not be required to register as an
"investment company" under the 1940 Act nor be characterized as other than a
grantor trust for United States federal income tax purposes. The Company has
agreed to conduct its affairs so that the Subordinated Debt Securities will be
treated as indebtedness of the Company for United States federal income tax
purposes. In this connection, the Institutional Trustee and the holders of a
majority of the Common Securities are authorized to take any action, not
inconsistent with applicable law or the Declaration, that the Institutional
Trustee and such holders of Common Securities determine in their discretion to
be necessary or desirable to achieve such end, even if such action adversely
affects the interests of the holders of the Capital Securities.
Holders of the Capital Securities have no preemptive or similar
rights.
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DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee
which has been executed and delivered for the benefit of the holders from time
to time of the Capital Securities. The Chase Manhattan Bank is acting as
Guarantee Trustee under the Guarantee. The New Guarantee has been qualified
under the Trust Indenture Act. This summary of the material terms of the
Guarantee does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the Guarantee
(a copy of which has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part). The Guarantee will be held by the Guarantee
Trustee for the benefit of the holders of the Capital Securities of the Trust.
GENERAL
Pursuant to the Guarantee, the Company has irrevocably and
unconditionally agreed, to the extent set forth therein, to pay in full, to the
holders of the Capital Securities, the Guarantee Payments (as defined herein)
(except to the extent paid by the Trust), as and when due, regardless of any
defense, right of set-off or counterclaim which the Trust may have or assert.
The following payments with respect to Capital Securities, to the extent not
paid by the Trust (the "Guarantee Payments"), are subject to the Guarantee
(without duplication): (i) any accrued and unpaid distributions which are
required to be paid on Capital Securities, to the extent the Trust shall have
funds available therefor; (ii) the Redemption Price, to the extent the Trust has
funds available therefor, with respect to any Capital Securities called for
redemption by the Trust and (iii) upon Liquidation of the Trust (other than in
connection with the distribution of Subordinated Debt Securities to the holders
of the Capital Securities in exchange therefor), the lesser of (a) the aggregate
of the liquidation amount and all accrued and unpaid distributions on such
Capital Securities to the date of payment, to the extent the Trust has funds
available therefor, and (b) the amount of assets of the Trust remaining
available for distribution to holders of such Capital Securities in liquidation
of the Trust. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of Capital Securities or by causing the Trust to pay such amounts to
such holders.
The Guarantee does not apply to any payment of distributions except
to the extent the Trust shall have funds available therefor, which funds will
not be available except to the extent the Company has made payments of interest
(or premium, if any) or principal or other payments on the Subordinated Debt
Securities purchased by the Trust. See "Description of the Subordinated Debt
Securities -- Certain Covenants." The Guarantee, when taken together with the
Company's obligations under the Subordinated Debt Securities, the Declaration
and the Indenture, including its obligations to pay costs, expenses, debts and
other obligations of the Trust (other than with respect to the Trust
Securities), provides a full and unconditional guarantee on a subordinated basis
by the Company of payments due on the Capital Securities.
Because the Guarantee is a guarantee of payment and not of
collection, holders of the Capital Securities may proceed directly against the
Company, rather than having to proceed against the Trust before attempting to
collect from the Company, and the Company waives any right or remedy to require
that any action be brought against the Trust or any other person or entity
before proceeding against the Company. Such obligations will not be discharged
except by payment of the Guarantee Payments in full. The Guarantee has been
deposited with the Guarantee Trustee to be held for the benefit of the holders
of Capital Securities. Except as otherwise noted herein, the Guarantee Trustee
has the right to enforce the Guarantee on behalf of the holders of the Capital
Securities.
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The Company has also agreed separately to irrevocably and
unconditionally guarantee the obligations of the Trust with respect to Common
Securities (the "Common Securities Guarantee") to the same extent as the
Guarantee, except that upon the occurrence and continuance of an event of
default under the Declaration, holders of Capital Securities shall have priority
over holders of Common Securities with respect to any payments made by the
Company on or in respect of the Trust Securities under the Guarantee and the
Common Securities Guarantee.
CERTAIN COVENANTS OF THE COMPANY UNDER THE GUARANTEE
In the Guarantee, the Company has covenanted that, so long as any
Capital Securities remain outstanding, if the Company shall be in default under
the Guarantee or there shall have occurred and be continuing any event that
would constitute an event of default under the Declaration, then (a) the Company
shall not declare or pay any dividend on, make a distribution with respect to,
or redeem, purchase or make a liquidation payment with respect to, any of the
Company's capital stock or rights to acquire such capital stock (other than (i)
purchases or acquisitions of shares of the Company's capital stock or rights to
acquire such capital stock in connection with the satisfaction by the Company of
its obligations under any employee benefit plans or any other contractual
obligations of the Company (other than a contractual obligation ranking pari
passu with or junior to the Subordinated Debt Securities), (ii) as a result of a
reclassification of the Company's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or series of the
Company's capital stock or rights to acquire such capital stock for another
class or series of the Company's capital stock or rights to acquire such capital
stock, (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) dividends and
distributions made on the Company's capital stock or rights to acquire such
capital stock with the Company's capital stock or rights to acquire such capital
stock, or (v) any declaration of a dividend in connection with the
implementation of a shareholder rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto), or make guarantee payments with respect to any guarantee by
the Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior to the Subordinated Debt Securities
(other than payments under the Guarantee and the Common Securities Guarantee)
and (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Company that rank pari passu with or junior to the Subordinated Debt
Securities.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not adversely affect the
rights of holders of the Capital Securities in any material respect (in which
case no vote of such holders will be required), the Guarantee may be amended
only with the prior approval of the holders of not less than a majority in
liquidation amount of the outstanding Capital Securities. All guarantees and
agreements contained in the Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Company and shall inure to the
benefit of the holders of the Capital Securities then outstanding.
TERMINATION
The Guarantee will terminate as to the Capital Securities (a) upon
full payment of the Redemption Price of all Capital Securities, (b) upon
distribution of the Subordinated Debt Securities to the holders of all of the
Capital Securities or (c) upon full payment of the amounts payable in accordance
with the Declaration upon dissolution of the Trust. The Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
holder of Capital Securities must restore payment of any sums paid under such
Capital Securities or Guarantee.
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EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure
of the Company to perform any of its payment or other obligations thereunder;
provided, however, that, other than with respect to a default on any payment
under the Guarantee, the Company shall have received notice of default and shall
not have cured such default within 90 days after receipt of such notice.
The holders of a majority in liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. A holder of record of the Capital
Securities may institute a legal proceeding directly against the Company to
enforce the Guarantee Trustee's rights under the Guarantee, without first
instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other person or entity. Pursuant to the Guarantee, the Company will waive any
right or remedy to require that any action be brought first against the Trust or
any other person or entity before proceeding directly against the Company.
STATUS OF THE GUARANTEE
The Company's obligations under the Guarantee are subordinate and
junior in right of payment to all present and future Senior Indebtedness of the
Company and are also effectively subordinated to claims of creditors of the
Company's subsidiaries. The terms of the Capital Securities provide that each
holder of Capital Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee relating thereto. The right of the
Company to participate in any distribution of assets of any of its subsidiaries
upon such subsidiary's liquidation or reorganization or otherwise is subject to
the prior claims of creditors of that subsidiary, except to the extent the
Company may itself be recognized as a creditor of that subsidiary. Accordingly,
the Company's obligations under the Guarantee are effectively subordinated to
all existing and future liabilities of the Company's subsidiaries, and claimants
should look only to the assets of the Company for payments thereunder. The
Guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of the Company, including Senior Indebtedness of the Company,
under any indenture that the Company may enter into in the future or otherwise.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with
respect to the Guarantee, undertakes to perform only such duties as are
specifically set forth in such Guarantee and, after default, shall exercise such
of the rights and powers vested in it by such Guarantee, and use the same degree
of care and skill in their exercise, as a prudent individual would exercise or
use in the conduct of his or her own affairs. Subject to such provisions, the
Trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of Capital Securities, unless offered
reasonable indemnity against the costs, expenses and liabilities which might be
incurred thereby.
The Company and certain of its affiliates maintain a banking
relationship with the Guarantee Trustee and its affiliates.
GOVERNING LAW
The Guarantee is governed by and construed in accordance with the
laws of the State of New York, without regard to conflict of laws principles.
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DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
The Old Subordinated Debt Securities were issued, and the New
Subordinated Debt Securities will be issued, as a separate series under the
Indenture. The Indenture has been qualified under the Trust Indenture Act. Set
forth below is a description of the principal terms of the Subordinated Debt
Securities. The following description does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the description in
the Indenture, dated as of January 21, 1997 (the "Base Indenture"), between the
Company and The Chase Manhattan Bank, as trustee (the "Debt Trustee"), as
supplemented by a First Supplemental Indenture dated as of January 21, 1997 (the
Base Indenture, as so supplemented, is herein referred to as the "Indenture").
Certain capitalized terms used herein are defined in the Indenture. This summary
of the material terms of the Indenture does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the Indenture (a copy of which has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part) and those terms
made a part of the Indenture by the Trust Indenture Act.
In certain circumstances, Subordinated Debt Securities may be
distributed to the holders of the Trust Securities in liquidation of the Trust.
See "Description of the Capital Securities -- Liquidation Distribution Upon
Dissolution."
GENERAL
Concurrently with the issuance of the Old Capital Securities, the
Trust invested the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Old Subordinated Debt Securities
issued by the Company. The Old Subordinated Debt Securities were and the New
Subordinated Debt Securities exchanged for the Old Subordinated Debt Securities
under the Exchange Offer will be issued as unsecured debt under the Indenture.
Subordinated Debt Securities will be limited to an amount equal to the sum of
the aggregate stated liquidation amounts of the Trust Securities.
The Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Subordinated Debt Securities will
mature and become due and payable, together with any accrued and unpaid interest
thereon including Compounded Interest (as defined herein) and Additional
Interest (as defined herein), if any, on January 15, 2027.
If the Subordinated Debt Securities are distributed to holders of
Capital Securities in liquidation of such holders' interests in the Trust, the
Subordinated Debt Securities will, with respect to Capital Securities held in
book-entry only form, initially be issued as a Global Security (as defined
herein) having an aggregate principal amount equal to the liquidation amount of
such Capital Securities and, with respect to such Capital Securities held in
certificated non-book entry form, will initially be deemed to be represented by
such certificates and to have an aggregate principal amount equal to the
liquidation amount of such Capital Securities. As described herein, under
certain limited circumstances, Subordinated Debt Securities may be issued in
certificated non-book entry form in exchange for a Global Security. See "--
Book-Entry Issuance and Settlement" below. Subordinated Debt Securities deemed
to be represented by a Capital Security certificate will be issued in
certificated form upon presentation for transfer or reissuance. Payments on
Subordinated Debt Securities issued as a Global Security will be made to DTC, a
successor depositary or, in the event that no depositary is used, to a paying
agent for the Subordinated Debt Securities. In the event Subordinated Debt
Securities are issued in certificated non-book entry form, interest and
principal (and premium, if any) will be payable, the transfer of the
Subordinated Debt Securities will be registrable and Subordinated Debt
Securities will be exchangeable for Subordinated Debt Securities of other
denominations of a like aggregate principal amount at the corporate trust office
of the Debt Trustee in New York, New York; provided that payment of interest may
be made, at the option of the Company, by check mailed to the address of the
holder entitled thereto or by wire transfer to an account appropriately
designated by the holder entitled thereto.
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Notwithstanding the foregoing, so long as the holder of any Subordinated Debt
Securities is the Institutional Trustee, the payment of interest and principal
(and premium, if any) on the Subordinated Debt Securities held by the
Institutional Trustee will be made at such place and to such account as may be
designated by the Institutional Trustee.
The Indenture does not contain provisions that afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction or other similar transaction involving the Company that may
adversely affect such holders.
SUBORDINATION
The Indenture provides that the Subordinated Debt Securities are
subordinated and junior in right of payment to all present and future Senior
Indebtedness of the Company. No payment of principal (including redemption
payments), premium, if any, or interest on the Subordinated Debt Securities may
be made (in cash, property, securities, by set-off or otherwise) if (i) any
Senior Indebtedness of the Company is not paid when due and any applicable grace
period with respect to a payment default under such Senior Indebtedness has
ended and such default has not been cured or waived or ceased to exist or (ii)
the maturity of any Senior Indebtedness of the Company has been accelerated
because of a default. Upon any distribution of assets of the Company to
creditors upon any dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all principal, premium, if any, and interest due or to become
due on all Senior Indebtedness of the Company must be paid in full before the
holders of Subordinated Debt Securities are entitled to receive or retain any
payment. Upon satisfaction of all claims of all Senior Indebtedness then
outstanding, the rights of the holders of the Subordinated Debt Securities will
be subrogated to the rights of the holders of Senior Indebtedness of the Company
to receive payments or distributions applicable to Senior Indebtedness until all
amounts owing on the Subordinated Debt Securities are paid in full.
The term "Senior Indebtedness" means, with respect to the Company
(except any other obligations which rank pari passu with or junior to the
Subordinated Debt Securities), (i) the principal, premium, if any, and interest
in respect of (A) indebtedness of the Company for money borrowed, and (B)
indebtedness evidenced by securities, debentures, notes, bonds or other similar
instruments issued by the Company, including, without limitation, any current of
future indebtedness under any indenture (other than the Indenture) to which the
Company is party; (ii) all capital lease obligations of the Company, (iii) all
obligations of the Company issued or assumed as the deferred purchase price of
property, all conditional sale obligations of the Company and all obligations of
the Company under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all obligations of the
Company for the reimbursement on any letter of credit, any banker's acceptance,
any security purchase facility, any repurchase agreement or similar arrangement,
any interest rate swap, any other hedging arrangement, any obligation under
options or any similar credit or other transaction, (v) all obligations of the
type referred to in clauses (i) through (iv) above of other persons for the
payment of which the Company is responsible or liable as obligor, guarantor or
otherwise and (vi) all obligations of the type referred to in clauses (i)
through (v) above of other persons secured by any lien on any property or asset
of the Company (whether or not such obligation is assumed by the Company),
except for (1) any indebtedness between or among the Company or any affiliate of
the Company and (2) any other debt securities issued pursuant to the Indenture
and guarantees in respect of those debt securities. Senior Indebtedness does not
include Subordinated Debt Securities or any junior subordinated debt securities
issued in the future with subordination terms substantially similar to the
Subordinated Debt Securities. Senior Indebtedness shall continue to be Senior
Indebtedness and be entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term of such Senior
Indebtedness.
The right of the Company to participate in any distribution of
assets of any subsidiary upon such subsidiary's liquidation or reorganization or
otherwise is subject to the prior claims of creditors of that
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subsidiary, except to the extent the Company may itself be recognized as a
creditor of that subsidiary. Accordingly, the Company's obligations under the
Subordinated Debt Securities will be effectively subordinated to all existing
and future liabilities of the Company's subsidiaries, and claimants should look
only to the assets of the Company for payments thereunder.
The Indenture does not limit the aggregate amount of Senior
Indebtedness that may be issued by the Company. The amount of Senior
Indebtedness and liabilities and obligations of the Company's subsidiaries that
would be effectively ranked senior to the Guarantee and the Subordinated Debt
Securities (exclusive of Deposits) was approximately $3,836,115,000 at December
31, 1996.
REDEMPTION
The Company may redeem the Subordinated Debt Securities, in whole or
in part, at any time and from time to time, on or after January 15, 2007 upon
not less than 30 nor more than 60 days' notice, at the Call Price described
under "Description of the Capital Securities -- Redemption," plus accrued and
unpaid interest to the redemption date.
In addition, Subordinated Debt Securities may be redeemed by the
Company at any time in certain circumstances upon the occurrence of a Tax Event
as described under "Description of the Capital Securities -- Tax Event
Redemption," upon not less than 30 nor more than 60 days' notice, at a
redemption price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest to the redemption date.
INTEREST
Subordinated Debt Securities bear interest at the rate of 8.65% per
annum, from the original date of issuance of the Old Subordinated Debt
Securities, payable semiannually in arrears on January 15 and July 15 of each
year (each an "Interest Payment Date"), commencing July 15, 1997, to the person
in whose name such Subordinated Debt Security is registered, subject to certain
exceptions, at the close of business on the Business Day next preceding such
Interest Payment Date. The term "interest" as used herein, as such term relates
to the Subordinated Debt Securities, includes any Compounded Interest,
Additional Interest or any Special Payment payable, unless otherwise stated. In
the event the Subordinated Debt Securities are not held solely in book-entry
only form, the Company will select relevant record dates, which shall be 15 days
prior to the relevant Interest Payment Date.
The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. The amount of interest
payable for any period shorter than a full semiannual period for which interest
is computed will be computed on the basis of the actual number of days elapsed
per 30-day month. In the event that any date on which interest is payable on the
Subordinated Debt Securities is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay)
with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as the Company is not in default in the payment of interest
that has become due and payable on the Subordinated Debt Securities and no
accrued interest from a prior completed Extension Period is unpaid, the Company
shall have the right to defer payments of interest on the Subordinated Debt
Securities by extending the interest payment period, at any time and from time
to time, for Extension Periods, each not exceeding 10 consecutive semiannual
periods and none extending beyond the maturity date of the Subordinated Debt
Securities, provided, however, that on the date on which each such Extension
Period ends or, if such date
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is not an Interest Payment Date, on the immediately following Interest Payment
Date, the Company shall pay all interest then accrued and unpaid, together with
interest thereon at the rate of 8.65% per annum, compounded semiannually (to the
extent permitted by applicable law) ("Compounded Interest"). During any
Extension Period (a) the Company shall not declare or pay dividends on, make any
distribution with respect to, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of its capital stock or rights to
acquire such capital stock (other than (i) purchases or acquisitions of shares
of any such capital stock or rights to acquire such capital stock in connection
with the satisfaction by the Company of its obligations under any employee
benefit plans or any other contractual obligations of the Company (other than a
contractual obligation ranking pari passu with or junior to the Subordinated
Debt Securities), (ii) as a result of a reclassification of the Company's
capital stock or rights to acquire such capital stock or the exchange or
conversion of one class or series of the Company's capital stock or rights to
acquire such capital stock for another class or series of the Company's capital
stock or rights to acquire such capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (iv) dividends and distributions made on the Company's capital stock,
or rights to acquire such capital stock with the Company's capital stock or
rights to acquire such capital stock, or (v) any declaration of a dividend in
connection with the implementation of a shareholder rights plan, or the issuance
of stock under any such plan in the future, or the redemption or repurchase of
any such rights pursuant thereto), or make guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu with or junior to the Subordinated
Debt Securities (other than payments under the Guarantee and the Common
Securities Guarantee) and (b) the Company shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company that rank pari passu with or junior to the
Subordinated Debt Securities. Prior to the termination of any such Extension
Period, the Company may further defer payments of interest by extending the
interest payment period; provided, however, that each such Extension Period,
including all such previous and further extensions thereof, may not exceed 10
consecutive semiannual periods or extend beyond the maturity of the Subordinated
Debt Securities. Upon the termination of any Extension Period and the payment of
all amounts then due, the Company may commence a new Extension Period, subject
to the terms set forth in this section. No interest during an Extension Period,
except on the date on which such Extension Period terminates (or if such date is
not an Interest Payment Date, on the immediately following Interest Payment
Date), shall be due and payable. The Company has no present intention of
exercising its right to defer payments of interest on the Subordinated Debt
Securities.
If the Institutional Trustee shall be the sole holder of the
Subordinated Debt Securities, the Company shall give the Administrators, the
Institutional Trustee and the Debt Trustee notice of its initiation of any
Extension Period one Business Day prior to the earlier of (i) the date
distributions on the Capital Securities are payable or (ii) the date the
Administrators are required to give notice to holders of the Capital Securities
(or any national securities exchange or other organization on which the Capital
Securities are listed, if any) of the record date or the distribution payment
date, in each case with respect to distributions on the Trust Securities the
payment of which is being deferred. An Administrator shall give notice of the
Company's initiation of any Extension Period to the holders of such Capital
Securities. If the Institutional Trustee shall not be the sole holder of the
Subordinated Debt Securities, the Company shall give the holders of such
Subordinated Debt Securities notice of its initiation of such Extension Period
10 Business Days prior to the earlier of (i) the next succeeding Interest
Payment Date or (ii) the date upon which the Company is required to give notice
to holders of such Subordinated Debt Securities (or any national securities
exchange or other organization on which the corresponding Capital Securities are
listed, if any) of the record date or interest payment date, in each case with
respect to interest payments the payment of which is being deferred.
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ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company will pay as additional interest ("Additional Interest")
on the Subordinated Debt Securities such additional amounts as shall be required
so that the net amounts received and retained by the Trust after paying any such
taxes, duties, assessments or other governmental charges will equal the amounts
the Trust and the Institutional Trustee would have received had no such taxes,
duties, assessments or other governmental charges been imposed.
PROPOSED TAX LEGISLATION
On February 6, 1997, President Clinton submitted to Congress the
Proposal to implement tax legislation. As explained in the Joint Committee
Description, the Proposal contains a provision which generally would deny a
deduction for interest on an instrument which (a) is issued by a corporation,
(b) has a maximum term of more than 15 years and (c) is not shown as
indebtedness on the separate balance sheet of the issuer (or, if the instrument
is issued to a related party other than a corporation and the holder or some
other related party issues a related instrument, such instrument is not shown as
indebtedness on the issuer's consolidated balance sheet). As explained in the
Joint Committee Description, legislation enacted under the Proposal would be
effective generally for instruments issued on or after the date of first
congressional committee action. To date there has been no congressional
committee action on the Proposal.
While the Company expects to be able to deduct interest on the
Subordinated Debt Securities, see "Certain Federal Income Tax Consequences --
Characterization of the Subordinated Debt Securities," there can be no assurance
that the Proposal, if implemented, will not result in legislation having a
retroactive effect and applicable to the Subordinated Debt Securities.
Furthermore, there can be no assurance that other legislation enacted after the
date hereof will not otherwise adversely affect the ability of the Company to
deduct the interest payable on the Subordinated Debt Securities. Accordingly,
there can be no assurance that a Tax Event will not occur. See "Risk Factors --
Redemption; Distribution" and "Description of the Capital Securities -- Tax
Event Redemption."
CERTAIN COVENANTS
If (i) there shall have occurred and be continuing any event that
would constitute an Event of Default (as defined herein) under the Indenture,
(ii) the Company shall be in default with respect to its payment of any
obligations under the Guarantee or Common Securities Guarantee, or (iii) the
Company shall have given notice of its election to defer payments of interest on
the Subordinated Debt Securities by extending the interest payment period as
provided in the Indenture and such period, or any extension thereof, shall be
continuing, then (a) the Company shall not declare or pay any dividend on, make
a distribution with respect to, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of its capital stock or rights to
acquire such capital stock (other than (i) purchases or acquisitions of shares
of any such capital stock or rights to acquire such capital stock in connection
with the satisfaction by the Company of its obligations under any employee
benefit plans or any other contractual obligations of the Company (other than a
contractual obligation ranking pari passu with or junior to the Subordinated
Debt Securities), (ii) as a result of a reclassification of the Company's
capital stock or rights to acquire such capital stock or the exchange or
conversion of one class or series of the Company's capital stock or rights to
acquire such capital stock for another class or series of the Company's capital
stock or rights to acquire such capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (iv) dividends and distributions made on the Company's capital stock
or rights to acquire such capital stock with the Company's capital stock or
rights to acquire such capital stock, or (v) any declaration of a dividend in
connection with the implementation of a shareholder rights plan, or the
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issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto), or make guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks pari passu with or junior to the
Subordinated Debt Securities (other than payments under the Guarantee or the
Common Securities Guarantee) and (b) the Company shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company that rank pari passu with or junior to the
Subordinated Debt Securities.
For so long as the Trust Securities remain outstanding, the Company
will covenant to maintain 100% ownership of the Common Securities; provided,
however, that any permitted successor of the Company under the Indenture may
succeed to the Company's ownership of such Common Securities. The Administrators
and the holder of a majority of the Common Securities each will covenant to use
their respective reasonable efforts to cause the Trust (a) to remain a statutory
business trust, except in connection with the distribution of Subordinated Debt
Securities to the holders of Trust Securities in liquidation of the Trust, the
redemption of all of the Trust Securities or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration, (b) to otherwise continue
to be classified as a grantor trust for United States federal income tax
purposes and (c) to use its reasonable efforts to cause each holder of Trust
Securities to be treated as owning an undivided beneficial interest in the
Subordinated Debt Securities.
LIMITATION ON MERGERS AND SALES OF ASSETS
Nothing contained in the Indenture or in the Subordinated Debt
Securities shall prevent any consolidation or merger of the Company with or into
any other corporation (whether or not affiliated with the Company) or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party, or shall prevent any sale, conveyance, transfer or other
disposition of the property of the Company or its successor or successors as an
entirety, or substantially as an entirety, to any other entity (whether or not
affiliated with the Company or its successor or successors) authorized to
acquire and operate the same; provided, however, that the Company shall, upon
any such consolidation, merger, sale, conveyance, transfer or other disposition,
cause the obligations of the Company under the Subordinated Debt Securities and
under the Indenture, to be expressly assumed, by supplemental indenture
satisfactory in form to the Debt Trustee and executed and delivered to the Debt
Trustee, by the successor entity formed by such consolidation or into which the
Company shall have been merged, or which shall have acquired such property. Upon
execution and delivery of such supplemental indenture to the Debt Trustee, such
successor entity will be substituted under the Indenture and thereupon the
Company will be relieved of any further liability or obligation thereunder.
EVENTS OF DEFAULT, WAIVER AND NOTICE
The Indenture provides that any one or more of the following
described events which has occurred and is continuing with respect to the
Subordinated Debt Securities constitutes an "Event of Default" with respect to
the Subordinated Debt Securities:
(a) default for 30 days in payment of any interest on the
Subordinated Debt Securities, including any Compounded Interest or
Additional Interest in respect thereof or any Special Payment, when due
(subject to deferral of any due date in the case of an Extension Period);
or
(b) default in payment of principal and premium, if any, on the
Subordinated Debt Securities when due either at maturity, upon redemption,
by declaration or otherwise; or
(c) default resulting in acceleration of other indebtedness of the
Company for borrowed money where the aggregate principal amount so
accelerated exceeds $25 million and such acceleration is not rescinded or
annulled within 30 days after the written notice thereof to the Company by
the Debt
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Trustee or to the Company and the Debt Trustee by the holders of 25% in
aggregate principal amount of the Subordinated Debt Securities then
outstanding; or
(d) default by the Company in the performance of any other of the
covenants or agreements in the Indenture which shall not have been
remedied for a period of 90 days after notice to the Company by the Debt
Trustee or to the Company and the Debt Trustee by the holders of not less
than 25% in aggregate principal amount of Subordinated Debt Securities; or
(e) certain events of bankruptcy, insolvency or reorganization of
the Company; or
(f) the Liquidation of the Trust, except in connection with the
distribution of Subordinated Debt Securities to the holders of Trust
Securities in liquidation of the Trust, the redemption of all of the Trust
Securities, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration.
The Indenture provides that the Debt Trustee may, under certain
circumstances, withhold from the holders notice of default with respect to the
Subordinated Debt Securities (except for any default in payment of principal of
or interest or premium, if any, on the Subordinated Debt Securities) if the
Trustee considers it in the interest of such holders to do so.
The Indenture provides that if an Event of Default in respect of the
Subordinated Debt Securities shall have occurred and be continuing, either the
Debt Trustee or the holders of not less than 25% in aggregate principal amount
of the Subordinated Debt Securities then outstanding may declare the principal
of and accrued interest on all Subordinated Debt Securities to be due and
payable immediately, but upon certain conditions such declarations may be
annulled and past defaults may be waived (except defaults in payment of
principal of or interest or premium on the Subordinated Debt Securities, which
must be cured or paid in full) by the holders of a majority in aggregate
principal amount of the Subordinated Debt Securities then outstanding.
No holder of any Subordinated Debt Security shall have any right to
institute any suit, action or proceeding for any remedy under the Indenture,
unless such holder previously shall have given to the Debt Trustee written
notice of a continuing Event of Default with respect to the Subordinated Debt
Securities and unless the holders of not less than 25% in aggregate principal
amount of the Subordinated Debt Securities then outstanding shall have given the
Debt Trustee a written request to institute such action, suit or proceeding and
shall have offered to the Debt Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred thereby, and
the Debt Trustee for 60 days after its receipt of such notice, request and offer
of indemnity shall have failed to institute any such action, suit or proceeding;
provided that no holder of Subordinated Debt Securities shall have any right to
prejudice the rights of any other holder of Subordinated Debt Securities, obtain
priority or preference over any other such holder or enforce any right under the
Indenture except as provided in the Indenture and for the equal, ratable and
common benefit of all holders of Subordinated Debt Securities. Notwithstanding
the foregoing, the right of any holder of any Subordinated Debt Security to
receive payment of the principal of, premium, if any, and interest, on such
Subordinated Debt Security when due, or to institute suit for the enforcement of
any such payment, shall not be impaired or affected without the consent of such
holder.
The holders of a majority in aggregate principal amount of the
Subordinated Debt Securities then outstanding shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to,
or exercising any trust or power conferred on, the Debt Trustee under the
Indenture; provided, however, that, except under certain circumstances, the Debt
Trustee may decline to follow any such direction if the Debt Trustee determines
that the action so directed would be unjustly prejudicial to holders not taking
part in such direction or would be unlawful or would involve the Debt Trustee in
personal liability. The
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Indenture requires the annual filing by the Company with the Debt Trustee of a
certificate as to the absence of certain defaults under the Indenture.
An Event of Default under the Indenture also constitutes a
Declaration Event of Default. The holders of the Capital Securities of the
Trust, in certain circumstances, have the right to direct the Institutional
Trustee of the Trust to exercise its rights as the holder of the Subordinated
Debt Securities. See "Description of the Capital Securities -- Declaration
Events of Default" and " -- Voting Rights." Notwithstanding the foregoing, if an
Indenture Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal (or
premium, if any) on the Subordinated Debt Securities on the respective dates
such interest or principal (or premium, if any) is payable, after giving effect
to any Extension Period (or in the case of redemption, on the redemption date),
the Company acknowledges that a holder of record of Capital Securities may
institute a Direct Action for payment, on or after the respective due dates
specified in such Subordinated Debt Securities, to such holder directly of the
principal of (or premium, if any) or interest on Subordinated Debt Securities
having an aggregate principal amount equal to the aggregate liquidation amount
of the Capital Securities of such holder. Notwithstanding any payments made to
such holder of Capital Securities by the Company in connection with a Direct
Action, the Company shall remain obligated to pay the principal of (or premium,
if any) or interest on the Subordinated Debt Securities, and the Company shall
be subrogated to the rights of such holder of such Capital Securities under the
Declaration to the extent of any payments made by the Company to such holder in
any Direct Action; provided, however, that no such subrogation right may be
exercised so long as a Declaration Event of Default has occurred and is
continuing. Except to the extent described above under "Description of the
Capital Securities -- Declaration Events of Default" and " -- Voting Rights,"
the holders of Capital Securities will not be able to exercise directly any
other remedy available to the holders of the Subordinated Debt Securities.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the
Debt Trustee, with the consent of the holders of not less than a majority in
principal amount of the Subordinated Debt Securities at the time outstanding, to
modify the Indenture or any supplemental indenture or the rights of the holders
of the Subordinated Debt Securities; provided, however, that no such
modification shall without the consent of the holder of each Subordinated Debt
Security so affected (i) extend the fixed maturity of any Subordinated Debt
Security, or reduce the principal amount thereof or any redemption premium
thereon, or reduce the rate or extend the time of payment of interest thereon,
or make the principal of, or interest or premium on, the Subordinated Debt
Securities payable in any coin or currency other than that provided in the
Subordinated Debt Securities, or impair or affect the right of any holder of
Subordinated Debt Securities to institute suit for the payment thereof or (ii)
reduce the aforesaid percentage of Subordinated Debt Securities the consent of
the holders of which is required for any such modification.
The Company and the Debt Trustee may enter into supplemental
indentures, without the consent of any holder of the Subordinated Debt
Securities: (i) to evidence the succession of another corporation to the Company
and the assumption by the successor corporation of the covenants, agreements and
obligations of the Company pursuant to the Indenture; (ii) to add to the
covenants of the Company such further covenants, restrictions or conditions for
the protection of the holders of the Subordinated Debt Securities and to make
the occurrence, or the occurrence and continuance (including any or no grace
periods), of a default in any of such additional covenants, restrictions or
conditions a default or an Event of Default permitting the enforcement of
remedies provided in the Indenture; (iii) to cure any ambiguity or to correct or
supplement any provision contained in the Indenture or in any supplemental
indenture which may be defective or inconsistent with any other provision
contained therein or in any supplemental indenture, or to make such other
provisions in regard to matters or questions arising under the Indenture;
provided that any such action shall not adversely affect the interests of the
holders of the Subordinated Debt Securities; (iv) to add to, delete from, or
revise the terms of the Subordinated Debt Securities to provide for transfer
procedures and restrictions substantially similar to those
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applicable to the Capital Securities (for purposes of assuring that no
registration of Subordinated Debt Securities is required under the Securities
Act); (v) to evidence and provide for the acceptance of appointment under the
Indenture by a successor Debt Trustee with respect to the Subordinated Debt
Securities and to add to or change any of the provisions of the Indenture as
shall be necessary to provide for or facilitate the administration of the Trust
under the Indenture by more than one Debt Trustee, pursuant to the Indenture;
(vi) to make any change that does not adversely affect the rights of any holder
of any Subordinated Debt Security in any material respect; or (vii) to provide
for the issuance, and establish the form and terms and conditions, of the
Subordinated Debt Securities, to establish the form of any certifications
required to be furnished pursuant to the terms of the Indenture or the
Subordinated Debt Securities or to add to the rights of the holders of the
Subordinated Debt Securities.
DISCHARGE
The Indenture provides that when, among other things, all
Subordinated Debt Securities not previously delivered to the Debt Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at the stated maturity within one year or are to be called for redemption within
one year under arrangements satisfactory to the Debt Trustee, and the Company
deposits or causes to be deposited with the Debt Trustee funds, in trust, for
the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Subordinated Debt Securities not previously delivered to the
Debt Trustee for cancellation, for the principal (and premium, if any) and
interest to the date of the stated maturity or redemption date, as the case may
be, then the Indenture will cease to be of further effect (except as to the
Company's obligations to pay all other sums due pursuant to the Indenture and to
provide the officers' certificates and opinions of counsel described therein),
and the Company will be deemed to have satisfied and discharged the Indenture.
THE DEBT TRUSTEE
The Company and certain of its affiliates maintain a banking
relationship with the Debt Trustee and its affiliates.
BOOK-ENTRY ISSUANCE AND SETTLEMENT
If distributed to holders of Capital Securities of the Trust in
connection with the involuntary or voluntary dissolution, winding-up or
liquidation of the Trust, the Subordinated Debt Securities will, with respect to
such Capital Securities held in book-entry form, initially be issued in the form
of one or more global certificates (each a "Global Security") registered in the
name of the Depositary or its nominee. Except under the limited circumstances
described below, Subordinated Debt Securities represented by a Global Security
will not be exchangeable for, and will not otherwise be issuable as,
Subordinated Debt Securities in definitive form. The Global Securities described
above may not be transferred except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Subordinated Debt
Securities in definitive form and will not be considered the holders (as defined
in the Indenture) thereof for any purpose under the Indenture, and no Global
Security representing Subordinated Debt Securities shall be exchangeable, except
for another Global Security of like denomination and tenor to be registered in
the name of the Depositary or its nominee or to a successor Depositary or its
nominee. Accordingly, each beneficial owner must rely on the procedures of the
Depositary
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or if such person is not a Participant, on the procedures of the Participant
through which such person owns its interest to exercise any rights of a holder
under the Indenture.
THE DEPOSITARY
If Subordinated Debt Securities are distributed to holders of
Capital Securities in liquidation of such holders' interests in the Trust, DTC
will act as securities Depositary for the Subordinated Debt Securities issued by
the Trust with respect to Capital Securities held in book-entry form. For a
description of DTC and the specific terms of the depositary arrangements, see
"Description of the Capital Securities -- Book-Entry Only Issuance -- The
Depository Trust Company." As of the date of this Prospectus, the description
herein of DTC's book-entry system and DTC's practices as they relate to
purchases, transfers, notices and payments with respect to the Capital
Securities would apply in all material respects to any debt obligations
represented by one or more Global Securities held by DTC. The Company may
appoint a successor to DTC or any successor depositary in the event DTC or such
successor depositary is unable or unwilling to continue as the Depositary for
the Global Securities.
None of the Company, the Trust, the Institutional Trustee, the Debt
Trustee, any paying agent and any other agent of the Company, the Trust, the
Institutional Trustee or the Debt Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in a Global Security for the Subordinated Debt
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Subordinated Debt
Securities registered in the names of persons other than the Depositary or its
nominee only if (i) the Depositary notifies the Company that it is unwilling or
unable to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the Depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
Depositary is required to be so registered to act as such depositary and no
successor depositary shall have been appointed, (iii) the Company, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Indenture Event of Default. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Subordinated Debt Securities registered in such names as the
Depositary shall direct. It is expected that such instructions will be based
upon directions received by the Depositary from its Participants with respect to
ownership of beneficial interests in such Global Security.
GOVERNING LAW
The Indenture and the Subordinated Debt Securities are governed by,
and construed in accordance with, the laws of the State of New York, without
regard to conflict of laws principles.
MISCELLANEOUS
The Indenture provides that the Company will pay all fees and
expenses related to (i) the offering and sale of the Trust Securities and the
Subordinated Debt Securities, (ii) the organization, maintenance and dissolution
of the Trust, (iii) the retention of the Trustees and Administrators and (iv)
the enforcement by the Institutional Trustee of the rights of the holders of the
Capital Securities.
The Company will have the right at all times to assign any of its
respective rights or obligations under the Indenture to a direct or indirect
wholly-owned subsidiary of the Company; provided that, in the event of any such
assignment, the Company will remain liable for all of its obligations. Subject
to the
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foregoing, the Indenture will be binding upon and inure to the benefit of the
parties thereto and their respective successors and assigns. Except as otherwise
provided in " -- Limitation on Mergers and Sales of Assets," the Indenture
provides that it may not otherwise be assigned by the parties thereto.
EFFECT OF OBLIGATIONS UNDER THE DECLARATION, THE SUBORDINATED
DEBT SECURITIES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to
issue and sell the Trust Securities evidencing undivided beneficial interests in
the assets of the Trust, and to invest the proceeds from such issuance and sale
in the Subordinated Debt Securities issued by the Company in accordance with
such Trust Securities.
As long as payments of interest and other payments are made when due
on the Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of the Subordinated Debt Securities
will be equal to the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Subordinated Debt Securities will match the distribution rate and
distribution and other payment dates for the Trust Securities; (iii) the Company
shall pay all, and the Trust shall not be obligated to pay directly or
indirectly any, costs, expenses, debts, and other obligations of the Trust
(other than with respect to such Trust Securities); and (iv) the Declaration
further provides that the Trustees shall not take any action or cause or permit
the Trust to, among other things, engage in any activity that is not consistent
with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are
available to the Trust) and other payments due on the Capital Securities (to the
extent funds therefor are available to the Trust) are guaranteed by the Company
as described under "Description of the Guarantee." If the Company does not make
interest payments on the Subordinated Debt Securities, it is expected that the
Trust will not have sufficient funds to pay distributions on such Capital
Securities. The Guarantee will not apply to any payment of distributions except
to the extent that Trust has funds available for the payment of such
distributions. The Guarantee will cover the payment of distributions and other
payments on such Capital Securities only if and to the extent that the Company
has made payments of interest or principal (or premium, if any) on the
Subordinated Debt Securities held by the Trust as its sole assets. The
Guarantee, when taken together with the Company's obligations under the
Subordinated Debt Securities, the Declaration and the Indenture, including its
obligations to pay costs, expenses, debts and other obligations of the Trust
(other than with respect to the Trust Securities), provide a full and
unconditional guarantee on a subordinated basis by the Company of amounts when
due on such Capital Securities.
If the Company fails to make interest or other payments on the
Subordinated Debt Securities when due (after giving effect to any Extension
Period), the Declaration provides a mechanism whereby the holders of the Capital
Securities, using the procedures described herein under "Description of the
Capital Securities -- Book-Entry Only Issuance -- The Depository Trust Company"
and " -- Voting Rights," may direct the Institutional Trustee to enforce its
rights under the Subordinated Debt Securities. If the Institutional Trustee
fails to enforce its rights under the Subordinated Debt Securities after a
majority in liquidation amount of Capital Securities have so directed the
Institutional Trustee, a holder of record of the Capital Securities may, to the
fullest extent permitted by law, institute a legal proceeding against the
Company to enforce the Institutional Trustee's rights under the Subordinated
Debt Securities without first instituting any legal proceedings against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay principal (or
premium, if any) or interest on the Subordinated Debt Securities on the
respective dates such principal (or premium, if any) or interest is payable,
after giving effect to any Extension Period (or in the case of redemption, on
the redemption date), then a holder of record of Capital Securities may
institute a Direct Action
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for payment on or after the respective due dates specified in the Subordinated
Debt Securities. In connection with such Direct Action, the Company will be
subrogated to the rights of such holder of Capital Securities under the
Declaration to the extent of any payment made by the Company to such holder of
Capital Securities in such Direct Action; provided, however, that no such
subrogation right may be exercised so long as a Declaration Event of Default has
occurred and is continuing.
The Subordinated Debt Securities and the Guarantee also are
effectively subordinated to all existing and future liabilities, including trade
payables and Deposits, of the Company's subsidiaries, except to the extent that
the Company is a creditor of the subsidiaries recognized as such.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Weil, Gotshal & Manges LLP, counsel to the Company
and the Trust (the "Counsel"), the following discussion, insofar as it describes
statements of law or legal conclusions, fairly summarizes the principal United
States federal income tax consequences to the holders of Capital Securities
attributable to the purchase, ownership and disposition of Capital Securities.
This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations thereunder, and administrative and
judicial interpretations thereof, each as of the date hereof, all of which are
subject to change, possibly on a retroactive basis.
This summary deals only with Capital Securities held as a capital
asset by a holder who or which purchased Capital Securities upon original
issuance (an "Initial Holder"). It does not deal with all aspects of United
States federal income taxation, nor with the particular United States federal
income tax consequences which may be applicable to certain classes of US Holders
(such as banks, thrift institutions, real estate investment trusts, regulated
investment companies, insurance companies, brokers and dealers in securities or
currencies, other financial institutions, tax-exempt organizations, persons
holding Capital Securities as a position in a "straddle," as part of a
"synthetic security or hedge," as part of a "conversion transaction" or as part
of any other integrated investment, persons having a functional currency other
than the U.S. Dollar and certain United States expatriates). Further, this
summary does not address (a) the federal income tax consequences to shareholders
in, or partners or beneficiaries of, a holder of Capital Securities, (b) the
United States federal alternative minimum tax consequences of the purchase,
ownership or disposition of Capital Securities, or (c) any state, local or
foreign tax consequences of the purchase, ownership and disposition of Capital
Securities.
EXCHANGE OF CAPITAL SECURITIES
For United States federal income purposes, the exchange of Old
Capital Securities for New Capital Securities pursuant to the Exchange Offer
should not be a taxable event to holders and should not be treated as an
"exchange." Accordingly, there should be no United States federal income tax
consequences as a result of the consummation of the Exchange Offer.
US HOLDERS
A "US Holder" is a holder of Capital Securities who or which is a
citizen or individual resident of the United States for federal income tax
purposes, a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or a
trust or estate the income of which is includible in its gross income for United
States federal income tax purposes without regard to its source.
CHARACTERIZATION OF THE TRUST
In connection with the issuance of the Old Capital Securities,
Counsel rendered its opinion generally to the effect that, under then current
law and assuming full compliance with the terms of the Indenture and the
Declaration (and certain other documents), and based on certain assumptions and
qualifications referenced in the opinion, the Trust will be characterized for
United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation. The discussion herein under the heading
"Certain Federal Income Tax Consequences" assumes that the Trust will be so
characterized. Accordingly, for federal income tax purposes, each holder of
Capital Securities generally will be considered the owner of an undivided
interest in the Subordinated Debt Securities owned by the Trust, and each US
Holder will be required
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to include all federal income or gain recognized for federal income tax purposes
with respect to its allocable share of the Subordinated Debt Securities on its
own income tax return. Investors should be aware that such tax opinion is not
binding on the Internal Revenue Service (the "Service") or the courts.
CHARACTERIZATION OF THE SUBORDINATED DEBT SECURITIES
In connection with the issuance of the Old Subordinated Debt
Securities, Counsel rendered its opinion generally to the effect that, under
then current law and assuming full compliance with the terms of the Indenture
(and other documents), and based on certain assumptions and qualifications
referenced in the opinion, the Subordinated Debt Securities will be
characterized for United States federal income tax purposes as debt of the
Company. The discussion herein under the heading "Certain Federal Income Tax
Consequences" assumes that the Subordinated Debt Securities will be so
characterized. Investors should be aware that such tax opinion is not binding on
the Service or the courts.
ORIGINAL ISSUE DISCOUNT
Under the terms of the Subordinated Debt Securities, the Company has
the option to defer payments of interest from time to time by extending the
interest payment period for a period not exceeding 10 consecutive semiannual
periods, but not beyond the maturity of the Subordinated Debt Securities.
Recently issued Treasury regulations under Section 1273 of the Code provide that
debt instruments like the Subordinated Debt Securities will not be considered
issued with OID by reason of the Company's option to defer payments of interest
if the likelihood of deferral is "remote."
The Company has concluded, and this discussion assumes, that, as of
the date of issuance of the Old Subordinated Debt Securities, the likelihood of
exercise of that option is "remote" within the meaning of the applicable
regulations, in part because exercising that option would prevent the Company
from declaring dividends on its stock and would prevent the Company from making
any payments with respect to debt securities that rank pari passu or junior to
the Subordinated Debt Securities. In such case, the Subordinated Debt Securities
should not be treated as issued with OID by reason of the Company's deferral
option. Rather, stated interest on the Subordinated Debt Securities will
generally be taxable to a US Holder, as ordinary income, when paid or accrued in
accordance with that holder's method of accounting for federal income tax
purposes. It should be noted, however, that these regulations have not yet been
addressed in any rulings or other interpretations by the Service. Accordingly,
it is possible that the Service could take a position contrary to the
interpretation described herein.
Notwithstanding the foregoing, in the event the Company does
exercise its option to defer payments of interest, the Subordinated Debt
Securities would be treated as retired and reissued for OID purposes and the sum
of the remaining interest payments on the Subordinated Debt Securities would
thereafter be treated as OID, which would accrue, and be includible in a US
Holder's taxable income, on an economic accrual basis (regardless of the US
Holder's method of accounting for federal income tax purposes) over the
remaining term of the Subordinated Debt Securities (including any period of
interest deferral), without regard to the timing of payments under the
Subordinated Debt Securities. Subsequent distributions of interest on the
Subordinated Debt Securities generally would not be taxable. The amount of OID
that accrues in any period generally would equal the amount of interest that
accrues on the Subordinated Debt Securities in that period at the stated
interest rate. Consequently, during any period of interest deferral, US Holders
will include OID in gross income in advance of the receipt of cash, and a US
Holder which disposes of a Capital Security prior to the record date for payment
of distributions on the Subordinated Debt Securities following that period will
be subject to income tax on OID accrued through the date of disposition (and not
previously included in income), but will not receive cash from the Trust with
respect to that OID.
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If the likelihood of exercise of Company's option to defer payments
of interest were not treated as remote, the Subordinated Debt Securities would
be treated as initially issued with OID in an amount equal to the aggregate
stated interest over the term of the Subordinated Debt. That OID would generally
be includible in a US Holder's taxable income, over the term of the Subordinated
Debt Securities, on an economic accrual basis, whether or not the Company does
exercise its option to defer payments of interest. The amount of OID that
accrues in any period generally would equal the amount of interest that accrues
on the Subordinated Debt Securities in that period at the stated interest rate.
Because the income underlying the Capital Securities will not be
characterized as dividends for income tax purposes, corporate holders of Capital
Securities will not be entitled to a dividends-received deduction for any income
recognized with respect to the Capital Securities.
MARKET DISCOUNT AND BOND PREMIUM
Holders of Capital Securities other than Initial Holders may be
considered to have acquired their undivided interests in the Subordinated Debt
Securities with market discount or acquisition premium (as each phrase is
defined for federal income tax purposes).
RECEIPT OF SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF THE
TRUST
Under certain circumstances described herein (See "Description of
the Capital Securities"), the Company will have the right to distribute
Subordinated Debt Securities to holders in exchange for the Capital Securities
and in liquidation of the Trust. Under current law, such a distribution would
not be a taxable event for federal income tax purposes, and each US Holder would
have an aggregate adjusted basis in its Subordinated Debt Securities for federal
income tax purposes equal to such holder's aggregate adjusted basis in its
Capital Securities. For federal income tax purposes, a US Holder's holding
period in the Subordinated Debt Securities received in such a liquidation of the
Trust would include the period during which the Capital Securities were held by
the holder. If, however, the relevant event is a Tax Event which results in the
Trust being treated as an association taxable as a corporation, the distribution
would likely constitute a taxable event to US Holders of the Capital Securities
for federal income tax purposes.
Under certain circumstances described herein (see "Description of
the Capital Securities"), the Subordinated Debt Securities may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Capital Securities. Such a redemption would be taxable for income tax
purposes, and a US Holder would recognize gain or loss as if it had sold the
Capital Securities for cash. See " -- Sales of Capital Securities" below.
SALES OF CAPITAL SECURITIES
A US Holder that sells Capital Securities will recognize gain or
loss equal to the difference between its adjusted basis in the Capital
Securities and the amount realized on the sale of such Capital Securities (other
than with respect to accrued but unpaid interest which has not yet been included
in income, which will be treated as ordinary income). Assuming the Capital
Securities are not deemed to be issued with OID, a US Holder's adjusted tax
basis in the Capital Securities generally will be its initial purchase price. If
the Capital Securities are deemed to be issued with OID (either upon original
issuance or at the time the Company exercises its option to defer interest
payments), a holder's tax basis in the Capital Securities generally will be its
initial issue price, increased by OID previously includible in such holder's
gross income to the date of disposition and decreased by payments received on
the Capital Securities from and including the date the Capital Securities were
deemed to be issued with OID. Except as noted above, any such gain or loss
generally will be capital gain or loss, and generally will be a long-term
capital gain or loss if the Capital Securities have been held for more than
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one year. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for federal income tax purposes.
PROPOSED TAX LEGISLATION
On February 6, 1997, President Clinton submitted to Congress the
Proposal to implement tax legislation. As explained in the Joint Committee
Description, the Proposal contains a provision which generally would deny a
deduction for interest on an instrument which (a) is issued by a corporation,
(b) has a maximum term of more than 15 years and (c) is not shown as
indebtedness on the separate balance sheet of the issuer (or, if the instrument
is issued to a related party other than a corporation and the holder or some
other related party issues a related instrument, such instrument is not shown as
indebtedness on the issuer's consolidated balance sheet). As explained in the
Joint Committee Description, legislation enacted under the Proposal would be
effective generally for instruments issued on or after the date of first
congressional committee action. To date there has been no congressional
committee action on the Proposal.
While the Company expects to be able to deduct interest on the
Subordinated Debt Securities, see "-- Characterization of the Subordinated Debt
Securities," there can be no assurance that the Proposal, if implemented, will
not result in legislation having a retroactive effect and applicable to the
Subordinated Debt Securities. Furthermore, there can be no assurance that other
legislation enacted after the date hereof will not otherwise adversely affect
the ability of the Company to deduct the interest payable on the Subordinated
Debt Securities. Accordingly, there can be no assurance that a Tax Event will
not occur. See "Risk Factors -- Redemption; Distribution" and "Description of
the Subordinated Debt Securities -- Proposed Tax Legislation."
NON-US HOLDERS
The following discussion applies to an Initial Holder who is not a
US Holder (a "Non-US Holder").
Payments by the Trust to a holder of a Capital Security which is a
Non-US Holder will generally not be subject to United States federal income tax
or withholding of United States federal income tax if the income is not
effectively connected with the conduct of a trade or business within the United
States, provided that (a) the beneficial owner of the Capital Security does not
(directly or indirectly, actually or constructively) own 10% or more of the
total combined voting power of all classes of stock of the Company entitled to
vote, (b) the beneficial owner of the Capital Security is not a controlled
foreign corporation that is related to the Company through stock ownership, (c)
the beneficial owner of a Capital Security is not a bank with respect to which
the Capital Security constitutes an extension of credit made pursuant to a loan
agreement entered into the ordinary course of its trade or business, and (d)
either (i) the beneficial owner of the Capital Securities certifies to the Trust
or its agent, under penalties of perjury, that it is a Non-US Holder and
provides its name and address, or (ii) a securities clearing organization, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution"), and holds the
Capital Securities in such capacity, certifies to the Trust or its agent, under
penalties of perjury, that such a statement has been received from the
beneficial owner by it or by another Financial Institution between it and the
beneficial owner in the chain of ownership, and furnishes the Trust or its agent
with a copy thereof.
As discussed above (see "-- Prior Tax Legislation"), changes in
legislation affecting the income tax consequences of the Subordinated Debt
Securities are possible, and could adversely affect the ability of the Company
to deduct the interest payable on the Subordinated Debt Securities. Moreover,
any such legislation could adversely affect, as the Proposed Legislation would
have adversely affected, Non-US Holders by characterizing income derived from
the Subordinated Debt Securities as dividends, generally subject to a 30% United
States federal income tax (on a withholding basis) when paid to a Non-US Holder
(subject to reduction
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under applicable treaties), rather than as interest which, as discussed above,
is generally exempt from income tax in the hands of a Non-US Holder.
Under current law, a Non-US Holder of a Capital Security will
generally not be subject to withholding of income tax on any gain realized upon
the sale or other disposition of a Capital Security provided such holder is not
engaged or considered to be engaged in the conduct of a trade or business in the
United States or, in the case of an individual Non-US Holder, such holder is
present in the United States for less than 183 days in the taxable year of the
sale or other disposition of a Capital Security.
A Non-US Holder which holds Capital Securities in connection with
the conduct of a United States trade or business will be subject to United
States federal income tax on all income and gains recognized with respect to its
proportionate share of the Subordinated Debt Securities.
INFORMATION REPORTING; BACKUP WITHHOLDING
The Trust intends to report income on the Capital Securities for a
calendar year to holders of record on Forms 1099 by the following January 31st.
Payments made on, and proceeds from the sale of, the Capital Securities may be
subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification or exemption requirements. Any amounts so withheld will
be allowed as a credit against the holder's income tax liability, or refunded,
provided that the required information is provided to the Service.
THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS THE
CONSEQUENCES TO A PARTICULAR HOLDER OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF CAPITAL SECURITIES. POTENTIAL HOLDERS OF CAPITAL SECURITIES ARE URGED TO
CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR PARTICULAR TAX CONSEQUENCES.
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PLAN OF DISTRIBUTION
Any broker-dealer who holds Old Securities acquired for its own
account as a result of market-making activities or other trading activities, and
who receives New Securities in exchange for such Old Securities pursuant to the
Exchange Offer may be a statutory underwriter and must deliver a prospectus
meeting the requirements of the Securities Act, in connection with any resales
of such New Securities. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
New Capital Securities received in exchange for Old Capital Securities where
such Old Capital Securities were acquired as a result of market-making
activities or other trading activities. Subject to certain provisions set forth
in the Registration Rights Agreement and to the limitations set out herein, the
Company and the Trust have agreed that, starting on the date on which the
Exchange Offer is consummated and ending on the close of business one year after
such date (or longer, if required by the Registration Rights Agreement), they
will make this Prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
________, 1997, all dealers effecting transactions in the New Capital Securities
may be required to deliver a prospectus. In that regard, each Exchanging Dealer
who surrenders Old Capital Securities pursuant to the Exchange Offer will be
deemed to have agreed, by execution of the Letter of Transmittal or delivery of
an Agent's Message in lieu thereof, that, upon receipt of notice from the
Company or the Trust of the occurrence of any event or the discovery of any fact
which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain other
events specified in the Registration Rights Agreement, such Exchanging Dealer
will suspend the sale of New Securities pursuant to this Prospectus until the
Company or the Trust has amended or supplemented this Prospectus to correct such
misstatement or omission and has furnished copies of the amended or supplemented
Prospectus to such Exchanging Dealer or the Company or the Trust has given
notice that the sale of the New Securities may be resumed, as the case may be.
The Company and the Trust will not receive any proceeds from any
sale of New Capital Securities by broker-dealers. New Capital Securities
received by broker-dealers for their own account pursuant to the Exchange Offer
may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the New Capital Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Capital Securities. Any
broker-dealer that resells New Capital Securities that were received by it for
its own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Capital Securities may be deemed to
be an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of New Capital Securities and any commissions or concessions
received by an such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of one year after the date on which the Exchange Offer
is consummated, the Company and the Trust will promptly send additional copies
of this Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer that requests such documents in the Letter of Transmittal. The
Company has agreed to pay all expenses incident to the Exchange Offer (including
the expenses of one counsel for the holders of the Old Capital Securities) other
than commissions or concessions of any brokers or dealers and will indemnify the
holders of the Old Capital Securities (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
75
<PAGE>
ERISA CONSIDERATIONS
Each fiduciary of a Plan subject to ERISA should consider the
fiduciary standards of ERISA in the context of the Plan's particular
circumstances before authorizing an investment in the Capital Securities.
Accordingly, among other factors, the fiduciary should consider whether the
investment would satisfy the prudence and diversification requirements of ERISA
and would be consistent with the documents and instruments governing the Plan.
The prohibited transaction rules of ERISA and Section 4975 of the
Code apply to Plans, including individual retirement accounts and entities
deemed to hold plan assets by reason of Department of Labor regulation, 29
C.F.R. ss.ss. 2510.3-101 ("Plan Assets Regulation") or applicable law, of such
employee benefit plans, accounts or plans (collectively "Plans"). Such rules
prohibit certain transactions involving "plan assets" of a Plan with persons who
are "parties in interest" under ERISA or "disqualified persons" under the Code
("Parties in Interest") with respect to such Plan unless exemptive relief is
available under an applicable statutory or administrative exemption. Employee
benefit plans that are governmental plans (as defined in Section 3(32) of
ERISA), certain church plans (as defined in Section 3(33) of ERISA) and foreign
plans (as described in Section 4(b)(5) of ERISA) are not subject to the
requirements of ERISA or Section 4975 of the Code.
Pursuant to an exception contained in the Plan Assets Regulation,
the assets of the Trust would not be deemed to be "plan assets" of Plans
acquiring Capital Securities if (i) the Capital Securities constitute publicly
offered securities, or (ii) immediately after the most recent acquisition of any
equity interest in the Trust, less than 25% of the value of each class of equity
interests in the Trust were held by Plans and other benefit plan investors
within the meaning of the Plan Assets Regulation (collectively, "Benefit Plan
Investors"), excluding for this purpose any Trust Securities owned by the
Institutional Trustee, the Delaware Trustee, the Company, the Administrators or
any of their affiliates. The Plan Assets Regulation states that a beneficial
interest in a trust is an equity interest. The acquisition of Capital Securities
(i) by at least 100 persons who are independent of one another (at the
completion of the initial offering or otherwise) for purposes of satisfying the
definition of a publicly offered security or (ii) by Benefit Plan Investors,
will not be monitored. Therefore, no assurances can be provided by the Initial
Purchasers that the assets of the Trust would not be treated as "plan assets" of
Plans owning Capital Securities at any time.
Certain transactions involving the Trust could be deemed to
constitute direct or indirect prohibited transactions under ERISA and Section
4975 of the Code if the assets of the Trust were deemed to be "plan assets" of
Plans investing in the Trust. For example, if the Company is a Party in Interest
with respect to an investing Plan, extensions of credit between the Company and
the Trust (as represented by the Subordinated Debt Securities and the
Guarantees) would likely be prohibited by Section 406(a)(1)(B) of ERISA and
Section 4975(c)(1)(B) of the Code, unless exemptive relief were available under
an applicable administrative exemption (see below).
The DOL has issued five PTCEs that may provide exemptive relief for
direct or indirect prohibited transactions resulting from the purchase or
holding of the Capital Securities, assuming that assets of the Trust were deemed
to be "plan assets" of Plans investing in the Trust (see above). Those class
exemptions are PTCE 96-23 (for certain transactions determined by in-house asset
managers), PTCE 96-60 (for certain transactions involving insurance company
general accounts), PTCE 91-38 (for certain transactions involving bank
collective investment funds), PTCE 90-1 (for certain transactions involving
insurance company separate accounts) and PTCE 84-14 (for certain transactions
determined by independent qualified asset managers).
Because the Capital Securities may be deemed to be equity interests
in the Trust for purposes of applying ERISA and Section 4975 of the Code, the
Capital Securities may not be purchased or held by any Plan, any entity whose
underlying assets include "plan assets" by reason of any Plan's investment in
the entity
76
<PAGE>
(a "Plan Asset Entity") or any person investing "plan assets" of any Plan,
unless such purchaser or holder is eligible for the exemptive relief available
under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14. Any purchaser or holder of the
Capital Securities or any interest therein will be deemed to have represented by
its purchase and holding thereof that it either (a) is not a Plan or a Plan
Asset Entity and is not purchasing such securities on behalf of or with "plan
assets" of any Plan or (b) is eligible for the exemptive relief available under
PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 with respect to such purchase or
holding.
Due to the complexity of these rules and the penalties that may be
imposed upon persons involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries or other persons considering purchasing
Capital Securities on behalf of or with "plan assets" of any Plan consult with
their counsel regarding the potential consequences if the assets of the Trust
were deemed to be "plan assets" and the availability of exemptive relief under
PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
The foregoing discussion with respect to Plans and other Benefit
Plan Investors is general in nature and is not intended to be all inclusive.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the New
Capital Securities and the creation of the Trust will be passed upon on behalf
of the Trust by Richards, Layton & Finger P.A., special Delaware counsel to the
Trust and the Company. The validity under New York law of the Subordinated Debt
Securities and the Guarantee will be passed upon for the Company and the Trust
by Weil, Gotshal & Manges LLP, New York, New York. Certain United States federal
income tax matters have been, and will be in connection with the Exchange Offer,
passed upon for the Company and the Trust by Weil, Gotshal & Manges LLP, New
York, New York.
EXPERTS
The consolidated balance sheets as of December 31, 1996 and 1995 and
the consolidated statements of income, changes in shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1996,
incorporated by reference herein, have been incorporated herein in reliance on
the report of Coopers & Lybrand L.L.P., independent accountants.
77
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS EXCEPT AS CONTAINED IN THIS PROSPECTUS OR THE ACCOMPANYING
LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, NO SUCH INFORMATION OR
REPRESENTATION SHOULD BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR
THE TRUST. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE ACCOMPANYING LETTER
OF TRANSMITTAL OR BOTH TOGETHER, NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE COMPANY OR THE TRUST SINCE THE DATE HEREOF. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL OR BOTH TOGETHER
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT
RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE
UNLAWFUL.
TABLE OF CONTENTS
Page
Available Information........................................................2
Incorporation of Certain Documents by
Reference..................................................................3
Summary......................................................................4
Risk Factors................................................................15
Leucadia National Corporation...............................................21
Selected Financial Data.....................................................23
Capitalization..............................................................25
Accounting Treatment........................................................27
Use of Proceeds.............................................................27
The Trust...................................................................27
The Exchange Offer..........................................................29
The Consent Solicitation....................................................39
Description of the Capital Securities.......................................40
Description of the Guarantee................................................55
Description of the Subordinated Debt Securities.............................58
Effect of Obligations Under the Declaration,
the Subordinated Debt Securities and the
Guarantee.................................................................68
Certain Federal Income Tax Consequences.....................................70
Plan of Distribution........................................................75
ERISA Considerations..................................................... 76
Legal Matters...............................................................77
Experts.....................................................................77
$150,000,000
LEUCADIA CAPITAL
TRUST I
8.65% CAPITAL TRUST
PASS-THROUGH SECURITIES SM
(TRUPS SM)
(Liquidation Amount $1,000
per Capital Security)
Fully and Unconditionally
Guaranteed, as described herein, by
LEUCADIA NATIONAL
CORPORATION
PROSPECTUS
DATED ________, 1997
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 722 through 725 of the New York Business Corporation Law
(the "Business Corporation Law") provide that a corporation may indemnify, with
certain limitations and exceptions, a director or officer as follows: (1) in a
derivative action, against his reasonable expenses, including attorneys' fees
but excluding certain settlement costs, actually and necessarily incurred by him
in connection with the defense thereof, or an appeal therein, if such director
or officer acted, in good faith, for a purpose which he reasonably believed to
be in (or in the case of service for another corporation, not opposed to) the
best interests of the corporation; and (2) in a civil or criminal non-derivative
action or proceeding including a derivative action by another corporation,
partnership or other enterprise in which any director or officer of the
indemnifying corporation served in any capacity at the indemnifying
corporation's request, against judgments, fines, settlement payments and
reasonable expenses, including attorneys' fees, incurred as a result thereof, or
any appeal therein, if such director or officer acted in good faith, for a
purpose which he reasonably believed to be in (or, in the case of service for
any other corporation, not opposed to) the best interests of the corporation
and, in criminal actions and proceedings, in addition, had no reasonable cause
to believe that his conduct was unlawful. Such indemnification is a matter of
right where the director or officer has been successful on the merits or
otherwise, and otherwise may be granted upon corporate authorization or court
award as provided in the statute.
Section 721 of the Business Corporation Law provides that
indemnification arrangements can be established for directors and officers, by
contract, by-law, charter provision, action of shareholders or board of
directors, on terms other than those specifically provided by Article 7 of the
Business Corporation Law, provided that no indemnification may be made to or on
behalf of any director or officer if a judgment or other final adjudication
adverse to the director or officer establishes that his acts were committed in
bad faith or were the result of active and deliberate dishonesty and were
material to the cause of action so adjudicated, or that he personally gained in
fact a financial profit or other advantage to which he was not legally entitled.
Article V of the Company's By-Laws provides for the indemnification, to the full
extent authorized by law, of any person made or threatened to be made a party in
any civil or criminal action or proceeding by reason of the fact that he, his
testator or intestate is or was a director or officer of the Company.
Section 726 of the Business Corporation Law provides that a
corporation may obtain insurance to indemnify itself and its directors and
officers. The Company maintains an insurance policy providing both directors and
officers liability coverage and corporate reimbursement coverage.
Article Sixth of the Company's Certificate of Incorporation contains
a charter provision eliminating or limiting director liability for monetary
damages arising from breaches of fiduciary duty, subject only to certain
limitations imposed by statute.
II-1
<PAGE>
ITEM 21. EXHIBITS.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
4.1 Indenture, dated as of January 21, 1997, between the Company and The
Chase Manhattan Bank, as Trustee.**
4.2 First Supplemental Indenture, dated as of January 21, 1997, between
the Company and The Chase Manhattan Bank, as Trustee, in respect of
the Company's 8.65% Junior Subordinated Deferrable Interest
Debentures due 2027.**
4.3 Form of Junior Subordinated Deferrable Interest Debenture (included
in the First Supplemental Indenture filed as Exhibit 4.2 to this
Registration Statement).
4.4 Certificate of Trust of Leucadia Capital Trust I dated January 10,
1997.**
4.5 Amended and Restated Declaration of Trust of Leucadia Capital Trust
I (the "Trust"), dated as of January 21, 1997, among the Company, as
sponsor, the Administrators thereof, Chase Manhattan Bank Delaware,
as Delaware Trustee, The Chase Manhattan Bank, as Institutional
Trustee and the holders from time to time of undivided interests in
the assets of the Trust.
4.6 Form of Capital Security Certificate for the Trust (included in the
Amended and Restated Declaration filed as Exhibit 4.5 to this
Registration Statement).
4.7 Capital Securities Guarantee Agreement, dated as of January 21,
1997, between the Company and The Chase Manhattan Bank, as Guarantee
Trustee.**
4.8 Registration Rights Agreement, dated January 21, 1997, among the
Company, the Trust and Salomon Brothers Inc, as Representative of
the Initial Purchasers.**
5.1 Opinion of Richards, Layton & Finger as to validity of the New
Capital Securities.
5.2 Opinion of Weil, Gotshal & Manges LLP as to validity of the New
Subordinated Debt Securities and the New Guarantee to be issued by
the Company.
8 Opinion of Weil, Gotshal & Manges LLP as to certain federal income
tax matters.
12 Statement of Computation of Ratios of Earnings to Fixed Charges
(filed as Exhibit 12 to the Company's Registration Statement on Form
S-3, File No. 333-59463).*
23.1 Consent of Cooper & Lybrand L.L.P.
23.2 Consent of Richards, Layton & Finger (included in the opinion filed
as Exhibit 5.1 to this Registration Statement).
23.3 Consent of Weil, Gotshal & Manges LLP (included in the opinion filed
as Exhibit 5.2 to this Registration Statement).
- -------------------
** Previously filed.
*** To be filed by amendment.
II-2
<PAGE>
23.4 Consent of Weil, Gotshal & Manges LLP (included in the opinion filed
as Exhibit 8 to this Registration Statement).
24 Powers of Attorney.**
25.1 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Indenture.
25.2 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Amended and Restated Declaration.
25.3 Form T-1 Statement of Eligibility of The Chase Manhattan Bank under
the Guarantee for the benefit of the holders of Capital Securities.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Exchange Agent Agreement.***
ITEM 22. UNDERTAKINGS.
(a) Each of the undersigned Registrants hereby undertakes:
(i) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(A) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "Securities
Act");
(B) to reflect in the Prospectus any facts or events
arising after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in this Registration Statement;
(C) to include any material information with respect to
the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in
this Registration Statement;
provided, however, that the undertakings set forth in paragraphs (A) and
(B) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") that are
incorporated by reference in this Registration Statement.
II-3
<PAGE>
(ii) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(iii) To remove from registration by means of a post-effective
amendment any of the Securities being registered hereby which remain
unsold at the termination of the offering.
(b) Each of the undersigned Registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, as
amended, each filing of a Registrant's annual report pursuant to Section 13 (a)
or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of a registrant pursuant to the foregoing provisions, or otherwise each
of the undersigned registrants has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by a
registrant of expenses incurred by a director, officer or controlling person of
a registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, each of the undersigned registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) Each of the undersigned registrants hereby undertakes to respond
to requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form within one business
day of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(e) Each of the undersigned registrants hereby undertake to supply
by means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Leucadia
National Corporation has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City and State of New York, on this 15th day of April, 1997.
LEUCADIA NATIONAL CORPORATION
By: /s/ JOSEPH A. ORLANDO
--------------------------------------
JOSEPH A. ORLANDO
VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons on
behalf of the registrant and in the capacities indicated, on the date set forth
above.
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman of the Board April 15, 1997
- ------------------------- (Principal Executive Officer)
(IAN M. CUMMING)
* President and Director April 15, 1997
- ------------------------- (Principal Executive Officer)
(JOSEPH S. STEINBERG)
/s/ JOSEPH A. ORLANDO Vice President and Chief April 15, 1997
- ------------------------- Financial Officer
(JOSEPH A. ORLANDO) (Principal Financial Officer)
* Vice President and Comptroller April 15, 1997
- ------------------------- (Principal Accounting Officer)
(BARBARA L. LOWENTHAL)
* Director April 15, 1997
- -------------------------
(PAUL M. DOUGAN)
* Director April 15, 1997
- -------------------------
(LAWRENCE D. GLAUBINGER
* Director April 15, 1997
- -------------------------
(JAMES E. JORDAN)
* Director April 15, 1997
- -------------------------
(JESSE CLYDE NICHOLS, III)
*By: /s/ Joseph A. Orlando
-----------------------------
Joseph A. Orlando
(Attorney-in-Fact)
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Leucadia
Capital Trust I has duly caused this Amendment to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City and State of New York, on this 15th day of April, 1997.
LEUCADIA CAPITAL TRUST I
By: /s/ Joseph A. Orlando
------------------------------
Joseph A. Orlando
Administrator
By: /s/ Barbara L. Lowenthal
------------------------------
Barbara L. Lowenthal
Administrator
II-6
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
4.1 Indenture, dated as of January 21, 1997, between the Company and The
Chase Manhattan Bank, as Trustee.**
4.2 First Supplemental Indenture, dated as of January 21, 1997, between
the Company and The Chase Manhattan Bank, as Trustee, in respect of
the Company's 8.65% Junior Subordinated Deferrable Interest
Debentures due 2027.**
4.3 Form of Junior Subordinated Deferrable Interest Debenture (included
in the First Supplemental Indenture filed as Exhibit 4.2 to this
Registration Statement).
4.4 Certificate of Trust of Leucadia Capital Trust I dated January 10,
1997.**
4.5 Amended and Restated Declaration of Trust of Leucadia Capital Trust
I (the "Trust"), dated as of January 21, 1997, among the Company, as
sponsor, the Administrators thereof, Chase Manhattan Bank Delaware,
as Delaware Trustee, The Chase Manhattan Bank, as Institutional
Trustee and the holders from time to time of undivided interests in
the assets of the Trust.
4.6 Form of Capital Security Certificate for the Trust (included in the
Amended and Restated Declaration filed as Exhibit 4.5 to this
Registration Statement).
4.7 Capital Securities Guarantee Agreement, dated as of January 21,
1997, between the Company and The Chase Manhattan Bank, as Guarantee
Trustee.**
4.8 Registration Rights Agreement, dated January 21, 1997, among the
Company, the Trust and Salomon Brothers Inc, as Representative of
the Initial Purchasers.**
5.1 Opinion of Richards, Layton & Finger as to validity of the New
Capital Securities.
5.2 Opinion of Weil, Gotshal & Manges LLP as to validity of the New
Subordinated Debt Securities and the New Guarantee to be issued by
the Company.
8 Opinion of Weil, Gotshal & Manges LLP as to certain federal income
tax matters.
12 Statement of Computation of Ratios of Earnings to Fixed Charges
(filed as Exhibit 12 to the Company's Registration Statement on Form
S-3, File No. 333-59463).*
23.1 Consent of Cooper & Lybrand L.L.P.
23.2 Consent of Richards, Layton & Finger (included in the opinion filed
as Exhibit 5.1 to this Registration Statement).
23.3 Consent of Weil, Gotshal & Manges LLP (included in the opinion filed
as Exhibit 5.2 to this Registration Statement).
23.4 Consent of Weil, Gotshal & Manges LLP (included in the opinion filed
as Exhibit 8 to this Registration Statement).
- -------------------
** Previously filed.
*** To be filed by amendment.
<PAGE>
24 Powers of Attorney.**
25.1 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Indenture.
25.2 Form T-1 Statement of Eligibility of The Chase Manhattan Bank to act
as trustee under the Amended and Restated Declaration.
25.3 Form T-1 Statement of Eligibility of The Chase Manhattan Bank under
the Guarantee for the benefit of the holders of Capital Securities.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Exchange Agent Agreement.***
- -------------------
** Previously filed.
*** To be filed by amendment.
AMENDED AND RESTATED DECLARATION
OF TRUST
LEUCADIA CAPITAL TRUST I
Dated as of January 21, 1997
<PAGE>
CROSS-REFERENCE TABLE*
Section of Trust Indenture
Act of 1939, as amended Section of Declaration
- ----------------------- ----------------------
310(a) 5.3(a)
310(c) Inapplicable
311(c) Inapplicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Inapplicable
314(c) 2.5
314(d) Inapplicable
314(f) Inapplicable
315(a) 3.9(b)
315(c) 3.9(a)
315(d) 3.9(a)
316(a) Annex I
316(b) Annex I
316(c) 3.6(e)
- --------
* This cross-reference Table does not constitute part of the
Declaration and shall not affect the interpretation of any of
its terms or provisions.
2
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
LEUCADIA CAPITAL TRUST I
January 21, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of January 21, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein), the Administrators (as defined herein) and by the
holders, from time to time, of undivided beneficial interests in the Trust to be
issued pursuant to this Declaration;
WHEREAS, the Delaware Trustee and the Sponsor established Leucadia
Capital Trust I (the "Trust"), a business trust under the Delaware Business
Trust Act pursuant to a Declaration of Trust dated as of January 10, 1997 (the
"Original Declaration"), and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on January 10, 1997, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Debentures of the Debenture Issuer (as defined herein);
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees, Administrators and the Sponsor, by
this Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitutes the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
3
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Administrative Action" has the meaning set forth in paragraph 4(c)
of Annex I.
"Administrators" means each of Barbara L. Lowenthal, Ruth
Klindtworth and Joseph A. Orlando solely in such Person's capacity as
Administrator of the Trust created and continued hereunder and not in such
Person's individual capacity, or such Administrator's successor in interest in
such capacity, or any successor appointed as herein provided.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Bankruptcy Event" means, with respect to any Person:
(a) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian,
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trustee, sequestrator (or similar official) of such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days; or
(b) such Person shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of such Person of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due.
"Book Entry Interest" means a beneficial interest in one or more
Global Capital Securities, ownership and transfers of which shall be maintained
and made through book entries by a Clearing Agency as described in Section 9.2.
"Business Day" means any day other than Saturday, Sunday or any
other day on which banking institutions in New York City (in the State of New
York), are permitted or required by any applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss. 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Capital Securities Guarantee" means the guarantee agreement dated
as of January 21, 1997, of Leucadia National Corporation, a New York corporation
(or any successor entity in a merger, consolidation or amalgamation), in its
capacity as guarantor in respect of the Capital Securities.
"Capital Securities" has the meaning specified in Section 7.1(a).
"Capital Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Certificate" means any certificate evidencing Securities.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Capital Securities and in whose name or in the name of a nominee of that
organization shall be registered a Global Capital Security and which shall
undertake to effect book entry transfers and pledges of the Capital Securities.
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"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means January 21, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities" has the meaning specified in Section 7.1(a).
"Common Securities Guarantee" means the guarantee agreement dated as
of January 21, 1997 of Leucadia National Corporation, a New York corporation (or
any successor entity in a merger, consolidation or amalgamation), in its
capacity as guarantor in respect of the Common Securities.
"Common Security Certificate" means a definitive Certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-3.
"Company Indemnified Person" means (a) any Administrator; (b) any
Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Institutional Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Declaration is located at 450 West 33rd Street, 15th
Floor, New York, NY 10001.
"Covered Person" means: (a) any Administrator, or any officer,
director, shareholder, partner, member, representative, employee or agent of the
Trust or any Affiliate of the Trust; and (b) any Holder of Securities.
"Debenture Issuer" means Leucadia National Corporation, a New York
corporation, in its capacity as issuer of the Debentures under the Indenture or
any permitted successor thereto under the Indenture.
"Debt Trustee" means The Chase Manhattan Bank, a New York banking
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
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"Debentures" means the Initial Debentures and the Exchange
Debentures.
"Definitive Capital Securities" means Initial Definitive Capital
Securities and Exchange Definitive Capital Securities.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Depositary" means, with respect to the Capital Securities, DTC, or
such other Person as may be acting as a Clearing Agency with respect to the
Capital Securities.
"Direct Action" has the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders of Securities
in accordance with Section 6.1.
"DTC" means The Depository Trust Company, New York, New York, the
initial Clearing Agency.
"Event of Default" in respect of the Securities means an Indenture
Event of Default has occurred and is continuing in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Exchange Capital Securities" has the meaning specified in Section
7.1(a).
"Exchange Capital Security Certificate" means a certificate
representing an Exchange Capital Security substantially in the form of Exhibit
A-2.
"Exchange Certificate" means a Common Security Certificate or an
Exchange Capital Security Certificate.
"Exchange Debentures" means 8.65% Junior Subordinated Deferrable
Interest Debentures due 2027 to be issued by the Debenture Issuer under the
Indenture in exchange for the Initial Debentures pursuant to the Registration
Rights Agreement.
"Exchange Definitive Capital Securities" means any Exchange Capital
Securities in definitive form issued by the Trust.
"Exchange Global Capital Securities" means any Exchange Capital
Securities in global form issued by the Trust.
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"Exchange Offer" means the registered offer pursuant to which
(subject to certain exceptions) Exchange Capital Securities will be offered in
exchange for Initial Capital Securities.
"Exchange Securities" means Common Securities and Exchange Capital
Securities.
"Extension Period" has the meaning set forth in paragraph 2(b) of
Annex I.
"Fiduciary Indemnified Person" shall mean the Institutional Trustee,
the Delaware Trustee, any Affiliate of the Institutional Trustee or the Delaware
Trustee, and any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Institutional
Trustee or the Delaware Trustee.
"Global Capital Securities" means any Initial Global Capital
Securities and Exchange Global Capital Securities.
"Holder" means a Person in whose name a Security is registered by
the Registrar in the Security register and any such Person shall be deemed to be
a beneficial owner within the meaning of the Business Trust Act.
"IAI" has the meaning set forth in Section 7.3(c).
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of January 21, 1997, among
the Debenture Issuer and the Debt Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued.
"Indenture Event of Default" means an "Event of Default" as defined
in the Indenture.
"Initial Capital Securities" has the meaning specified in Section
7.1(a).
"Initial Capital Security Certificate" means a Certificate
representing an Initial Capital Security substantially in the form of Exhibit
A-1.
"Initial Certificate" means a Common Security Certificate or an
Initial Capital Security Certificate.
"Initial Debentures" means the 8.65% Junior Subordinated Deferrable
Interest Debentures due 2027 issued by the Debenture Issuer under the Indenture
on the Closing Date, a specimen certificate for such series of Debentures being
Exhibit D.
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"Initial Definitive Capital Securities" means any Restricted
Definitive Capital Security and any other Initial Capital Securities in
definitive form issued by the Trust.
"Initial Global Capital Securities" means any Rule 144A Global
Security and any other Initial Capital Securities in global form issued by the
Trust.
"Initial Securities" means the Common Securities and the Initial
Capital Securities.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3
"interest" means any interest due on the Debentures, including any
Compounded Interest, Special Interest and Additional Interest (as each such term
is defined in the Indenture).
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.8(e).
"Liquidation" has the meaning set forth in paragraph 3 of Annex I.
"Liquidation Distribution" has the meaning set forth in paragraph 3
of Annex I.
"Majority in liquidation amount of the Securities" means Holder(s)
of outstanding Securities voting together as a single class or, as the context
may require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount of all outstanding Securities
of the relevant class.
"Ministerial Action" has the meaning set forth in paragraph 4(c) of
Annex I.
"Offering Memorandum" has the meaning set forth in Section 3.6.
"Officer's Certificates" means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to a condition or covenant provided for it in
this Declaration shall include:
(a) a statement that each officer signing the Certificate has read
the covenant or condition and the definitions relating thereto;
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(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 7.2.
"Payment Amount" has the meaning set forth in Section 6.1.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"PORTAL" has the meaning set forth in Section 3.6(a)(i).
"Property Account" has the meaning set forth in Section 3.8(c).
"Pro Rata" has the meaning set forth in paragraph 8 of Annex I.
"Purchase Agreement" means the Purchase Agreement for the offering
and sale of Capital Securities in the form of Exhibit E.
"QIBs" has the meaning set forth in Section 7.3.
"Redemption/Distribution Notice" has the meaning set forth in
paragraph 4(e) of Annex I.
"Redemption Price" has the meaning set forth in paragraph 4(a) of
Annex I.
"Redemption Tax Opinion" has the meaning set forth in paragraph 4(c)
of Annex I.
"Registered Exchange Offer" has the meaning as set forth in the
Registration Rights Agreement.
"Registrar" has the meaning set forth in Section 7.2.
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"Registration Agreement" means the Registration Rights Agreement
relating to the Securities in the form of Exhibit F.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Relevant Trustee" has the meaning set forth in Section 5.7(a).
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee with direct responsibility for the administration of this Declaration
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Restricted Capital Securities" means Rule 144A Global Capital
Securities and Restricted Definitive Capital Securities.
"Restricted Definitive Capital Securities" has the meaning set forth
in Section 7.3(c).
"Restricted Securities Legend" has the meaning set forth in Section
9.2(g).
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Global Capital Security" has the meaning set forth in
Section 7.3(a).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and
the Capital Securities Guarantee.
"Sponsor" means Leucadia National Corporation, a New York
corporation, or any successor entity in a merger, consolidation or amalgamation,
in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in paragraph 4(c) of Annex I.
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"10% in liquidation amount of the Securities" means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate liquidation amount of all outstanding Securities of the
relevant class.
"Transfer Agent" has the meaning set forth in Section 7.2.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue as a trustee in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as a trustee hereunder in
accordance with the provisions hereof, and references herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Trust Property" means (a) the Debentures, (b) any cash on deposit
in, or owing to, the Property Account and (c) all proceeds and rights in respect
of the foregoing and any other property and assets for the time being held or
deemed to be held by the Institutional Trustee pursuant to the trusts of this
Declaration.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act: Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by ss.ss. 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
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(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Administrators on behalf of the
Trust shall provide the Institutional Trustee (i) within five days after each
record date for payment of Distributions, a list, in such form as the
Institutional Trustee may reasonably require, of the names and addresses of the
Holders of the Capital Securities ("List of Holders") as of such record date,
provided that neither the Sponsor nor the Administrators on behalf of the Trust
shall be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Institutional Trustee by the Sponsor and the Administrators on behalf of the
Trust or at any time that the Institutional Trustee is serving as Registrar, and
(ii) at any other time, within 30 days of receipt by the Trust of a written
request therefor, a List of Holders as of a date no more than 14 days before
such List of Holders is given to the Institutional Trustee. The Institutional
Trustee shall preserve, in as current a form as is reasonably practicable, all
information contained in the most recent List of Holders given to it or which it
receives in its capacity as Paying Agent (if acting in such capacity) provided
that the Institutional Trustee may destroy any List of Holders previously given
to it on receipt of a new List of Holders.
(b) The Institutional Trustee shall comply with its obligations
under ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee. Within 60 days
after May 15 of each year, the Institutional Trustee shall provide to the
Holders of the Capital Securities such reports as are required by ss. 313 of the
Trust Indenture Act, if any, in the form and in the manner provided by ss. 313
of the Trust Indenture Act. The Institutional Trustee shall also comply with the
requirements of ss. 313(d) of the Trust Indenture Act. The Sponsor shall
promptly notify the Institutional Trustee in writing when the Capital Securities
are listed on any stock exchange.
SECTION 2.4 Periodic Reports to Institutional Trustee. Each of the
Sponsor and the Administrators on behalf of the Trust shall provide to the
Institutional Trustee such documents, reports and information as required by ss.
314 (if any) and the compliance certificate required by ss. 314 of the Trust
Indenture Act in the form, in the manner and at the times required by ss. 314 of
the Trust Indenture Act and an Officer's Certificate as to its compliance with
all conditions and covenants under this Declaration, on an annual basis.
SECTION 2.5 Evidence of Compliance with Conditions Precedent. Each
of the Sponsor and the Administrators on behalf of the Trust shall provide to
the Institutional Trustee such evidence as may be required by the Trust
Indenture Act of compliance with any conditions precedent, if any, provided for
in this Declaration that relate to any of the matters set forth in ss. 314(c) of
the
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Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to ss. 314(c)(1) may be given in the form of an Officer's
Certificate.
SECTION 2.6 Events of Default; Waiver. (a) The Holders of a Majority
in liquidation amount of Capital Securities may, by vote or consent, on behalf
of the Holders of all of the Capital Securities, waive any past Event of Default
in respect of the Capital Securities and its consequences, provided that, if the
underlying Indenture Event of Default:
(i) is not waivable under the Indenture, the Event of Default
under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority
in principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, such Event of Default
under this Declaration may only be waived by the vote or consent of
the Holders of at least the proportion in liquidation amount of the
Capital Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of
ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
Indenture Event of Default shall cease to exist, and any Event of Default with
respect to the Capital Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
The Holders of a Majority in liquidation amount of the Capital
Securities will have the right to direct the time, method and place of
conducting any proceeding of any remedy available to the Institutional Trustee
or to direct the exercise of any trust or power conferred upon the Institutional
Trustee, including the right to direct the Institutional Trustee to exercise the
remedies available to it as holder of the Debentures; provided, however, that
(subject to the provisions of Section 3.9) the Institutional Trustee shall have
the right to decline to follow any such direction if the Institutional Trustee
shall determine that the action so directed would be unjustly prejudicial to the
Holders not taking part in such direction or if the Institutional Trustee, being
advised by counsel, determines that the action or proceeding so directed may not
lawfully be taken or if the Institutional Trustee, in good faith, by its board
of directors or trustees, executive committee, or a trust committee of directors
or trustees and/or Responsible Officers, shall determine that the action or
proceedings so directed would involve the Institutional Trustee in personal
liability.
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(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote or consent, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that if the underlying Indenture Event
of Default:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such
Event of Default under this Declaration as provided below in the
proviso to this Section 2.6(b), the Event of Default under this
Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived under the Indenture, except where the Holders of the Common
Securities were deemed to have waived such Event of Default under
this Declaration as provided below in the proviso to this Section
2.6(b), such Event of Default under this Declaration may only be
waived by the vote or consent of the Holders of at least the
proportion in liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding;
provided, that, notwithstanding (i) or (ii) above, each Holder of Common
Securities will be deemed to have waived any such Indenture Event of Default and
all Events of Default with respect to the Common Securities and their
consequences until all Events of Default with respect to the Capital Securities
have been cured, waived or otherwise eliminated, and until such Events of
Default have been so cured, waived or otherwise eliminated, the Institutional
Trustee will be deemed to be acting solely on behalf of the Holders of the
Capital Securities and only the Holders of the Capital Securities will have the
right to direct the Institutional Trustee in accordance with the terms of the
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted in the Trust
Indenture Act. Subject to the foregoing provisions in this Section 2.6(b), upon
such waiver, any such Indenture Event of Default shall cease to exist, and any
Event of Default with respect to the Common Securities arising therefrom shall
be deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Indenture Event of Default by the Institutional
Trustee at the direction of the Holders of the Capital Securities constitutes a
waiver of the corresponding Event of Default under this Declaration. The
foregoing provisions of this Section 2.6(c) shall be in lieu of ss. 316(a)(1)(B)
of the Trust Indenture Act and ss. 316(a)(1)(B) of the Trust Indenture Act is
hereby expressly excluded from this Declaration and the Securities, as permitted
by the Trust Indenture Act.
SECTION 2.7 Events of Default; Notice. (a) The Institutional Trustee
shall, within 90 days after the occurrence of an Event of Default known to a
Responsible Officer of the Institutional Trustee, transmit by mail, first class
postage prepaid, to the Holders of the Securities,
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notices of all defaults with respect to the Securities actually known to a
Responsible Officer of the Institutional Trustee, unless such defaults have been
cured before the giving of such notice (the term "defaults" for the purposes of
this Section 2.7(a) being hereby defined to be an Indenture Event of Default,
not including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein); provided, however, that, except for a
default in the payment of principal of (or premium, if any) or interest on any
of the Debentures, the Institutional Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Institutional Trustee
in good faith determines that the withholding of such notice is in the interests
of the Holders of the Capital Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge
of any default or Event of Default except any default or Event of Default as to
which the Institutional Trustee shall have received written notice or of which a
Responsible Officer of the Institutional Trustee charged with the administration
of the Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name. The Trust is named "Leucadia Capital Trust I," as
such name may be modified from time to time by the Administrators following
written notice to the Delaware Trustee, the Institutional Trustee and the
Holders of Securities. The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Administrators.
SECTION 3.2 Office. The address of the principal office of the Trust
is c/o Leucadia National Corporation, 315 Park Avenue South, New York, New York
10001. On ten Business Days written notice to the Delaware Trustee, the
Institutional Trustee and the Holders of Securities, the Administrators may
designate another principal office.
SECTION 3.3 Purpose. The exclusive purposes and functions of the
Trust are (a) to issue and sell Securities representing undivided beneficial
interests in the assets of the Trust, (b) investing the gross proceeds from such
sale to acquire the Debentures and (c) except as otherwise limited herein, to
engage in only those other activities necessary or incidental thereto, which may
include engaging in the Exchange Offer. The Trust shall not borrow money, issue
debt or reinvest proceeds derived from investments, pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would cause
the Trust not to be classified for United States federal income tax purposes as
a grantor trust.
SECTION 3.4 Authority. Except as specifically provided in this
Declaration, the Administrators and the Institutional Trustee shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by a Trustee or an Administrator in accordance with its powers
shall constitute the act of and serve to bind the Trust. In dealing with the
Trustees or the Administrators acting on behalf of the Trust, no Person shall be
required to inquire into the authority
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of the Trustees or the Administrators to bind the Trust. Persons dealing with
the Trust are entitled to rely conclusively on the power and authority of the
Trustees or the Administrators as set forth in this Declaration. The
Administrators shall have only those ministerial duties set forth herein with
respect to accomplishing the purposes of the Trust and are not intended to be
trustees or fiduciaries with respect to the Trust or the Holders. The
Institutional Trustee shall have the right, but shall not be obligated except as
provided in Section 3.6, to perform those duties assigned to the Administrators.
SECTION 3.5 Title to Property of the Trust. Except as provided in
Section 3.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an undivided beneficial interest in
the assets of the Trust.
SECTION 3.6 Powers and Duties of the Trustees and the
Administrators. (a) The Trustees and the Administrators shall conduct the
affairs of the Trust in accordance with the terms of this Declaration. Subject
to the limitations set forth in paragraph (b) of this Section, and in accordance
with the following provisions (i) and (ii), the Trustees and/or the
Administrators shall have the authority to enter into all transactions and
agreements determined by the Trustees or the Administrators to be appropriate in
exercising the authority, express or implied, otherwise granted to the Trustees
or the Administrators, as the case may be, under this Declaration, and to
perform all acts in furtherance thereof, including without limitation, the
following:
(i) Each Administrator shall have the power and authority to act on
behalf of the Trust with respect to the following matters:
(A) the issuance and sale of the Securities;
(B) to cause the Trust to enter into, and to execute and
deliver on behalf of the Trust, such agreements as may be necessary
or desirable in connection with the purposes and function of the
Trust, including the Registration Agreement and agreements with the
Depositary and the Paying Agent;
(C) assisting in the compliance with the Securities Act,
applicable state securities or blue sky laws, and the Trust
Indenture Act;
(D) to execute and file one or more registration statements
relating to the Capital Securities contemplated by the Registration
Agreement and the preparation and filing of all periodic and other
reports and other documents pursuant to the foregoing;
(E) if and at such time determined by the Debenture Issuer,
assisting in the designation of the Capital Securities for trading
in the Private Offering, Resales and Trading through the Automatic
Linkages ("PORTAL") system or any other national stock exchange or
the Nasdaq Stock Market's National Market;
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(F) the sending of notices (other than notices of default),
and other information regarding the Securities and the Debentures to
the Holders in accordance with this Declaration;
(G) the appointment of a Paying Agent, Transfer Agent and
Registrar in accordance with this Declaration;
(H) execution of the Securities in accordance with this
Declaration;
(I) execution and delivery of closing certificates, pursuant
to the Purchase Agreement and the application for a taxpayer
identification number;
(J) unless otherwise determined by the Institutional Trustee
or the Holders of a Majority in liquidation amount of the Capital
Securities or Common Securities or as otherwise required by the
Business Trust Act or the Trust Indenture Act, to execute on behalf
of the Trust (either acting alone or together with any or all of the
Administrators) any documents that the Administrators have the power
to execute pursuant to this Declaration;
(K) the taking of any action incidental to the foregoing as
the Administrators or the Institutional Trustee may from time to
time determine is necessary or advisable to give effect to the terms
of this Declaration for the benefit of the Holders (without
consideration of the effect of any such action on any particular
Holder);
(L) execution and delivery of letters or documents to, or
instruments with, DTC relating to the Capital Securities;
(M) to establish a record date with respect to all actions to
be taken hereunder that require a record date be established,
including and with respect to, for the purposes of ss. 316(c) of the
Trust Indenture Act, Distributions, voting rights, redemptions and
exchanges, and to issue relevant notices to the Holders of Capital
Securities and Holders of Common Securities as to such actions and
applicable record dates;
(N) to the extent provided in this Declaration, the winding up
of the affairs of and liquidation of the Trust and the preparation,
execution and filing of the certificate of cancellation with the
Secretary of State of the State of Delaware;
(O) to duly prepare and file all applicable tax returns and
tax information reports that are required to be filed with respect
to the Trust on behalf of the Trust; and
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(P) to take all action that may be necessary or appropriate
for the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory business
trust under the laws of the State of Delaware and of each other
jurisdiction in which such existence is necessary to protect the
limited liability of the Holders of the Capital Securities or to
enable the Trust to effect the purposes for which the Trust was
created;
(ii) As among the Trustees and the Administrators, the
Institutional Trustee shall have the power, duty and authority to act on
behalf of the Trust with respect to the following matters:
(A) the establishment of the Property Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal (and premium, if
any) and any other payments made in respect of the Debentures in the
Property Account;
(D) the distribution through the Paying Agent of amounts owed
to the Holders in respect of the Securities;
(E) the exercise of all of the rights, powers and privileges
of a holder of the Debentures;
(F) the sending of notices of default and other information
regarding the Securities and the Debentures to the Holders in
accordance with this Declaration;
(G) the distribution of the Trust Property in accordance with
the terms of this Declaration;
(H) to the extent provided in this Declaration, the winding up
of the affairs of and liquidation of the Trust and the preparation,
execution and filing of the certificate of cancellation with the
Secretary of State of the State of Delaware;
(I) subject to Section 3.9(a), after any Event of Default
(provided that such Event of Default is not by or with respect to
the Institutional Trustee), the taking of any action incidental to
the foregoing as the Institutional Trustee may from time to time
determine is necessary or advisable to give effect to the terms of
this Declaration and protect and conserve the Trust Property for the
benefit of the Holders (without consideration of the effect of any
such action on any particular Holder); and
(iii) The Institutional Trustee shall have the power and authority
to act on behalf of the Trust with respect to any of the duties,
liabilities, powers or the authority of the
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Administrators set forth in Section 3.6(a)(i)(F) herein but shall not have
a duty to do any such act unless specifically requested to do so in
writing by the Sponsor, and shall then be fully protected in acting
pursuant to such written request; and in the event of a conflict between
the action of the Administrators and the action of the Institutional
Trustee, the action of the Institutional Trustee shall prevail.
(b) So long as this Declaration remains in effect, the Trust (or the
Trustees or Administrators acting on behalf of the Trust) shall not undertake
any business, activities or transaction except as expressly provided herein or
contemplated hereby. In particular, neither the Trustees nor the Administrators
may cause the Trust to (i) acquire any investments or engage in any activities
not authorized by this Declaration, (ii) sell, assign, transfer, exchange,
mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or
interests therein, including to Holders, except as expressly provided herein,
(iii) take any action that would reasonably be expected to cause the Trust to
fail or cease to qualify as a "grantor trust" for United States Federal income
tax purposes, (iv) incur any indebtedness for borrowed money or issue any other
debt or (v) take or consent to any action that would result in the placement of
a lien on any of the Trust Property. The Institutional Trustee shall at the sole
cost and expense of the Trust defend all claims and demands of all Persons at
any time claiming any lien on any of the Trust Property adverse to the interest
of the Trust or the Holders in their capacity as Holders.
(c) In connection with the issue and sale of the Capital Securities,
the Sponsor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Sponsor in furtherance of the following prior to the date of this
Declaration are hereby ratified and confirmed in all respects):
(i) the preparation by the Trust of an offering memorandum in
relation to the Capital Securities, including any amendments or
supplements thereto (the "Offering Memorandum") and the taking of any
action necessary to obtain an exemption from the Securities Act;
(ii) the determination of the States in which to take appropriate
action to qualify or register for sale all or part of the Capital
Securities and the determination of any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and the advice
to the Trustees of actions they must take on behalf of the Trust, and the
preparation for execution and filing of any documents to be executed and
filed by the Trust or on behalf of the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any
such States in connection with the sale of the Capital Securities;
(iii) the negotiation of the terms of, and the execution and
delivery of, the Purchase Agreement providing for the sale of the Capital
Securities; and
(iv) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities.
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(d) Notwithstanding anything herein to the contrary, the
Administrators, the Institutional Trustee and the Holders of a Majority in
liquidation amount of the Common Securities are authorized and directed to
conduct the affairs of the Trust and to operate the Trust so that the Trust will
not be deemed to be an "investment company" required to be registered under the
Investment Company Act, or to be characterized as other than a grantor trust for
United States Federal income tax purposes and so that the Debentures will be
treated as indebtedness of the Debenture Issuer for United States Federal income
tax purposes; provided, however, that the Institutional Trustee shall not be
required to take any action pursuant to this paragraph (d) that is not otherwise
expressly required of the Institutional Trustee pursuant to the terms of this
Declaration. In this connection, the Institutional Trustee, acting at the
written direction of the Holders of a Majority in liquidation amount of the
Common Securities, and the Holders of a Majority in liquidation amount of the
Common Securities are authorized to take any action, not inconsistent with
applicable law, the Certificate of Trust or this Declaration, as amended from
time to time, that the Holders of a Majority in liquidation amount of Common
Securities determines in its discretion to be necessary or desirable for such
purposes, even if such action adversely affect the interests of the Holders of
the Capital Securities.
(e) All expenses incurred by the Administrators or the Trustees
pursuant to this Section 3.6 shall be reimbursed by the Sponsor, and the
Trustees shall have no obligations with respect to such expenses.
(f) The assets of the Trust shall consist of the Trust Property.
(g) Legal title to all Trust Property shall be exclusively vested at
all times in the Institutional Trustee (in its capacity as such) and shall be
held and administered by the Institutional Trustee for the benefit of the Trust.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not engage in any activity other than as required or
authorized by this Declaration. In particular, the Trust shall not and the
Institutional Trustee shall not cause the Trust to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
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(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever other
than as expressly provided herein;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration (including Annex
I), (A) direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B)
exercise the remedies available to it under the Indenture as the Holder of
the Debentures, (C) waive any past default that is waivable under the
Indenture, (D) exercise any right to rescind or annul any declaration that
the principal of all the Debentures shall be due and payable, or (E)
consent on behalf of the Holders of the Capital Securities to any
amendment, modification or termination of the Indenture or the Debentures
where such consent shall be required unless (except with respect to clause
(A) above), the Trust shall have received an opinion of counsel to the
effect that such modification will not cause more than an insubstantial
risk that for United States federal income tax purposes the Trust will not
be classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Institutional Trustee. (a) The
legal title to the Debentures shall be owned by and held of record in the name
of the Institutional Trustee in trust for the benefit of the Trust and the
Holders of the Securities. The right, title and interest of the Institutional
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Institutional Trustee in accordance with Section 5.7.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its right, title
and interest in the Debentures to the Administrators or to the Delaware Trustee
(if the Institutional Trustee does not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Account") in the name of and under the exclusive
control of the Institutional Trustee, on behalf of the Holders of the
Securities and, upon the receipt of payments of funds made in respect of
the Debentures held by the Institutional Trustee, deposit such funds into
the Property Account and make payments to the Holders of the Capital
Securities and Holders of the Common Securities from the Property Account
in accordance with Section 6.1. Funds in the Property Account shall be
held uninvested until disbursed in accordance with this Declaration. The
Property Account shall be a trust account that is maintained with a
banking institution the rating on whose long-term unsecured indebtedness
is at least equal to the rating
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assigned to the Capital Securities by a "nationally recognized statistical
rating organization", as that term is defined for purposes of Rule
436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Capital Securities and the
Common Securities to the extent the Debentures are redeemed or mature; and
(iii) upon notice of distribution issued by the Administrators in
accordance with the terms of the Securities, engage in such ministerial
activities as shall be necessary or appropriate to effect the distribution
of the Debentures to Holders of Securities upon the occurrence of certain
circumstances pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform
such duties as may be specifically required of the Institutional Trustee
pursuant to the terms of the Securities.
(e) The Institutional Trustee may bring or defend, pay, collect,
compromise, arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action") which arises out of or in
connection with an Event of Default of which a Responsible Officer of the
Institutional Trustee has actual knowledge or the Institutional Trustee's duties
and obligations under this Declaration or the Trust Indenture Act; provided,
however, that if an Event of Default has occurred and is continuing and such
event is attributable to the failure of the Debenture Issuer to pay interest or
principal (or premium, if any) on the Debentures on the date such interest or
principal (or premium, if any) is otherwise payable after giving effect to any
Extension Period (or in the case of redemption, on the redemption date), then a
Holder of Capital Securities may institute directly against the Debenture Issuer
a proceeding for enforcement of payment on or after the respective due date
specified in the Debentures, to such Holder directly of the principal of (or
premium, if any) or interest on the Debentures having an aggregate principal
amount equal to the aggregate liquidation amount of the Capital Securities of
such Holder (a "Direct Action"). In connection with such Direct Action, the
rights of the Debenture Issuer will be subrogated to the rights of such Holder
of Capital Securities to the extent of any payment made by the Debenture Issuer
to such Holder of Capital Securities in such Direct Action; provided, however,
that the Debenture Issuer may not exercise any such right of subrogation so long
as an Event of Default has occurred and is continuing.
(f) No resignation of the Institutional Trustee shall be effective
unless either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7.
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(g) The Institutional Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default occurs and is continuing, the
Institutional Trustee may, for the benefit of Holders of the Securities, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to this Declaration (including Annex I) and the terms of the
Securities.
The Institutional Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and, except as expressly provided herein, the
Institutional Trustee shall not take, nor shall the Sponsor or any Administrator
direct the Institutional Trustee to take, any action that is inconsistent with
the purposes and functions of the Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Trustees and
Administrators.
(a) The Institutional Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants or obligations shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6), the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) The duties and responsibilities of the Trustees and the
Administrators shall be as provided by this Declaration and, in the case of the
Institutional Trustee, by the Trust Indenture Act. Notwithstanding the
foregoing, no provision of this Declaration shall require any Trustee or
Administrator to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity satisfactory to it
against such risk or liability is not reasonably assured to it. Whether or not
therein expressly so provided, every provision of this Declaration relating to
the conduct or affecting the liability of or affording protection to the
Trustees or Administrators shall be subject to the provisions of this Article.
Nothing in this Declaration shall be construed to release an Administrator or
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct. To the extent that, at law or in equity,
a Trustee or an Administrator has duties and liabilities relating thereto to the
Trust or to the Holders, such Administrator or Trustee shall not be liable to
the Trust or to any Holder for such Administrator's good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of the Administrators or
Trustees otherwise existing at law or in equity, are agreed by the Holders to
replace such other duties and liabilities of the Administrators or Trustees.
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(c) All payments made by the Institutional Trustee or a Paying Agent
in respect of the Securities shall be made only from the revenue and proceeds
from the Trust Property and only to the extent that there shall be sufficient
revenue or proceeds from the Trust Property to enable the Institutional Trustee
or a Paying Agent to make payments in accordance with the terms hereof. Each
Holder, by its acceptance of a Security, agrees that it will look solely to the
revenue and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees and the
Administrators are not personally liable to it for any amount distributable in
respect of any Security or for any other liability in respect of any Security.
This Section 3.9(c) does not limit the liability of the Trustees expressly set
forth elsewhere in this Declaration or, in the case of the Institutional
Trustee, in the Trust Indenture Act.
(d) No provision of this Declaration shall be construed to relieve
the Institutional Trustee from liability with respect to matters that are within
the authority of the Institutional Trustee under this Declaration for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) the Institutional Trustee shall not be liable for any error or
judgment made in good faith by an authorized officer of the Institutional
Trustee, unless it shall be proved that the Institutional Trustee was
negligent in ascertaining the pertinent facts;
(ii) the Institutional Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
liquidation amount of the Capital Securities or the Common Securities, as
applicable, relating to the time, method and place of conducting any
proceeding for any remedy available to the Institutional Trustee, or
exercising any trust or power conferred upon the Institutional Trustee
under this Declaration;
(iii) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and the
Property Account shall be to deal with such property in a similar manner
as the Institutional Trustee deals with similar property for its own
account, subject to the protections and limitations on liability afforded
to the Institutional Trustee under this Declaration and the Trust
Indenture Act;
(iv) the Institutional Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree in writing
with the Administrators; and money held by the Institutional Trustee need
not be segregated from other funds held by it except in relation to the
Property Account maintained by the Institutional Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law; and
(v) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Sponsor with their
respective duties under this Declaration, nor shall the Institutional
Trustee be liable for the default or misconduct of the Administrators or
the Sponsor.
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SECTION 3.10 Certain Rights of Institutional Trustee. Subject to the
provisions of Section 3.9:
(a) the Institutional Trustee may conclusively rely and shall fully
be protected in acting or refraining from acting in good faith upon any
resolution, opinion of counsel, certificate, written representation of a Holder
or transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) if (i) in performing its duties under this Declaration the
Institutional Trustee is required to decide between alternative courses of
action, or (ii) in construing any of the provisions of this Declaration the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure of the
application of any provision of this Declaration, then, except as to any matter
as to which the Holders of Capital Securities are entitled to vote under the
terms of this Declaration, the Institutional Trustee may deliver a notice to the
Administrators requesting the Administrators' opinion as to the course of action
to be taken and the Institutional Trustee shall take such action, or refrain
from taking such action, as the Institutional Trustee in its sole discretion
shall deem advisable and in the best interests of the Holders, in which event
the Institutional Trustee shall have no liability except for its own bad faith,
negligence or willful misconduct;
(c) any direction or act of the Sponsor or the Administrators
contemplated by this Declaration shall be sufficiently evidenced by an Officer's
Certificate;
(d) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be established
before undertaking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and rely upon an Officer's
Certificate which, upon receipt of such request, shall be promptly delivered by
the Sponsor or the Administrators;
(e) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof or to the filing of any report,
statement or other communication with the Commission;
(f) the Institutional Trustee may consult with counsel (which
counsel may be counsel to the Sponsor or any of its Affiliates) and the advice
of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon and in accordance with such advice; the Institutional
Trustee shall have the right at any time to seek instructions concerning the
administration of this Declaration from any court of competent jurisdiction;
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(g) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at the
request or direction of any of the Holders pursuant to this Declaration, unless
such Holders shall have offered to the Institutional Trustee security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction, provided, that, nothing contained in this Section 3.10(g) shall be
taken to relieve the Institutional Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in it by
this Declaration;
(h) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by one or more Holders, but
the Institutional Trustee may make such further inquiry or investigation into
such facts or matters as it may see fit;
(i) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys and the Institutional Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent or attorney appointed with due care by it
hereunder;
(j) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder
the Institutional Trustee (i) may request instructions from the Holders of the
Capital Securities which instructions may only be given by the Holders of the
same proportion in liquidation amount of the Capital Securities as would be
entitled to direct the Institutional Trustee under the terms of the Securities
in respect of such remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (iii) shall be fully protected in acting in accordance with such
instructions;
(k) except as otherwise expressly provided in this Declaration, the
Institutional Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration;
(l) without prejudice to any other rights available to the
Institutional Trustee under applicable law, when the Institutional Trustee
incurs expenses or renders services in connection with a Bankruptcy Event, such
expenses (including the fees and expenses of its counsel) and the compensation
for such services are intended to constitute expenses of administration under
any bankruptcy law or law relating to creditors rights generally;
(m) the Institutional Trustee shall not be charged with knowledge of
an Event of Default unless a Responsible Officer of the Institutional Trustee
obtains actual knowledge of such event or the Institutional Trustee receives
written notice of such event from Holders holding more than a Majority in
liquidation amount of the Capital Securities;
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(n) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be required to
inquire as to the authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Institutional Trustee's or its
agent's taking such action; and
(o) no provision of this Declaration shall be deemed to impose any
duty or obligation on the Institutional Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee. Notwithstanding any other provision
of this Declaration other than Section 5.2, the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities, of any of the Trustees or the Administrators
described in this Declaration. Except as set forth in Section 5.2, the Delaware
Trustee shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of ss. 3807 of the Business Trust Act. In the event the Delaware
Trustee shall at any time be required to take any action or perform any duty
hereunder with respect to the Trust, the Delaware Trustee shall be entitled to
the benefits of Section 3.9(b) and (d) and Section 3.10.
SECTION 3.12 Execution of Documents. Subject to the provisions of
Section 3.11, unless otherwise determined in writing by the Institutional
Trustee, and except as otherwise required by the Business Trust Act, the
Institutional Trustee, or any one or more of the Administrators, as the case may
be, is authorized to execute on behalf of the Trust any documents that the
Trustees or the Administrators, as the case may be, have the power and authority
to execute pursuant to Section 3.6.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration, the
Debentures or the Securities.
SECTION 3.14 Duration of Trust. The Trust, unless terminated
pursuant to the provisions of Article VIII hereof, shall have existence for
fifty-five (55) years from January 15, 1997.
SECTION 3.15 Mergers. (a) The Trust may not consolidate, amalgamate,
merge with or into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any corporation or other
body, except as described in Section 3.15(b) and (c) or Section 3 of Annex I.
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(b) The Trust may, at the request of the Holders of a Majority in
liquidation amount of the Common Securities and without the consent of the
Holders of the Capital Securities, consolidate, amalgamate, merge with or into,
or be replaced by a trust organized as such under the laws of any State;
provided that:
(i) if the Trust is not the Survivor, such successor entity (the
"Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under the
Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so that the Successor Securities rank the same as the
Securities rank with respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) a trustee of the Successor Entity that possesses the same
powers and duties as the Institutional Trustee is appointed as the holder
of the Debentures;
(iii) the Capital Securities or any Successor Securities are listed,
or any Successor Securities will be listed upon notification of issuance,
on any national securities exchange or with another organization on which
the Capital Securities are then listed or quoted, if any;
(iv) such merger, consolidation, amalgamation or replacement does
not cause the Capital Securities (including any Successor Securities) to
be downgraded by any nationally recognized statistical rating
organization;
(v) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the Holders of
the Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of such Holders'
interests in the Successor Entity);
(vi) such Successor Entity has a purpose substantially identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Trust has received an opinion of a nationally recognized
independent counsel to the Trust experienced in such matters to the effect
that:
(A) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of
the Holders of the Securities
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(including any Successor Securities) in any material respect (other
than with respect to any dilution of the Holders' interest in the
Successor Entity);
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and
(C) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
classified as other than a grantor trust for United States federal
income tax purposes;
(viii) the Debenture Issuer guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent
provided by the Securities Guarantees; and
(ix) prior to such merger, consolidation, amalgamation or
replacement, the Institutional Trustee shall have received an Officer's
Certificate of the Administrators and an opinion of counsel, each to the
effect that all conditions precedent of this paragraph (b) to such
transactions have been satisfied.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities. On the Closing
Date, the Sponsor will purchase all of the Common Securities issued by the
Trust, in an amount at least equal to 3% of the capital of the Trust, at the
same time as the Capital Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor. In connection with the
issue and sale of the Capital Securities, the Sponsor shall have the exclusive
right and responsibility to engage in the following activities:
(a) to prepare and distribute the Offering Memorandum in relation to
the Capital Securities, including any supplements and amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do any
and all such acts, other than actions which
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must be taken by the Trust, and advise the Trust of actions it must take, and
prepare for execution and filing any documents to be executed and filed by the
Trust, as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) to prepare for filing and request the Administrators to cause
the filing by the Trust, as may be appropriate, of an application to the PORTAL,
the New York Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing or quotation upon notice of issuance of any Capital
Securities; and
(d) to negotiate the terms of and execute on behalf of the Trust,
the Purchase Agreement, the Registration Agreement and other related agreements
providing for the sale of the Capital Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees. The number of Trustees initially
shall be two (2), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in liquidation
amount of the Common Securities; provided, however, that there shall be a
Delaware Trustee if required by Section 5.2; and there shall always be one
Trustee who shall be the Institutional Trustee, and such Trustee may also serve
as Delaware Trustee if it meets the applicable requirements, in which case
Section 3.11 shall have no application to such entity in its capacity as
Institutional Trustee.
SECTION 5.2 Delaware Trustee. If required by the Business Trust Act,
one Trustee (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law, including ss.3807 of the Business Trust Act.
SECTION 5.3 Institutional Trustee; Eligibility. (a) There shall at
all times be one Trustee which shall act as Institutional Trustee which shall:
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(i) not be an Affiliate of the Sponsor or any Person involved in the
organization or operation of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation permitted by the Commission to act
as an institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then for the
purposes of this Section 5.3(a)(iii), the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 5.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.7(c).
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture
Act, the Institutional Trustee and the Holder of the Common Securities (as if it
were the obligor referred to in ss. 3.10(b) of the Trust Indenture Act), shall
in all respects comply with the provisions of ss. 3.10(b) of the Trust Indenture
Act.
(d) The Indenture, the Debentures issued or to be issued thereunder,
the Declaration, the Securities issued or to be issued hereunder and the Capital
Securities Guarantee and Common Securities Guarantee in connection therewith
shall be deemed to be specifically described in this Declaration for purposes of
clause (i) of the proviso contained in ss. 310(b)(1) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be: The Chase Manhattan
Bank.
SECTION 5.4 Certain Qualifications of the Delaware Trustee
Generally. The Delaware Trustee shall be either a natural person who is at least
21 years of age or a legal entity that shall act through one or more Authorized
Officers.
SECTION 5.5 Administrators. The initial Administrators shall be:
Barbara L. Lowenthal, Ruth Klindtworth and Joseph A. Orlando.
Except where a requirement for action by a specific number of
Administrators is expressly set forth in this Declaration, any action required
or permitted to be taken by the
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Administrators may be taken by, and any power of the Administrators may be
exercised by, or with the consent of, any one such Administrators.
SECTION 5.6 Delaware Trustee. The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware, 1201 Market Street, 9th Floor,
Wilmington, DE 19801
SECTION 5.7 Appointment, Removal and Resignation of Trustees. (a) No
resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of this Section 5.7.
Subject to the immediately preceding paragraph, a Relevant Trustee
may resign at any time by giving written notice thereof to the Administrators
and the Holders of Securities. The Holder(s) of a Majority in liquidation amount
of the Common Securities shall appoint a successor Relevant Trustee meeting the
eligibility requirements set forth in this Declaration. If the instrument of
acceptance by the successor Relevant Trustee required by Section 5.7 shall not
have been delivered to the Relevant Trustee within 60 days after the giving of
such notice of resignation, the Relevant Trustee may petition, at the expense of
the Trust, any court of competent jurisdiction for the appointment of a
successor Relevant Trustee.
Unless an Event of Default shall have occurred and be continuing,
the Institutional Trustee or the Delaware Trustee, or both of them, may be
removed at any time and its successor appointed by the act of the Holders of a
Majority in liquidation amount of the Common Securities. If an Event of Default
shall have occurred and be continuing the Institutional Trustee, the Delaware
Trustee, or both of them, may be removed and its successor appointed by the
Holders of a Majority of liquidation amount of the Capital Securities. If such
Holders fail to appoint a successor Trustee within 30 days of such removal, the
Holder of a Majority in liquidation amount of the Common Securities shall
appoint such successor Trustee at any time.
The Administrators shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all Holders
in the manner provided in Section 5.7(b) and shall give notice to the Sponsor.
Each notice shall include the name of the successor Relevant Trustee and the
address of its Corporate Trust Office if it is the Institutional Trustee.
Notwithstanding the foregoing or any other provision of this
Declaration, in the event a Delaware Trustee who is a natural person dies or
becomes incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by the Holder of a Majority in
liquidation amount of the Common Securities (with such successor Delaware
Trustee being a Person who satisfies the eligibility requirement for a Delaware
Trustee set forth in this Declaration).
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(b) In case of the appointment hereunder of a successor Relevant
Trustee, the retiring Relevant Trustee and each successor Relevant Trustee with
respect to the Trust Securities shall execute and deliver an amendment hereto
wherein each successor Relevant Trustee shall accept such appointment and which
(a) shall contain such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Securities and the Trust and (b) shall add to or change any of the provisions of
this Declaration as shall be necessary to provide for or facilitate the
administration of the Trust by more than one Relevant Trustee, it being
understood that nothing herein or in such amendment shall constitute such
Relevant Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on request of the Trust of any successor Relevant Trustee such retiring Relevant
Trustee shall duly assign, transfer and deliver to such successor Relevant
Trustee all Trust Property, all proceeds thereof and money held by such retiring
Relevant Trustee hereunder with respect to the Securities and the Trust.
(c) If no Successor Institutional Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.7 within 60 days after delivery of an instrument of resignation or
removal, the Institutional Trustee or Delaware Trustee resigning or being
removed, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Institutional Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Institutional Trustee or Successor Delaware Trustee,
as the case may be.
(d) No Institutional Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.8 Vacancies Among Trustees. If a Trustee ceases to hold
office for any reason and the number of Trustees is not reduced pursuant to
Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1,
a vacancy shall occur. A resolution certifying the existence of such vacancy by
the Trustees or, if there are more than two, a majority of the Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of a Trustee shall not operate to dissolve, terminate or
annul the Trust. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled by the appointment of a Trustee in accordance with
Section 5.7, the Institutional Trustee shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by this
Declaration.
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SECTION 5.10 Meetings of the Trustees and the Administrators.
Meetings of the Trustees or the Administrators shall be held from time to time
upon the call of any Trustee or Administrator, as applicable. Regular meetings
of the Trustees and the Administrators, respectively, may be held at a time and
place fixed by resolution of the Trustees or the Administrators, as applicable.
Notice of any in-person meetings of the Trustees or the Administrators shall be
hand delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 48 hours before such meeting.
Notice of any telephonic meetings of the Trustees or the Administrators or any
committee thereof shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 24
hours before a meeting. Notices shall contain a brief statement of the time,
place and anticipated purposes of the meeting. The presence (whether in person
or by telephone) of a Trustee or an Administrator, as the case may be, at a
meeting shall constitute a waiver of notice of such meeting except where a
Trustee or an Administrator, as the case may be, attends a meeting for the
express purpose of objecting to the transaction of any activity on the ground
that the meeting has not been lawfully called or convened. Unless provided
otherwise in this Declaration, any action of the Trustees or the Administrators,
as the case may be, may be taken at a meeting by vote of a majority of the
Trustees or the Administrators present (whether in person or by telephone) and
eligible to vote with respect to such matter, provided that a Quorum is present,
or without a meeting by the unanimous written consent of the Trustees or the
Administrators. Meetings of the Trustees and the Administrators together shall
be held from the time to time upon the call of any Trustee or Administrator.
SECTION 5.11 Delegation of Power. (a) Any Trustee or any
Administrator, as the case may be may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission or making any other governmental filing; and
(b) the Trustees shall have power to delegate from time to time to
such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Trustees or otherwise as the Trustees may deem expedient, to the extent
such delegation is not prohibited by applicable law or contrary to the
provisions of the Trust, as set forth herein.
SECTION 5.12 Conversion, Consolidation or Succession to Business.
Any Person into which the Institutional Trustee or the Delaware Trustee, as the
case may be, may be merged or converted or with which either may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any Person succeeding to all or substantially
all the corporate trust business of the Institutional Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Institutional Trustee
or the Delaware Trustee, as the case may be, hereunder, provided such Person
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
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ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions. Holders shall receive Distributions (as
defined herein) in accordance with the applicable terms of the relevant Holder's
Securities. Distributions shall be made on the Capital Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including any Compounded Interest, Special Interest and Additional
Interest, premium, if any, and/or principal on the Debentures held by the
Institutional Trustee (the amount of any such payment being a "Payment Amount"),
the Institutional Trustee shall and is directed, to the extent funds are
available for that purpose, to make a distribution (a "Distribution") of the
Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities. (a) The
Administrators shall on behalf of the Trust issue one series of capital
securities substantially in the form of Exhibit A-1 representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the "Initial Capital Securities") and to be exchanged pursuant
to the Registration Agreement for Capital Securities substantially in the form
of Exhibit A-2 having the terms set forth in Annex I (the "Exchange Capital
Securities" and together with the Initial Capital Securities, the "Capital
Securities") and one class of common securities representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the "Common Securities"). The Trust shall issue no securities
or other interests in the assets of the Trust other than the Capital Securities
and the Common Securities and the aggregate liquidation amount of all series of
Securities issued by the Trust and outstanding at any time shall not exceed
$154,640,000. The Capital Securities rank pari passu and payment thereon shall
be made Pro Rata with the Common Securities except that, where an Event of
Default has occurred and is continuing, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights of the Holders of the
Capital Securities.
(b) The Certificates shall be signed on behalf of the Trust by one
or more Administrators. Such signature may be the manual or facsimile signature
of any Administrator. Typographical and other minor errors or defects in any
such reproduction of any signature shall not affect the validity of any
Certificate. In case any Administrator of the Trust who shall have signed any of
the Securities shall cease to be such Administrator before the Certificates so
signed shall be delivered by the Trust, such Certificates nevertheless may be
delivered as though the person who signed such Certificates had not ceased to be
such Administrator; and any Certificate may be signed on behalf of the Trust by
such persons who, at the actual date of execution of such Security, shall be
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an Administrator of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such an Administrator. A
Capital Security shall not be valid until authenticated by the manual signature
of an authorized officer of the Institutional Trustee. Such signature shall be
conclusive evidence that the Capital Security has been authenticated under this
Declaration. Upon written order of the Trust signed by one Administrator, the
Institutional Trustee shall authenticate the Capital Securities for original
issue. The Institutional Trustee may appoint an authenticating agent acceptable
to the Trust to authenticate the Capital Securities. A Common Security need not
be so authenticated.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration and the Capital Securities Guarantee.
SECTION 7.2 Paying Agent, Transfer Agent and Registrar. The Trust
shall maintain in the Borough of Manhattan, City of New York, State of New York,
an office or agency where the Capital Securities may be presented for payment
("Paying Agent"), and an office or agency where Securities may be presented for
registration of transfer (the "Transfer Agent"). The Trust shall keep or cause
to be kept at such office or agency a register for the purpose of registering
Securities and transfers and exchanges of Securities, such register to be held
by a registrar (the "Registrar"). The Administrators may appoint the Paying
Agent, the Registrar, the Transfer Agent and may appoint one or more additional
paying agents or one or more co-Registrars, or one or more co-Transfer Agents in
such other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent, the term "Registrar" includes any additional registrar
or co-Registrar and the term "Transfer Agent" includes any additional transfer
agent. The Administrators may change any Paying Agent without prior notice to
any Holder. The Administrators shall notify the Institutional Trustee of the
name and address of any Paying Agent, Transfer Agent and Registrar not a party
to this Declaration. The Administrators hereby appoint the Institutional Trustee
to act as Paying Agent, Transfer Agent and Registrar for the Capital Securities
and the Common Securities. The Institutional Trustee or any of its Affiliates
may act as Paying Agent or Registrar.
SECTION 7.3 Form and Dating. The Initial Capital Securities and the
Institutional Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibit A-1, the Exchange Capital Securities and
the Institutional Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibit A-2 and the Common Securities shall be
substantially in the form of Exhibit A-3, each of which is hereby incorporated
in and expressly made a part of this Declaration. Certificates may be typed,
printed, lithographed or engraved or may be produced in any
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other manner as is reasonably acceptable to the Administrators, as conclusively
evidenced by their execution thereof. The Securities may have letters, numbers,
notations or other marks of identification or designation and such legends or
endorsements required by law, stock exchange rule, the Depositary, agreements to
which the Trust is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Sponsor). The Sponsor shall
furnish any such legend not contained in Exhibit A-1, A-2 or A-3 to the
Institutional Trustee in writing. Each Capital Security shall be dated the date
of its authentication. The terms and provisions of the Securities set forth in
Annex I and the forms of Securities set forth in Exhibits A-1, A-2 and A-3 are
part of the terms of this Declaration and to the extent applicable, the
Institutional Trustee, the Delaware Trustee, the Administrators and the Sponsor,
by their execution and delivery of this Declaration, expressly agree to such
terms and provisions and to be bound thereby. Capital Securities will be issued
only in blocks having a stated liquidation amount of not less than $100,000.
(a) Global Capital Securities.
(i) The Initial Capital Securities are being offered and sold by the
Trust pursuant to the Purchase Agreement. Securities offered and sold to
Qualified Institutional Buyers ("QIBs") in reliance on Rule 144A as provided in
the Purchase Agreement, shall be issued in the form of one or more permanent
global Securities in definitive, fully registered form without distribution
coupons with the appropriate global legends and the Restricted Securities Legend
(each, a "Rule 144A Global Capital Security"), which shall be deposited on
behalf of the purchasers of the Capital Securities represented thereby with the
Institutional Trustee as custodian for the Depositary, and registered in the
name of the Depositary or a nominee of the Depositary, duly executed by the
Trust and authenticated by the Institutional Trustee as hereinafter provided.
The number of Capital Securities represented by the Rule 144A Global Capital
Security may from time to time be increased or decreased by adjustments made on
the records of the Institutional Trustee and the Depositary or its nominee as
hereinafter provided.
(ii) In the event the Initial Global Security is tendered in a
Registered Exchange Offer, it shall be exchanged for interests in a single,
permanent global security in definitive, fully registered form without
distribution coupons. Upon issuance, such Exchange Global Security shall be
deposited on behalf of the holders of the Exchange Capital Securities
represented thereby with the Institutional Trustee as custodian for the
Depositary, and registered in the name of the Depositary or a nominee of the
Depositary, duly executed by the Trust and authenticated by the Institutional
Trustee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply only to
Global Capital Securities as may be authorized by the Trust to be deposited with
or on behalf of the Depositary. The Trust shall execute and the Institutional
Trustee shall, in accordance with this Section 7.3, authenticate and deliver
initially one or more Global Capital Securities that (a) shall be registered in
the name of Cede & Co. or other nominee of such Depositary and (b) shall be
delivered by the Institutional Trustee to such Depositary or pursuant to such
Depositary's instructions or held by the Institutional Trustee as custodian for
the Depositary. Clearing Agency Participants shall have no rights under this
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Declaration with respect to any Global Capital Security held on their behalf by
the Depositary or by the Institutional Trustee as the custodian of the
Depositary or under such Global Capital Security, and the Depositary may be
treated by the Trust, the Institutional Trustee and any agent of the Trust or
the Institutional Trustee as the absolute owner of such Global Capital Security
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Trust, the Institutional Trustee or any agent of the Trust or the
Institutional Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and the Clearing Agency Participants, the operation of customary
practices of such Depositary governing the exercise of the rights of a holder of
a beneficial interest in any Global Capital Security.
(c) Definitive Capital Securities.
(i) Except as provided in Section 9.2(e), owners of beneficial
interests in the Rule 144A Global Capital Security will not be entitled to
receive physical delivery of Definitive Capital Securities. Purchasers of
Initial Securities who are institutional "accredited investors" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) ("IAIs"), but are not
QIBs will receive Initial Capital Securities in the form of individual
certificates in definitive, fully registered form without distribution coupons
and with the Restricted Securities Legend ("Restricted Definitive Capital
Securities"); provided, however, that upon registration of transfer of such
Restricted Definitive Capital Securities to a QIB, such Restricted Definitive
Capital Securities will, unless the Rule 144A Global Capital Security has
previously been exchanged, be exchanged for an interest in a Rule 144A Capital
Global Security pursuant to the provisions set forth in Section 9.2. Restricted
Definitive Securities will bear the Restricted Securities Legend unless removed
in accordance with this Section 7.3 or Section 9.2.
(ii) In the event Initial Definitive Capital Securities are tendered
in a Registered Exchange Offer, they will be exchanged for certificated
securities in definitive, fully registered form, without coupons and without the
Restricted Securities Legend; or, at the option of the Holder, as an interest in
the Exchange Global Capital Security issued pursuant to Section 7.1(a).
SECTION 7.4 Mutilated, Destroyed, Lost or Stolen Certificates. If:
(a) any mutilated Certificates should be surrendered to the Registrar, or if the
Registrar shall receive evidence to its satisfaction of the destruction, loss or
theft of any Certificate; and
(b) there shall be delivered to the Registrar and the Administrators
such security or indemnity as may be required by them to keep each of them
harmless; then, in the absence of notice that such Certificate shall have been
acquired by a bona fide purchaser, an Administrator on behalf of the Trust shall
execute (and in the case of a Capital Security Certificate, the Institutional
Trustee shall authenticate) and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 7.4, the Registrar or the Administrators may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection
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therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
SECTION 7.5 Temporary Securities.
Until definitive Securities are ready for delivery, the
Administrators may prepare and, in the case of the Capital Securities, the
Institutional Trustee shall authenticate, temporary Securities. Temporary
Securities shall be substantially in form of definitive Securities but may have
variations that the Administrators consider appropriate for temporary
Securities. Without unreasonable delay, the Administrators shall prepare and, in
the case of the Capital Securities, the Institutional Trustee shall
authenticate, definitive Securities in exchange for temporary Securities.
SECTION 7.6 Cancellation.
The Administrators at any time may deliver Securities to the
Institutional Trustee for cancellation. The Registrar shall forward to the
Institutional Trustee any Securities surrendered to it for registration of
transfer, redemption or payment. The Institutional Trustee shall promptly cancel
all Securities surrendered for registration of transfer, payment, replacement or
cancellation and shall destroy such canceled Securities unless the
Administrators otherwise direct. The Administrators may not issue new Securities
to replace Securities that have been paid or that have been delivered to the
Institutional Trustee for cancellation.
ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1 Dissolution and Termination of Trust. (a) The Trust
shall terminate:
(i) unless earlier dissolved, on January 15, 2052, the expiration of
the term of the Trust;
(ii) upon a Bankruptcy Event with respect to the Debenture Issuer;
(iii) (other than in connection with a merger, consolidation or
similar transaction not prohibited by the Indenture, this Declaration or
the Capital Securities Guarantee, as the case may be) upon the filing of a
certificate of dissolution or its equivalent with respect to the Sponsor;
upon the consent of Holders of a Majority in liquidation amount of the
Securities voting together as a single class to file a certificate of
cancellation with respect to the Trust, or upon the revocation of the
charter of the Sponsor and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
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(iv) upon the distribution of the Debentures to the Holders of the
Securities, upon exercise of the right of the Holder of all of the
outstanding Common Securities to dissolve the Trust as provided in Annex I
hereto;
(v) upon the entry of a decree of judicial dissolution of the Holder
of the Common Securities, the Sponsor, the Trust or the Debenture Issuer;
(vi) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Securities;
or
(vii) before the issuance of any Securities, with the consent of all
of the Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), and after satisfaction of liabilities to
creditors of the Trust, and subject to the terms set forth in Annex I, the
Trustees shall terminate the Trust by filing a certificate of cancellation with
the Secretary of State of the State of Delaware.
(c) The provisions of Article X shall survive the termination of the
Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 General. (a) Where Capital Securities are presented to
the Registrar with a request to register a transfer or to exchange them for an
equal number of Capital Securities represented by different certificates, the
Registrar shall register the transfer or make the exchange if its requirements
for such transactions are met. To permit registrations of transfer and
exchanges, the Trust shall issue and the Institutional Trustee shall
authenticate Capital Securities at the Registrar's request.
(b) Upon issuance of the Common Securities, the Sponsor shall
acquire and retain beneficial and record ownership of the Common Securities and
for so long as the Securities remain outstanding, the Sponsor shall maintain
100% ownership of the Common Securities, provided, however, that any permitted
successor of the Sponsor under the Indenture may succeed to the Sponsor's
ownership of the Common Securities.
(c) Capital Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities, provided, however, that Initial Capital Securities
may be transferred only in blocks having a stated liquidation amount of not less
than $100,000 (i.e., 100 Initial Capital Securities). Any transfer or purported
transfer of any Security not made in accordance with this Declaration shall be
null and void
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and will be deemed to be of no legal effect whatsoever and any such transferee
shall be deemed not to be the holder of such Capital Securities for any purpose,
including but not limited to the receipt of Distributions on such Capital
Securities, and such transferee shall be deemed to have no interest whatsoever
in such Capital Securities.
(d) The Registrar shall provide for the registration of Securities
and of transfers of Securities, which will be effected without charge but only
upon payment (with such indemnity as the Registrar may require) in respect of
any tax or other governmental charges that may be imposed in relation to it.
Upon surrender for registration of transfer of any Securities, the Registrar
shall cause one or more new Securities to be issued in the name of the
designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Security surrendered for
registration of transfer shall be canceled by the Institutional Trustee pursuant
to Section 7.6. A transferee of a Security shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Security. By acceptance of a Security, each transferee shall be
deemed to have agreed to be bound by this Declaration.
(e) The Trust shall not be required (i) to issue, register the
transfer of, or exchange any Capital Securities during a period beginning at the
opening of business 15 days before the day of any selection of Capital
Securities for redemption and ending at the close of business on the earliest
date on which the relevant notice of redemption is deemed to have been given to
all Holders of Capital Securities to be redeemed, or (ii) to register the
transfer or exchange of any Capital Security so selected for redemption in whole
or in part, except the unredeemed portion of any Capital Security being redeemed
in part.
SECTION 9.2 Transfer Procedures and Restrictions.
(a) General.
(i) If Initial Capital Securities are issued upon the
registration of transfer, exchange or replacement of Initial Capital
Securities bearing the Restricted Securities Legend, or if a request
is made to remove such Restricted Securities Legend on Initial
Capital Securities, the Initial Capital Securities so issued shall
bear the Restricted Securities Legend, or the Restricted Securities
Legend shall not be removed, as the case may be, unless there is
delivered to the Administrators such satisfactory evidence, which
may include an opinion of counsel licensed to practice law in the
State of New York, as may be reasonably required by the
Administrators, that neither the legend nor the restrictions on
transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A or Rule 144 under
the Securities Act or, with respect to Restricted Capital
Securities, that such Securities are not "restricted" within the
meaning of Rule 144 under the Securities Act. Upon provision of such
satisfactory evidence, the Institutional Trustee, at the written
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direction of the Administrators, shall authenticate and deliver
Capital Securities that do not bear the legend.
(ii) If a transfer of Initial Capital Securities is made
pursuant to an effective Shelf Registration Statement, the
Restricted Securities Legend shall be removed from such Initial
Capital Securities so transferred at the request of the Holder.
(iii) Any Initial Capital Securities which are presented to
the Registrar for exchange pursuant to a Registered Exchange Offer
shall be exchanged for Exchange Capital Securities of equal
liquidation amount upon surrender to the Registrar of the Initial
Capital Securities to be exchanged in accordance with the terms of
the Registered Exchange Offer; provided that the Initial Capital
Securities so surrendered for exchange are duly endorsed and
accompanied by a letter of transmittal or written instrument of
transfer in form satisfactory to the Administrators and duly
executed by the Holder thereof or such Holder's attorney who shall
be duly authorized in writing to execute such document on the behalf
of such Holder.
(b) Transfer and Exchange of Definitive Capital Securities. When
Initial Definitive Capital Securities or Exchange Definitive Capital Securities
are presented to the Registrar
(x) to register the transfer of such Initial Definitive Capital
Securities or Exchange Definitive Capital Securities, or
(y) to exchange such Initial Definitive Capital Securities or
Exchange Definitive Capital Securities for an equal number of Initial
Definitive Capital Securities or Exchange Definitive Capital Securities,
respectively, of another number,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Capital Securities surrendered for registration of transfer
or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of Initial Definitive Capital Securities that
are Restricted Definitive Capital Securities, are being transferred
or exchanged pursuant to an effective registration statement under
the Securities Act or pursuant to clause (A) (B), (C) or (D) below,
and are accompanied by the following additional information and
documents, as applicable:
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(A) if such Restricted Definitive Capital Securities are
being delivered to the Registrar by a Holder for registration
in the name of such Holder, without transfer, a certification
from such Holder to that effect;
(B) if such Restricted Definitive Capital Securities are
being transferred pursuant to an exemption from registration
in accordance with Rule 144 under the Securities Act: (i) a
certification to that effect and (ii) if the Administrators so
requests, evidence reasonably satisfactory to the
Administrators as to the compliance with the restrictions set
forth in the Restricted Securities Legend;
(C) if such Restricted Definitive Capital Securities are
transferred to QIBs in accordance with Rule 144A under the
Securities Act, the transferee QIBs must take delivery of
their interests in the Capital Securities in the form of a
beneficial interest in the Rule 144A Global Capital Security
in accordance with Section 9.2(c); or
(D) if such Restricted Definitive Capital Securities are
being transferred to a Person who is an IAI, but it is not a
QIB, upon the delivery of a certificate by the transferee IAI
substantially in the form of Exhibit B hereto and such other
opinion, certification and/or other information as may be
reasonably required by the Administrators or the Sponsor, the
Institutional Trustee shall cancel or cause to be canceled
such Restricted Definitive Securities being transferred and
concurrently therewith, the Administrators shall issue and the
Institutional Trustee shall authenticate, upon written order
of any Administrator, an appropriate number of Restricted
Definitive Capital Securities.
(c) Restrictions on Transfer of an Initial Definitive Capital
Security for a Beneficial Interest in an Initial Global Capital Security. An
Initial Definitive Capital Security may not be exchanged for a beneficial
interest in an Initial Global Capital Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Institutional Trustee of an
Initial Definitive Capital Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Administrators, together
with:
(i) if such Initial Definitive Capital Security is a Restricted
Capital Security, certification, substantially in the form set forth of
Exhibit C hereto, that such Definitive Capital Security is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act; and
(ii) whether or not such Definitive Capital Security is a Restricted
Capital Security, written instructions directing the Institutional Trustee
to make, or to direct the Depositary to make, an adjustment on its books
and records with respect to such Initial Global
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Capital Security to reflect an increase in the number of the Initial
Capital Securities represented by the Initial Global Capital Security,
then the Institutional Trustee shall cancel such Initial Definitive Capital
Security and cause, or direct the Depositary to cause, the aggregate number of
Initial Capital Securities represented by the Global Capital Security to be
increased accordingly. If no Initial Global Capital Securities are then
outstanding, the Administrators shall issue and the Institutional Trustee shall
authenticate, upon written order of any Administrator, an appropriate number of
Initial Capital Securities in global form.
(d) Transfer and Exchange of Global Capital Securities. The transfer
and exchange of Initial Global Capital Securities or Exchange Global Capital
Securities or beneficial interests therein shall be effected through the
Depositary, in accordance with this Declaration (including applicable
restrictions on transfer set forth in the Restricted Securities Legend and the
procedures of the Depositary therefor).
Notwithstanding any other provisions of this Declaration, a Global Capital
Security may not be transferred as a whole except by the Depositary to a nominee
of the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary.
(e) Transfer of a Beneficial Interest in a Global Capital Security
for a Definitive Capital Security.
(i) Any Person having a beneficial interest in an Initial Global
Capital Security that is being transferred or exchanged pursuant to an
effective registration statement under the Securities Act or pursuant to
clause (A) or (B) below may upon request, and if accompanied by the
information specified below, exchange such beneficial interest for an
Initial Definitive Capital Security or Exchange Capital Security, as the
case may be, representing the same number of Initial Capital Securities or
Exchange Definitive Capital Securities, as the case may be. Upon receipt
by the Institutional Trustee from the Depositary or its nominee on behalf
of any Person having a beneficial interest in an Initial Global Capital
Security or an Exchange Global Security, as the case may be, of written
instructions or such other form of instructions as is customary for the
Depositary or the Person designated by the Depositary as having such a
beneficial interest in such Global Capital Security and in the case of an
Initial Global Security the following additional information and documents
(all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred pursuant
to an exemption from registration in accordance with Rule 144 under
the Securities Act: (i) a certification to that effect from the
transferee or transferor and (ii) if any Administrator so requests,
additional evidence reasonably satisfactory to them as to the
compliance with the restrictions set forth in the Restricted
Securities Legend; or
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(B) if such beneficial interest is being transferred to a
Person who is an IAI, but is not a QIB, upon the delivery of a
certificate by the transferee IAI substantially in the form of
Exhibit B hereto and such other opinion, certification and/or other
information as may be reasonably required by any Administrator and
the Sponsor,
then the Institutional Trustee will cause, in accordance with the standing
instructions and procedures of the Depositary, the aggregate liquidation
amount of the Global Capital Security to be reduced on its books and
records and, following such reduction, the Administrators will issue and
the Institutional Trustee will authenticate, upon written order of any
Administrator, an appropriate number of Definitive Capital Securities.
(ii) Definitive Capital Securities issued in exchange for a
beneficial interest in a Global Capital Security pursuant to this Section
9.2(e) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from Clearing
Agency Participants or indirect participants or otherwise, shall instruct
the Institutional Trustee. The Institutional Trustee shall deliver such
Capital Securities to the Persons in whose names such Capital Securities
are so registered in accordance with the instructions of the Depositary.
(f) Authentication of Definitive Capital Securities. If at any time:
(i) the Depositary notifies the Institutional Trustee and the
Administrators that the Depositary is unwilling or unable to continue as
Depositary for the Global Capital Securities and a successor Depositary
for the Global Capital Securities is not appointed by the Sponsor within
90 days after delivery of such notice; or
(ii) the Administrators notify the Institutional Trustee in writing
to issue Definitive Capital Securities under this Declaration,
then the Administrators will execute, and the Institutional Trustee, upon
receipt of a written order of one Administrator requesting the authentication
and delivery of Definitive Capital Securities to the Persons designated by the
Administrators, will authenticate and deliver Definitive Capital Securities, in
an aggregate principal amount equal to the principal amount of Global Capital
Securities, in exchange for such Global Capital Securities.
(g) Legend.
Except as permitted by Section 9.2(a), each Initial Capital Security
certificate evidencing the Rule 144A Global Capital Securities and the
Restricted Definitive Capital Securities (and all Initial Capital Securities
issued in exchange therefor or substitution thereof) shall bear a legend (the
"Restricted Securities Legend") in substantially the following form:
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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH LEUCADIA NATIONAL
CORPORATION (THE "COMPANY") OR LEUCADIA CAPITAL TRUST I (THE "TRUST") OR ANY
AFFILIATE OF THE COMPANY OR THE TRUST WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTIONS TERMINATION DATE") ONLY
(A) TO THE COMPANY OR THE TRUST, (B) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE
501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUST. THE HOLDER OF THIS SECURITY AGREES THAT
IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS. SECURITIES OWNED BY A PURCHASER
THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN BOOK-ENTRY FORM.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE
RESTRICTIONS TERMINATION DATE.
(h) Cancellation or Adjustment of Global Capital Security. At such
time as all beneficial interests in a Global Capital Security have either been
exchanged for Definitive Capital Securities to the extent permitted by this
Declaration or redeemed, repurchased or canceled in accordance with the terms of
this Declaration, such Global Capital Security shall be canceled by the
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Institutional Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Capital Security is exchanged for Definitive Capital
Securities, Capital Securities represented by such Global Capital Security shall
be reduced and an adjustment shall be made on the books and records of the
Institutional Trustee (if it is then the Securities Custodian for such Global
Capital Security) with respect to such Global Capital Security, by the
Institutional Trustee to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of Capital
Securities.
(i) To permit registrations of transfers and exchanges, the
Administrators shall execute and the Institutional Trustee shall
authenticate Definitive Capital Securities and Global Capital Securities
at the Registrar's request;
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the
Registrar or the Sponsor may require) in respect of any tax or other
governmental charge that may be imposed in relation to it;
(iii) The Registrar shall not be required to register the transfer
of or exchange of (A) any Capital Security during a period beginning at
the opening of business 15 days before the day of any selection of any
Capital Security for redemption set forth in the terms and ending at the
close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all Holders of Capital
Securities to be redeemed, and (B) any Capital Security so selected for
redemption in whole or in part, except the unredeemed portion of any
Capital Security being redeemed in part; or
(iv) All Capital Securities issued upon any registration of transfer
or exchange pursuant to the terms of this Declaration shall evidence the
same security and shall be entitled to the same benefits under this
Declaration as the Capital Securities surrendered upon such registration
of transfer or exchange.
SECTION 9.3 Deemed Security Holders. The Trust, the Administrators,
the Trustees, the Paying Agent, the Transfer Agent or the Registrar may treat
the Person in whose name any Certificate shall be registered on the books and
records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust, the Administrators, the Trustees, the
Paying Agent, the Transfer Agent or the Registrar shall have actual or other
notice thereof.
SECTION 9.4 Notices to Clearing Agency. Whenever a notice or other
communication to the Capital Security Holders is required under this
Declaration, unless and until Definitive Capital Securities shall have been
issued to the beneficial owners of Capital Securities pursuant to Section 9.2(e)
or Section 9.2(f), the Administrators and the Trustees shall give all such
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notices and communications specified herein to be given to the Capital Security
Holders to the Clearing Agency, and shall have no notice obligations to the
beneficial owners of Capital Securities.
SECTION 9.5 Appointment of Successor Clearing Agency. If any
Clearing Agency elects to discontinue its services as securities depositary with
respect to the Capital Securities, the Administrators, in their sole discretion,
shall appoint a successor Clearing Agency with respect to such Capital
Securities.
ARTICLE X
LIMITATION OF LIABILITY OF SPONSOR,
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability. (a) Except as expressly set forth in this
Declaration, the Securities Guarantees or the terms of the Securities, the
Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.
(b) Pursuant to the terms of the Indenture, the Debenture Issuer
shall be liable for all of the debts and obligations of the Trust (other than
with respect to the Securities) to the extent not satisfied out of the Trust's
assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders
of the Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware; provided, however,
that the Holder of Common Securities shall be liable for all the debts and
obligations of the Trust (other than with respect to the Securities) to the
extent not satisfied out of the Trust's assets.
SECTION 10.2 Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust or any Covered
Person for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
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(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and, if selected by such Indemnified Person,
has been selected by such Indemnified Person with reasonable care by or on
behalf of the Trust, including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty. (a) To the extent that, at law or in
equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the
Trust or to any other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity (other than the duties imposed on the
Institutional Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of the Indemnified Person.
(b) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4 Indemnification. (a) (i) The Sponsor shall indemnify,
to the full extent permitted by law, any Indemnified Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason
of the fact that he is or was an Indemnified Person against expenses (including
reasonable agents' and attorneys' fees and expenses), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Indemnified Person did not act in good faith and in a manner which he
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reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent permitted by
law, any Indemnified Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or
in the right of the Trust to procure a judgment in its favor by reason of
the fact that he is or was an Indemnified Person against expenses
(including reasonable agents' and attorneys' fees and expenses) actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Indemnified
Person shall have been adjudged to be liable to the Trust unless and only
to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity
for such expenses which such Court of Chancery or such other court shall
deem proper.
(iii) To the extent that an Indemnified Person shall be successful
on the merits or otherwise (including dismissal of an action without
prejudice or the settlement of an action without admission of liability)
in defense of any action, suit or proceeding referred to in paragraphs (i)
and (ii) of this Section 10.4 (a), or in defense of any claim, issue or
matter therein, he shall be indemnified, to the full extent permitted by
law, against expenses (including reasonable agents' and attorneys' fees
and expenses) actually and reasonably incurred by him in connection
therewith.
(iv) Any indemnification of an Administrator under paragraphs (i)
and (ii) of this Section 10.4(a) (unless ordered by a court) shall be made
by the Sponsor only as authorized in the specific case upon a
determination that indemnification of the Indemnified Person is proper in
the circumstances because he has met the applicable standard of conduct
set forth in paragraphs (i) and (ii). Such determination shall be made by
the Common Security Holder of the Trust.
(v) To the fullest extent permitted by law, expenses (including
reasonable agents' and attorneys' fees and expenses) incurred by an
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 10.4 (a) shall be paid by the Sponsor in advance of
the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Sponsor as authorized in this Section 10.4 (a).
Notwithstanding the foregoing, no advance shall be made by the Sponsor if
a determination is reasonably and promptly made by the Common Security
Holder of the Trust, that, based upon the facts known to the Common
Security Holder at the time such determination is made, such
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Indemnified Person acted in bad faith or in a manner that such Person did
not believe to be in or not opposed to the best interests of the Trust,
or, with respect to any criminal proceeding, that such Indemnified Person
believed or had reasonable cause to believe his conduct was unlawful. In
no event shall any advance be made in instances where the Common Security
Holder reasonably determine that such Person deliberately breached his
duty to the Trust or its Common or Capital Security Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4 (a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the Sponsor
or Capital Security Holders of the Trust or otherwise, both as to action
in his official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section
10.4(a) shall be deemed to be provided by a contract between the Sponsor
and each Indemnified Person who serves in such capacity at any time while
this Section 10.4 (a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then existing.
(vii) The Sponsor or the Trust may purchase and maintain insurance
on behalf of any Person who is or was an Indemnified Person against any
liability asserted against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not the Sponsor would
have the power to indemnify him against such liability under the
provisions of this Section 10.4 (a).
(viii) For purposes of this Section 10.4 (a), references to "the
Trust" shall include, in addition to the resulting or surviving entity,
any constituent entity (including any constituent of a constituent)
absorbed in a consolidation or merger, so that any Person who is or was a
director, trustee, officer or employee of such constituent entity, or is
or was serving at the request of such constituent entity as a director,
trustee, officer, employee or agent of another entity, shall stand in the
same position under the provisions of this Section 10.4 (a) with respect
to the resulting or surviving entity as he would have with respect to such
constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided
when authorized or ratified, continue as to a Person who has ceased to be
an Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a Person.
SECTION 10.5 Outside Businesses. Any Covered Person, the Sponsor,
the Delaware Trustee and the Institutional Trustee (subject to Section 5.3(c))
may engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders of Securities shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived
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therefrom, and the pursuit of any such venture, even if competitive with the
business of the Trust, shall not be deemed wrongful or improper. No Covered
Person, the Sponsor, the Delaware Trustee, or the Institutional Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor, the Delaware
Trustee and the Institutional Trustee shall have the right to take for its own
account (individually or as a partner or fiduciary) or to recommend to others
any such particular investment or other opportunity. Any Covered Person, the
Delaware Trustee and the Institutional Trustee may engage or be interested in
any financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
SECTION 10.6 Compensation; Fees. The Sponsor agrees:
(a) to pay to the Trustees from time to time reasonable compensation
for all services rendered by them hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust); and
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this
Declaration (including the reasonable compensation and the expenses and
disbursements of their respective agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith.
The provisions of Section 10.4 and this Section 10.6 shall survive
the dissolution of the Trust and the termination of this Declaration and the
removal or resignation of any Trustee.
No Trustee may claim any lien or charge on any property of the Trust
as a result of any amount due pursuant to this Section 10.6.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year. The fiscal year ("Fiscal Year") of the
Trust shall be the calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters. (a) At all times during the
existence of the Trust, the Administrators shall keep, or cause to be kept, full
books of account, records and supporting documents, which shall reflect in
reasonable detail each transaction of the Trust. The books of account shall be
maintained on the accrual method of accounting, in accordance with generally
accepted accounting principles, consistently applied.
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(b) The Administrators shall cause to be prepared and delivered to
the Trustees and each of the Holders of Securities, within 135 days after the
end of each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related statements of income or loss, which shall be examined by and
reported upon by a firm of independent certified public accountants selected by
the Administrators.
(c) The Administrators shall cause to be duly prepared and delivered
to each of the Holders of Securities any annual United States federal income tax
information statement required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Administrators shall endeavor to deliver all
such statements within 90 days after the end of each Fiscal Year of the Trust.
(d) The Sponsor shall cause to be duly prepared and filed an annual
United States federal income tax return on a Form 1041 or such other form
required by United States federal income tax law, and any other annual income
tax returns required to be filed by the Sponsor on behalf of the Trust with any
state or local taxing authority.
SECTION 11.3 Banking. The Trust may maintain one or more bank
accounts in the name and for the sole benefit of the Trust; provided, however,
that all payments of funds in respect of the Debentures held by the
Institutional Trustee shall be made directly to the Property Account and no
other funds of the Trust shall be deposited in the Property Account. The sole
signatories for such accounts (including the Property Account) shall be
designated by the Institutional Trustee.
SECTION 11.4 Withholding. The Institutional Trustee or any Paying
Agent and the Administrators shall comply with all withholding requirements
under United States federal, state and local law. The Institutional Trustee or
any Paying Agent shall request, and the Holders shall provide to the
Institutional Trustee or any Paying Agent, such forms or certificates as are
necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Institutional Trustee or any Paying Agent to assist it in determining the
extent of, and in fulfilling, its withholding obligations. The Administrators
shall file required forms with applicable jurisdictions and, unless an exemption
from withholding is properly established by a Holder, shall remit amounts
withheld with respect to the Holder to applicable jurisdictions. To the extent
that the Institutional Trustee or any Paying Agent is required to withhold and
pay over any amounts to any authority with respect to distributions or
allocations to any Holder, the amount withheld shall be deemed to be a
Distribution in the amount of the withholding to the Holder. In the event of any
claimed overwithholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Institutional Trustee or any Paying Agent
may reduce subsequent Distributions by the amount of such withholding.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments. (a) Except as otherwise provided in this
Declaration or by any applicable terms of the Securities, this Declaration may
only be amended by a written instrument approved and executed by
(i) the Institutional Trustee and the Holder of a Majority of the
liquidation amount of the Common Securities; and
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
(b) Notwithstanding any other provision of this Article XII, no
amendment shall be made, and any such purported amendment shall be void and
ineffective:
(i) unless the Institutional Trustee shall have first
received an opinion of counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
and
(ii) if the result of such amendment would be to
(A) cause the Trust to be classified for purposes of United
States federal income taxation as other than a grantor trust; or
(B) cause the Trust to be deemed to be an Investment Company
which is required to be registered under the Investment Company Act.
(c) Except as provided in Section 12.1(d), (e) or (h), no amendment
shall be made, and any such purported amendment shall be void and ineffective
unless the Holders of a Majority in liquidation amount of the Capital Securities
shall have consented to such amendment.
(d) In addition to and notwithstanding any other provision in this
Declaration, without the consent of each affected Holder, this Declaration may
not be amended to (i) change the amount or timing of any distribution on the
Securities or otherwise adversely affect the amount of any distribution required
to be made in respect of the Securities as of a specified date or (ii) restrict
the right of a Holder to institute suit for the enforcement of any such payment
on or after such date.
(e) Section 9.1(b) and 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders of the Securities.
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(f) Article IV shall not be amended without the consent of the
Holders of a majority of the Common Securities.
(g) the rights of the holders of the Capital Securities under
Article V shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Capital Securities.
(h) This Declaration may be amended by the Institutional Trustee and
the Holder(s) of a majority of the liquidation amount of the Common Securities
without the consent of the Holders of the Capital Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor; or
(iv) to modify, eliminate or add to any provision of this
Declaration to such extent as may be necessary to ensure that the Trust
will be classified for United States federal income tax purposes at all
times as a grantor trust and will not be required to register as an
"investment company" under the Investment Company Act;
provided, however, that no such modification, elimination or addition referred
to in clauses (i), (ii) or (iii) shall (A) adversely affect the powers,
preferences or special rights of Holders of Capital Securities so long as they
remain outstanding or (B) provide for the liquidation of the Trust other than
pursuant to the terms of this Declaration.
SECTION 12.2 Meetings of the Holders of Securities; Action by
Written Consent. (a) Meetings of the Holders of any class of Securities may be
called at any time by the Administrators (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, if any. The Administrators shall
call a meeting of the Holders of such class if directed to do so by the Holders
of at least 15% in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Administrators one or more calls
in a writing stating that the signing Holders of Securities wish to call a
meeting and indicating the general or specific purpose for which the meeting is
to be called. Any Holders of Securities calling a meeting shall specify in
writing the Certificates held by the Holders of Securities exercising the right
to call a meeting and only those Securities represented by such Certificates
shall be counted for purposes of determining whether the required percentage set
forth in the second sentence of this paragraph has been met.
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(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Whenever a vote, consent or
approval of the Holders of Securities is permitted or required under this
Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, if any, such vote, consent
or approval may be given at a meeting of the Holders of Securities. Any
action that may be taken at a meeting of the Holders of Securities may be
taken without a meeting if a consent in writing setting forth the action
so taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in writing.
The Administrators may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the
Administrators;
(ii) each Holder of a Security may authorize any Person to act for
it by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to
the giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation
and the Holders of the Securities were stockholders of a Delaware
corporation; each meeting of the Holders of the Securities shall be
conducted by the Administrators or by such other Person that the
Administrators may designate; and
(iii) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Capital Securities are then listed for trading, if
any, otherwise provides, the Administrators, in their sole discretion,
shall establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting
at which any matter is to be voted on by any Holders of Securities, waiver
of any such notice, action by consent without a meeting, the establishment
of a record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
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ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional
Trustee. The Trustee that acts as initial Institutional Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Institutional Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Institutional Trustee's acceptance of
its appointment as Institutional Trustee, that:
(a) the Institutional Trustee is a banking corporation or a national
banking association with trust powers, duly organized, validly existing and in
good standing under the laws of the United States with trust power and authority
to execute and deliver, and to carry out and perform its obligations under the
terms of, this Declaration;
(b) the execution, delivery and performance by the Institutional
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Institutional Trustee. This Declaration has been duly
executed and delivered by the Institutional Trustee, and it constitutes a legal,
valid and binding obligation of the Institutional Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether considered in a proceeding in
equity or at law);
(c) the execution, delivery and performance of this Declaration by
the Institutional Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with
or notice to, any state or federal banking authority governing the trust powers
of the Institutional Trustee is required for the execution, delivery or
performance by the Institutional Trustee of this Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee. The
Trustee that acts as initial Delaware Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each Successor
Delaware Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee, that:
(a) The Delaware Trustee is duly organized, validly existing and in
good standing under the laws of the State of Delaware, with power and authority
to execute and deliver, and to carry out and perform its obligations under the
terms of, this Declaration.
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(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration. This
Declaration under Delaware law constitutes a legal, valid and binding obligation
of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
(c) No consent, approval or authorization of, or registration with
or notice to, any state or federal banking authority governing the trust powers
of the Delaware Trustee is required for the execution, delivery or performance
by the Delaware Trustee of this Declaration.
(d) The Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware and, in either case, a
Person that satisfies for the Trust the requirements of Section 3807 of the
Business Trust Act.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices. All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrators or any of
the Administrators at the Trust's mailing address set forth below (or such other
address as the Trust may give notice of to the Institutional Trustee, the
Delaware Trustee and the Holders of the Securities):
Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
Attention: Corporate Secretary
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of to the
Administrators, the Institutional Trustee and the Holders of the Securities):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trustee Administration Department
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(c) if given to the Institutional Trustee, at the Institutional
Trustee's mailing address set forth below (or such other address as the
Institutional Trustee may give notice of to the Administrators, the Delaware
Trustee and the Holders of the Securities):
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trustee Administration Department
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice of to the Institutional Trustee, the
Delaware Trustee and the Trust):
Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
Attention: Corporate Secretary
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 14.2 Governing Law. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to the principles of conflict of laws of the State of
Delaware or any other jurisdiction that would call for the application of the
law of any jurisdiction other than the State of Delaware; provided, however,
that there shall not be applicable to the Trust, the Trustees or this
Declaration any provision of the laws (statutory or common) of the State of
Delaware pertaining to trusts (other than the Business Trust Act) that relate to
or regulate, in a manner inconsistent with the terms hereof (a) the filing with
any court or governmental body or agency of trustee accounts or schedules of
trustee fees and charges, (b) affirmative requirements to post bonds for
trustees, officers, agents or employees of a trust, (c) the necessity for
obtaining court or other governmental approval concerning the acquisition,
holding or disposition of real or personal property, (d) fees or other sums
payable to trustees, officers, agents or employees of a trust, (e) the
allocation of receipts and expenditures to income or principal, (f) restrictions
or limitations on the permissible nature, amount or concentration of trust
investments or requirements relating to the titling, storage or other manner of
holding or investing trust assets or (g) the establishment of fiduciary or other
standards of responsibility or limitations on the acts or powers of trustees
that are inconsistent with the limitations or liabilities or authorities and
powers of the
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Trustees as set forth or referenced in this Declaration. Section 3540 of Title
12 of the Delaware Code shall not apply to the Trust.
SECTION 14.3 Intention of the Parties. It is the intention of the
parties hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust and that the Debentures be treated as debt for
United States federal income tax purposes. Each holder, by its acceptance of the
Securities, agrees to treat, for United States federal income tax purposes, the
Debentures as indebtedness and the Capital Securities as evidence of beneficial
ownership in the Debentures. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 14.4 Headings. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.
SECTION 14.5 Successors and Assigns. Whenever in this Declaration
any of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Declaration by the Sponsor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether or not so expressed.
SECTION 14.6 Partial Enforceability. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 14.7 Counterparts. This Declaration may contain more than
one counterpart of the signature page and this Declaration may be executed by
the affixing of the signature of each of the Trustees and Administrators to any
of such counterpart signature pages. All of such counterpart signature pages
shall be read as though one, and they shall have the same force and effect as
though all of the signers had signed a single signature page.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
CHASE MANHATTAN BANK DELAWARE
as Delaware Trustee
By:_____________________________
Name:
Title
THE CHASE MANHATTAN BANK
as Institutional Trustee
By:_____________________________
Name:
Title:
LEUCADIA NATIONAL CORPORATION,
as Sponsor
By:_____________________________
Name:
Title:
---------------------------------
Barbara L. Lowenthal, as Administrator
---------------------------------
Ruth Klindtworth, as Administrator
---------------------------------
Joseph A. Orlando, as Administrator
<PAGE>
ANNEX I
TERMS OF
8.65% CAPITAL TRUST PASS-THROUGH SECURITIES(SM) (TRUPS(SM))*
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of January 21, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in the
Declaration, as defined in the Offering Memorandum referred to below):
1. Designation and Number. (a) Capital Securities. 150,000 Capital
Securities of Leucadia Capital Trust I (the "Trust"), with an aggregate stated
liquidation amount with respect to the assets of the Trust of one hundred fifty
million dollars ($150,000,000) and a stated liquidation amount with respect to
the assets of the Trust of $1,000 per Capital Security, are hereby designated
for the purposes of identification only as "8.65% Capital Trust Pass-through
Securities"(SM) (the "Capital Securities"). The Capital Security Certificates
evidencing the Capital Securities shall be substantially in the form of Exhibit
A-1 to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to conform
to the rules of any stock exchange on which the Capital Securities are listed,
if any.
(b) Common Securities. 4,640 Common Securities of the Trust (the
"Common Securities"). The Common Security Certificates evidencing the Common
Securities shall be substantially in the form of Exhibit A-2 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions. (a) Distributions payable on each Security will be
fixed at a rate per annum of 8.65% (the "Coupon Rate") of the stated liquidation
amount of $1,000 per Security, such rate being the rate of interest payable on
the Debentures to be held by the Institutional Trustee. Except as set forth
below in respect of an Extension Period, Distributions in arrears for more than
one semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions and any such
compounded distributions payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable for any period
will be computed for any full semiannual period on the basis of a 360-day year
of twelve 30-day months and the actual number of days elapsed per 30- day month.
(b) Distributions on the Securities will be cumulative, will accrue
from the date of original issuance of the Capital Securities, and will be
payable, subject to extension of distribution
- --------
* Salomon Brothers Inc has filed applications with the United States
Patent and Trademark Office for the registration of the "Capital
Trust Pass-through Securities" and the TruPS" service marks.
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payment periods as described herein, semiannually in arrears on January 15 and
July 15 of each year, commencing on July 15, 1997 (each a "Distribution Payment
Date") when, as and if available for payment. The Debenture Issuer has the right
under the Indenture to defer payments of interest on the Debentures by extending
the interest payment period (each an "Extension Period") at any time and from
time to time on the Debentures, subject to the conditions described below,
although such interest would continue to accrue on the Debentures at a rate of
8.65% per annum, compounded semiannually to the extent permitted by law during
any Extension Period. If such right is exercised, semiannual distributions on
the Securities will also be deferred (though such distributions would continue
to accrue at the distribution rate of 8.65% per annum, compounded semiannually
to the extent permitted by law) during any Extension Period. Such right to
extend any interest payment period in respect of the Debentures is limited to
Extension Periods, each not exceeding 10 consecutive semiannual periods,
provided, however, that no Extension Period shall be initiated while accrued
interest from a prior, completed Extension Period is unpaid or while the
Debenture Issuer is in default in the payment of interest that has become due
and payable on the Debentures; and, provided, further, that no Extension Period
shall extend beyond the maturity of the Debentures. In the event that the
Debenture Issuer exercises this right, then, during any Extension Period (a) the
Debenture Issuer shall not declare or pay dividends on, make a distribution with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock or rights to acquire such capital stock
(other than (i) purchases or acquisitions of shares of any such capital stock or
rights to acquire such capital stock in connection with the satisfaction by the
Debenture Issuer of its obligations under any employee benefit plans, (ii) as a
result of a reclassification of the Debenture Issuer's capital stock or rights
to acquire such capital stock or the exchange or conversion of one class or
series of the Debenture Issuer's capital stock or rights to acquire such capital
stock for another class or series of the Debenture Issuer's capital stock or
rights to acquire such capital stock, (iii) the purchase of fractional interests
in shares of the Debenture Issuer's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (iv) dividends and distributions made on the Debenture Issuer's
capital stock or rights to acquire such capital stock with the Debenture
Issuer's capital stock or rights to acquire such capital stock or (v) any
declaration of a dividend in connection with the implementation of a
shareholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto) or
make guarantee payments with respect to any guarantee by the Debenture Issuer of
the debt securities of any subsidiary of the Debenture Issuer if such guarantee
ranks pari passu with or junior to the Subordinated Debt Securities (other than
payments under the Capital Securities Guarantee and the Common Securities
Guarantee) and (b) the Debenture Issuer shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Debenture Issuer that rank pari passu with or junior to
such Debentures. Prior to the termination of any such Extension Period in
respect of the Debentures, the Debenture Issuer may further extend the interest
payment period; provided that each such Extension Period in respect of the
Debentures, together with all such previous and further extensions thereof, may
not exceed 10 consecutive semiannual periods or extend beyond the maturity of
the Debentures. Upon the termination of any Extension Period in respect of the
Debentures and the payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above requirements. If
Distributions are deferred, the Distributions due shall be paid on the date that
the related Extension Period terminates, or, if such date is not a Distribution
Payment Date, on the immediately following Distribution Payment Date, to Holders
of the Securities as they appear on the books and records of the Trust on the
record date immediately preceding such date. Distributions on
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the Securities must be paid on the dates payable (after giving effect to any
Extension Period) to the extent that the Trust has funds available for the
payment of such distributions in the Property Account of the Trust. The Trust's
funds available for Distribution to the Holders of the Securities will be
limited to payments received from the Debenture Issuer. The payment of
Distributions out of moneys held by the Trust is guaranteed by the Guarantor
pursuant to the Securities Guarantees.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Capital Securities are held solely in
book-entry only form will be one Business Day prior to the relevant payment
dates, which payment dates correspond to the interest payment dates on the
Debentures. Such Distributions will be paid through the Institutional Trustee
who will hold amounts received in respect of the Debentures in the Property
Account for the benefit of the Holders of the Securities. Subject to any
applicable laws and regulations and the provisions of the Declaration, each such
payment in respect of the Capital Securities will be made as described under the
heading "Description of the Capital Securities -- Book-Entry Only Issuance --
The Depository Trust Company" in the Offering Memorandum dated January 13, 1997
of the Trust as amended or supplemented form time to time (the "Offering
Memorandum"). The relevant record dates for the Common Securities shall be the
same record dates as for the Capital Securities. At any time when the Capital
Securities are not held solely in book-entry only form, the relevant record
dates shall be the 15th day prior to the relevant payment dates. Payments in
respect of Capital Securities held in registered definitive form will be made by
check to the Holder entitled thereto. Distributions payable on any Securities
that are not punctually paid on any Distribution Payment Date, as a result of
the Debenture Issuer having failed to make a payment under the Debentures, as
the case may be, when due (taking into account any Extension Period), will cease
to be payable to the Person in whose name such Securities are registered on the
relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record
date or other specified date determined in accordance with the Indenture. In the
event that any date on which Distributions are to be made on the Securities is
not a Business Day, then payment of the Distribution payable on such date will
be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such payment date.
(d) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution. In the event of the
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Trust (each a "Liquidation") other than in connection with a redemption of
the Debentures, the Holders of the Securities will be entitled to receive out of
the assets of the Trust, after satisfaction of liabilities to creditors of the
Trust (to the extent not satisfied by the Debenture Issuer), distributions in an
amount equal to the aggregate of the stated liquidation amount of $1,000 per
Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless in connection with
such Liquidation, Debentures in an aggregate stated principal amount equal to
the aggregate stated liquidation amount of, with identical premium to, if any,
such Securities, with an interest rate equal to
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<PAGE>
the Coupon Rate of, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on, and having the same record date as,
such Securities, after the payment or the making of reasonable provision to pay
all claims and obligations of the Trust in accordance with Section 3808(e) of
the Business Trust Act, shall be distributed on a Pro Rata basis to the Holders
of the Securities in exchange for such Securities. Upon any such Liquidation of
the Trust involving a distribution of the Debentures, if at the time of such
Liquidation, the Capital Securities are rated by at least one
nationally-recognized statistical rating organization, the Debenture Issuer will
use its best efforts to obtain from at least one nationally recognized
statistical rating organization a rating for the Debentures.
The Holder of all of the outstanding Common Securities, has the
right at any time to dissolve the Trust (including without limitation upon the
occurrence of a Tax Event) and, after satisfaction of liabilities to creditors
of the Trust (to the extent not satisfied by the Debenture Issuer), cause the
Debentures to be distributed to the Holders of the Securities on a Pro Rata
basis in accordance with the aggregate stated liquidation amount thereof, in
liquidation of the Trust.
The Trust shall dissolve on the first to occur of (i) January 15,
2052, the expiration of the term of the Trust, (ii) upon a Bankruptcy Event with
respect to the Debenture Issuer, (iii) (other than in connection with a merger,
consolidation or similar transaction not prohibited by the Indenture, this
Declaration or the Capital Securities Guarantees, as the case may be) upon the
filing of a certificate of dissolution or its equivalent with respect to the
Sponsor; upon the consent of the Holders of a Majority in liquidation amount of
the Securities voting together as a single class to file a certificate of
cancellation with respect to the Trust, or upon the revocation of the charter of
the Sponsor and the expiration of 90 days after the date of revocation without a
reinstatement thereof, (iv) upon the distribution of the Debentures to the
Holders of the Securities upon exercise of the right of the Holder of all of the
outstanding Common Securities to dissolve Trust as described above, (v) upon the
entry of a decree of a judicial dissolution of the Sponsor or the Trust or (vi)
upon a redemption of all of the Securities. As soon as practicable after the
dissolution of the Trust and upon completion of the winding up of the Trust, the
Trust shall terminate upon the filing of a certificate of cancellation with the
Secretary of State of the State of Delaware.
If a Liquidation of the Trust occurs as described in clause (i),
(ii), (iii) or (v) in the immediately preceding paragraph, the Trust shall be
liquidated by the Trustees of the Trust as expeditiously as such Trustees
determine to be possible by distributing to the Holders of the Securities, after
satisfaction of liabilities to creditors of the Trust, to the extent not
satisfied by the Debenture Issuer, the Debentures on a Pro Rata basis, unless
such distribution is determined by the Institutional Trustee not to be
practical, in which event such Holders will be entitled to receive out of the
assets of the Trust available for distribution to the Holders, after
satisfaction of liabilities of creditors of the Trust, to the extent not
satisfied by the Debenture Issuer, an amount equal to the Liquidation
Distribution. An early Liquidation of the Trust pursuant to clause (iv) above
shall occur only if the Institutional Trustee determines that such Liquidation
is possible by distributing the Debentures to the Holders of the Securities,
after satisfaction of liabilities of creditors of the Trust, to the extent not
satisfied by the Debenture Issuer.
If, upon any such Liquidation the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution,
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<PAGE>
then the amounts payable directly by the Trust on such Capital Securities shall
be paid to the Holders of the Trust Securities on a Pro Rata basis. The Holders
of the Common Securities issued by the Trust will be entitled to receive
distributions upon any such Liquidation Pro Rata with the Holders of such
Capital Securities, except that if an Event of Default has occurred and is
continuing the Capital Securities shall have a preference over the Common
Securities with respect to such distribution.
After the date for any distribution of the Debentures upon
dissolution of the Trust, (i) the Securities of the Trust will be deemed to be
no longer outstanding, (ii) the Depositary or its nominee, as the record holder
of the Capital Securities, will receive a registered security in global form or
certificates representing the Debentures to be delivered upon such distribution,
and (iii) any certificates representing the Capital Securities not held by the
Depositary or its nominee will be deemed to represent undivided beneficial
interests in such of the Debentures have an aggregate principal amount equal to
the aggregate stated liquidation amount of, with an interest rate identical to
the distribution rate of, and bearing accrued and unpaid interest equal to
accrued and unpaid distributions on, the Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissuance.
4. Redemption and Distribution. (a) If the Debenture Issuer redeems
the Debentures, the Trust shall redeem, on a Pro Rata basis, its Securities at a
redemption price (the "Redemption Price") equal to (i) $1,000 per Security in
the case of redemptions of the Debentures in certain circumstances described
below upon the occurrence of a Tax Event or (ii) other than in certain
circumstances upon the occurrence of a Tax Event an amount per Security equal to
the product of $1,000 and the percentage used to determine the call price for
the Debentures being redeemed as specified below:
If redeemed during the
12-month period
beginning, January 15, call price
- ------------------------------------------- --------------------
2007......................................... 104.2790%
2008......................................... 103.8511
2009......................................... 103.4232
2010......................................... 102.9953
2011......................................... 102.5674
2012......................................... 102.1395
2013......................................... 101.7116
2014......................................... 101.2837
2015......................................... 100.8558
2016......................................... 100.4279
and thereafter at 100% of the principal amount of the Debentures, together, in
each case, with accrued and unpaid Distributions thereon to the date fixed for
redemption; provided, however, that Holders of the Securities shall be given not
less than 30 nor more than 60 days' notice of such redemption (other than at the
stated maturity of the Debentures).
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Capital Securities will be redeemed Pro
Rata and the Capital Securities to be redeemed will be as described in Section
4(e)(ii) below.
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<PAGE>
(c) If, at any time, a Tax Event (as defined below) should occur and
be continuing and the Debenture Issuer receives an opinion (a "Redemption Tax
Opinion") of a nationally recognized independent tax counsel experienced in such
matters that, as a result of a Tax Event, there is more than an insubstantial
risk that the Debenture Issuer would be precluded from deducting the interest on
the Debentures for United States federal income tax purposes even if the
Debentures were distributed to the Holders of Securities in liquidation of such
Holders' interests in the Trust as described in this Section 4(c), the Debenture
Issuer shall have the right within 90 days following the occurrence of such Tax
Event, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures in whole or in part for cash so long as such Tax Event is continuing
at the principal amount plus any accrued and unpaid interest thereon to the
dates of redemption (the "Tax Event Redemption"), and, following such
redemption, Securities with and aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so redeemed shall be redeemed by
the Trust at the Redemption Price on a Pro Rata basis; provided, however, that,
if (i) at the time there is available to the Debenture Issuer or the Trust the
opportunity to eliminate, within such 90 day period, the adverse effects of the
Tax Event by taking some ministerial action, such as filing a form or making an
election or pursuing some other similar reasonable measure that will have no
adverse effect on the Trust (a "Ministerial Action"), the Debenture Issuer or
the Holders of the Securities and (ii) if such notice has not been given, the
Administrators or the Debenture Issuer will pursue such Ministerial Action in
lieu of redemption.
"Tax Event" means that the Trustees shall have received an opinion
of a nationally recognized independent tax counsel to the Debenture Issuer
experienced in such matters (a "Dissolution Tax Opinion") to the effect that, as
a result of (a) any amendment to, clarification of or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, (b) any judicial decision, official administrative pronouncement,
ruling, regulatory procedure, notice or announcement, including any notice or
announcement of intent to adopt such procedures or regulations (an
"Administrative Action"), or (c) any amendment to, clarification of, or change
in the administrative position or the interpretation of any Administrative
Action or judicial decision that differs from the theretofore generally accepted
position, in each case, by any legislative body, court, governmental agency or
regulatory body, irrespective of the manner in which such amendment,
clarification or change is made known, which amendment, clarification, or change
is effective or such Administrative Action or decision is announced, in each
case, on or after the date of the Offering Memorandum, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the date
thereof, subject to United States federal income tax with respect to interest
accrued or received on the Debentures or subject to more than a de minimus
amount of other taxes, duties or other governmental charges, (ii) any portion of
interest payable by the Debenture Issuer to the Trust on the Debentures is not,
or within 90 days of the date thereof will not be, deductible by the Debenture
Issuer for United States federal income tax purposes or (iii) the Debenture
Issuer could become liable to pay, on the next date on which any amount would be
payable with respect to the Debentures, any Additional Interest (as defined in
the Indenture).
(d) The Trust may not redeem fewer than all the outstanding Capital
Securities unless all accrued and unpaid Distributions have been paid on all
such Capital Securities for all semiannual Distribution periods terminating on
or before the date of redemption.
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<PAGE>
(e) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days before
the date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 4(e)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to Holders of
such Securities. Each Redemption/Distribution Notice shall be addressed to
the Holders of such Securities at the address of each such Holder
appearing on the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing thereof with respect to
any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Capital Securities; provided,
however, that, in respect of Capital Securities registered in the name of
and held of record by the Depositary or its nominee (or any successor
Clearing Agency or its nominee), the Capital Securities shall be redeemed
in accordance with the procedures of the Depositary, and the distribution
of the proceeds of such redemption will be made to each Clearing Agency
Participant (or Person on whose behalf such nominee holds such Securities)
in accordance with the procedures applied by such Clearing Agency or
nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/ Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice will be
irrevocable), then (A) with respect to the Capital Securities, while the
Capital Securities are in book-entry only form, provided that the
Debenture Issuer has paid the Institutional Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the
Debentures, the Institutional Trustee will deposit irrevocably with the
Depositary or its nominee (or successor Clearing Agency or its nominee),
on the redemption date, funds sufficient to pay the applicable Redemption
Price with respect to the Capital Securities and will give the Depositary
irrevocable instructions and authority to pay the Redemption Price to the
Holders of the Capital Securities, and (B) with respect to Capital
Securities issued in definitive form and Common Securities, provided that
the Debenture Issuer has paid the Institutional Trustee a sufficient
amount of cash in connection with the related redemption or maturity of
the Debentures, the Institutional Trustee will pay the relevant Redemption
Price to the Holders of such Securities by check mailed to the address of
each such Holder appearing on the books and records of the Trust on the
redemption date. If a Redemption/Distribution Notice shall have been given
and funds deposited as required then immediately prior to the close of
business on the date of such deposit Distributions will cease to accrue on
the Securities so called for redemption and all rights of Holders of such
Securities so called for redemption will cease, except the right of the
Holders of such Securities to receive the applicable Redemption Price
specified in Section
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<PAGE>
4(a), but without interest on such Redemption Price. If any date fixed for
redemption of Securities is not a Business Day, then payment of any such
redemption price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day falls in the
next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on
such date fixed for redemption. If payment of the Redemption Price in
respect of any Securities is improperly withheld or refused and not paid
either by the Trust or by the Debenture Issuer as guarantor pursuant to
the relevant Securities Guarantee, Distributions on such Securities will
continue to accrue at the then applicable rate from the original
redemption date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes
of calculating the Redemption Price. In the event of any redemption of
Capital Securities issued by the Trust in part, the Trust shall not be
required to (i) issue, register the transfer of or exchange any Security
during a period beginning at the opening of business 15 days before any
selection for redemption of Capital Securities and ending at the close of
business on the earliest date on which the relevant notice of redemption
is deemed to have been given to all Holders of Capital Securities to be so
redeemed or (ii) register the transfer of or exchange any Capital
Securities so selected for redemption, in whole or in part, except for the
unredeemed portion of any Capital Securities being redeemed in part.
(iv) Redemption/Distribution Notices shall be sent by the
Administrators on behalf of the Trust to (A) in respect of the Capital
Securities, the Depositary or its nominee (or any successor Clearing
Agency or its nominee) if the Global Capital Securities have been issued
or, if Definitive Capital Securities have been issued, to the Holders
thereof, and (B) in respect of the Common Securities, to the Holder
thereof.
(v) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), provided the
acquiror is not the Holder of the Common Securities or the obligor under
the Indenture, the Sponsor or any of its subsidiaries may at any time and
from time to time purchase outstanding Capital Securities by tender, in
the open market or by private agreement.
5. Voting Rights - Capital Securities. (a) Except as provided under
Sections 5(b) and 7 and as otherwise required by law and the Declaration, the
Holders of the Capital Securities will have no voting rights. The Administrators
are required to call a meeting of the Holders of the Capital Securities if
directed to do so by Holders of at least 15% in liquidation amount of the
Capital Securities.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in liquidation amount of the Capital Securities, voting
separately as a class, have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or exercising any trust or power conferred upon the Institutional Trustee under
the Declaration, including the right to direct the Institutional Trustee, as
holder of the Debentures, to (i) exercise the remedies available under the
Indenture as the holder of the Debentures, (ii) waive any past default that is
waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and payable or
(iv) consent on behalf
I-8
<PAGE>
of all the Holders of the Capital Securities to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required, provided, however, that in the case of clause (i) above, (a) such
direction shall not be in conflict with this Declaration, (b) the Institutional
Trustee may take any other action deemed proper by the Institutional Trustee
which is not inconsistent with such direction and (c) the Institutional Trustee
shall have the right to decline to follow such direction if a Responsible
Officer or Officers of the Institutional Trustee shall in good faith determine
that the proceeding so directed would be unjustly prejudicial to the Holders of
Capital Securities not joining in any such direction or would involve the
Institutional Trustee in personal liability, and provided, further, that, where
a consent or action under the Indenture would require the consent or act of the
holders of more than a majority in principal amount of Debentures (a "Super
Majority") affected thereby, the Institutional Trustee may only give such
consent or take such action at the written direction of the Holders of at least
the proportion in aggregate liquidation amount of the Capital Securities
outstanding which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding. If the Institutional Trustee
fails to enforce its rights under the Debentures after the Holders of a Majority
in liquidation amount of such Capital Securities have so directed the
Institutional Trustee a Holder of the Capital Securities may, to the fullest
extent permitted by law, institute a legal proceeding directly against the
Debenture Issuer to enforce the Institutional Trustee's rights under the
Debentures without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Debenture Issuer to pay interest or
principal (or premium, if any) on the Debentures on the date the interest or
principal (or premium, if any) is payable (or in the case of redemption, the
redemption date), then a Holder of record of Capital Securities may directly
institute a proceeding for enforcement of payment, on or after the respective
due dates specified in the Debentures, to such Holder directly of the principal
of (or premium, if any) or interest on the Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such Holder. The Institutional Trustee shall notify all Holders of
the Capital Securities of any default actually known to the Institutional
Trustee with respect to the Debentures unless (x) such default has been cured
prior to the giving of such notice or (y) the Institutional Trustee determines
in good faith that the withholding of such notice is in the interest of the
Holders of such Capital Securities, except where the default relates to the
payment of principal of (or premium, if any) or interest on any of the
Debentures. Such notice shall state that such Indenture Event of Default also
constitutes an Event of Default hereunder. Except with respect to directing the
time, method and place of conducting a proceeding for a remedy, the
Institutional Trustee shall not take any of the actions described in clauses
(i), (ii) or (iii) above unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust
will not be classified as other than a grantor trust for United States federal
income tax purposes.
In the event the consent of the Institutional Trustee, as the holder
of the Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the Holders of the Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a Majority
in liquidation amount of the Securities voting together as a single class;
provided, however, that where a consent under the Indenture would require the
consent of a Super-Majority, the Institutional Trustee may only give such
consent at the direction of the Holders of at least the proportion in
liquidation amount of such Trust
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<PAGE>
Securities outstanding which the relevant Super-Majority represents of the
aggregate principal amount of the Debentures outstanding. The Institutional
Trustee shall not take any such action in accordance with the directions of the
Holders of the Securities unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust
will not be classified as other than a grantor trust for United States federal
income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver
of the corresponding Event of Default hereunder. Any required approval or
direction of Holders of Capital Securities may be given at a separate meeting of
Holders of Capital Securities convened for such purpose, at a meeting of all of
the Holders of Securities in the Trust or pursuant to written consent. The
Institutional Trustee will cause a notice of any meeting at which Holders of
Capital Securities are entitled to vote, or of any matter upon which action by
written consent of such Holders is to be taken, to be mailed to each Holder of
record of the Capital Securities. Each such notice will include a statement
setting forth the following information (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents. No vote or consent of the Holders of
the Capital Securities will be required for the Trust to redeem and cancel
Capital Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
Notwithstanding that Holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not entitle the Holder thereof to vote or consent and shall, for purposes
of such vote or consent, be treated as if such Capital Securities were not
outstanding.
In no event will Holders of Capital Securities have the right to
vote to appoint, remove or replace the Administrators, which voting rights are
vested exclusively in the Sponsor as the Holder of all of the Common Securities
of the Trust. Under certain circumstances as more fully described in the
Declaration, Holders of Capital Securities have the right to vote to appoint,
remove or replace the Institutional Trustee.
6. Voting Rights - Common Securities. (a) The Common Securities will
have such voting rights as provided under Sections 6(b), 6(c) and 7 and as
otherwise required by law or pursuant to the Declaration.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Administrators.
(c) Subject to Section 2.6 of the Declaration and only after each
Event of Default (if any) with respect to the Capital Securities has been cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority of the Common
Securities, voting separately as a class, may direct the time, method, and place
of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including (i) directing the time, method, place
of conducting any proceeding for any remedy available to the Debenture
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<PAGE>
Trustee, or exercising any trust or power conferred on the Debenture Trustee
with respect to the Debentures, (ii) waive any past default and its consequences
that is waivable under the Indenture, or (iii) exercise any right to rescind or
annul a declaration that the principal of all the Debentures shall be due and
payable, provided, however, that, where a consent or action under the Indenture
would require a Super Majority, the Institutional Trustee may only give such
consent or take such action at the written direction of the Holders of at least
the proportion in liquidation amount of the Common Securities which the relevant
Super Majority represents of the aggregate principal amount of the Debentures
outstanding. Notwithstanding this Section 6(c), the Institutional Trustee shall
not revoke any action previously authorized or approved by a vote or consent of
the Holders of the Capital Securities. Other than with respect to directing the
time, method and place of conducting any proceeding for any remedy available to
the Institutional Trustee or the Debenture Trustee as set forth above, the
Institutional Trustee shall not take any action described in (i), (ii) or (iii)
above, unless the Institutional Trustee has obtained an opinion of tax counsel
to the effect that for the purposes of United States federal income tax the
Trust will not be classified as other than a grantor trust on account of such
action. If the Institutional Trustee fails to enforce its rights under the
Declaration, to the fullest extent permitted by law, any Holder of Common
Securities may institute a legal proceeding directly against any Person to
enforce the Institutional Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Institutional Trustee or any other
Person.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Administrators will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of Common Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
7. Amendments to Declaration and Indenture. (a) The provisions set
forth under Section 12.1 of the Declaration and this Section 7 shall govern any
amendments to the Declaration.
(b) Notwithstanding any provision of the Declaration and the
provisions of Section 3.16(b) of the Trust Indenture Act, the right of any
Holder of Capital Securities to receive payment of distributions and other
payments upon redemption or otherwise, on or after their respective due dates,
or to institute a suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder. For the protection and enforcement of the foregoing provision, each and
every Holder of Capital Securities shall be entitled to such relief as can be
given either at law or equity.
8. Pro Rata. A reference in these terms of the Securities to any
payment, distribution or treatment as being "Pro Rata" shall mean pro rata to
each Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Securities outstanding unless, in relation to a payment, an Event
of Default has occurred and is continuing, in which case any funds available to
make such payment shall be paid first to each Holder of the Capital Securities
Pro Rata according to the
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aggregate liquidation amount of Capital Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Capital Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Capital Securities, to each Holder of Common Securities Pro Rata according
to the aggregate liquidation amount of Common Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Common Securities
outstanding. In any such proration, the Institutional Trustee may make such
adjustments as may be appropriate in order that only Securities in denominations
of $1,000 or integral multiples thereof shall be redeemed.
9. Ranking. The Capital Securities rank pari passu with and payment
thereon shall be made Pro Rata with the Common Securities except that, upon the
occurrence and during the continuance of an Event of Default, the rights of
Holders of the Common Securities to receive payment of Distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the Holders of the Capital Securities with the result that no payment
of any Distribution on, or Redemption Price of, any Common Security, and no
other payment on account of redemption, liquidation or other acquisition of
Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all outstanding Capital Securities for
all distribution periods terminating on or prior thereto, or in the case of
payment of the Redemption Price the full amount of such Redemption Price on all
outstanding Capital Securities then called for redemption, shall have been made
or provided for, and all funds immediately available to the Institutional
Trustee shall first be applied to he payment in full in cash of all
Distributions on, or the redemption Price of, Capital Securities then due and
payable.
10. Acceptance of Securities Guarantee and Indenture. Each Holder of
Capital Securities and Common Securities, by the acceptance of such Securities,
agrees to the provisions of the Capital Securities Guarantee and the Common
Securities Guarantee, respectively, including the subordination provisions
therein and to the provisions of the Indenture.
11. No Preemptive Rights. The Holders of the Securities shall have
no preemptive or similar rights to subscribe for any additional securities.
12. Miscellaneous. These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital Securities
Guarantee or the Common Securities Guarantee (as may be appropriate), and the
Indenture to a Holder without charge on written request to the Sponsor at its
principal place of business.
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<PAGE>
EXHIBIT A-1
FORM OF INITIAL CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[Include the following Restricted Securities Legend on all Capital
Securities, including Rule 144A Global Capital Securities and Restricted
Definitive Capital Securities, unless otherwise determined by the Sponsor in
accordance with applicable law ----THIS SECURITY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE WHICH IS THREE YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH LEUCADIA
NATIONAL CORPORATION (THE "COMPANY") OR LEUCADIA CAPITAL TRUST I (THE "TRUST")
OR ANY AFFILIATE OF THE COMPANY OR THE TRUST WAS THE OWNER OF THIS SECURITY (OR
ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTIONS TERMINATION DATE")
ONLY (A) TO THE COMPANY OR THE TRUST, (B) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE
501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUST. THE HOLDER OF THIS SECURITY AGREES THAT
IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS. SECURITIES OWNED BY A PURCHASER
THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN BOOK-ENTRY FORM.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE
RESTRICTIONS TERMINATION DATE.]
A-1-1
<PAGE>
[Include if Capital Security is in the form of a Restricted
Definitive Capital Security --IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL
DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATE AND OTHER
INFORMATION MAY BE REQUIRED BY THE DECLARATION TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.]
[Include if Capital Security is in global form and The Depository
Trust Company is the Clearing Agency -- UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OF TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[Include if Capital Security is in global form -- TRANSFERS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO
BELOW.]
A-1-2
<PAGE>
Certificate Number: Number of Capital Securities:
CUSIP NO ___________
Aggregate Liquidation Amount:
Certificate Evidencing Capital Securities
of
LEUCADIA CAPITAL TRUST I
8.65% Capital Pass-through Securities(SM) (TRUPS(SM))
(liquidation amount $1,000 per Capital Security)
LEUCADIA CAPITAL TRUST I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of securities of the Trust
representing undivided beneficial interests in the assets of the Trust,
designated the 8.65% Capital Trust Pass-through Securities(SM) (liquidation
amount $1,000 per Capital Security) (the "Capital Securities"). Subject to the
Declaration (as defined below), the Capital Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form for transfer. The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities represented hereby are issued pursuant to,
and shall in all respects be subject to, the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of January 21, 1997, among
Barbara L. Lowenthal, Ruth Klindtworth and Joseph A. Orlando as Administrators,
Chase Manhattan Bank Delaware, as Delaware Trustee, The Chase Manhattan Bank, as
Institutional Trustee, Leucadia National Corporation and the holders from time
to time of undivided beneficial interests in the assets of the Trust, as
Sponsor, including the designation of the terms of the Capital Securities as set
forth in Annex I to the Declaration, as the same may be amended from time to
time (the "Declaration"). Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Capital Securities Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Capital Securities Guarantee
and the Indenture to the Holder without charge upon written request to the Trust
at its principal place of business.
Upon receipt of this Security, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Security, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Capital Securities as evidence of beneficial ownership in the Debentures.
This Capital Security is governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to principles of
conflict of laws.
A-1-3
<PAGE>
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
LEUCADIA CAPITAL TRUST I
By:________________________________
Name:
Title: Administrator
Dated: ______________
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
THE CHASE MANHATTAN BANK, as the
Institutional Trustee
By:
Authorized Officer
A-1-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a
rate per annum of 8.65% (the "Coupon Rate") of the stated liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Except as set forth below in
respect of an Extension Period, Distributions in arrears for more than a
semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions and any such
compounded interest and any Special Interest and Additional Interest (each as
defined in the Indenture) payable on the Debentures unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds available therefor. The amount of Distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed per 30-day month.
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable (subject to extension of distribution payment periods)
semiannually in arrears on January 15 and July 15 of each year, commencing on
July 15, 1997 when, as and if available for payment. Distributions will be made
by the Institutional Trustee, except as otherwise described. The Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period (each an "Extension Period") at any time
and from time to time on the Debentures, subject to certain conditions, although
such interest will continue to accrue on the Debentures at a rate of 8.65% per
annum, compounded semiannually (to the extent permitted by law) during any
Extension Period. If such right is exercised, semiannual Distributions on the
Capital Securities will also be deferred (though such Distributions would
continue to accrue at the distribution rate of 8.65% per annum, compounded
semiannually (to the extent permitted by law)) during any Extension Period. Such
right to extend any distribution payment period is limited to Extension Periods,
each not exceeding 10 consecutive semiannual periods, and no Extension Period
may be initiated while accrued interest from a prior, completed Extension Period
is unpaid or while the Debenture Issuer is in default in the payment of interest
that has become due and payable on the Debentures, and no Extension Period may
extend beyond the maturity of the Debentures; and no Extension Period may extend
beyond the date of maturity of the Debentures. Prior to the termination of any
such Extension Period in respect of the Debentures, the Debenture Issuer may
further extend the interest payment period; provided that each such Extension
Period in respect of the Debentures, together with all such previous and further
extensions thereof, may not exceed 10 consecutive semiannual periods or extend
beyond the maturity of the Debentures. If Distributions are deferred, the
Distributions due shall be paid on the date that the related Extension Period
terminates, or, if such date is not a Distribution Payment Date, on the
immediately following Distribution Payment Date, to Holders of the Capital
Securities as they appear on the books and records of the Trust on the record
date immediately preceding such date. Distributions on the Capital Securities
must be paid on the dates payable (after giving effect to any Extension Period)
to the extent that the Trust has funds available for the payment of such
Distributions in the Property Account of the Trust. The Trust's funds available
for distribution to the Holders of the Securities will be limited to payments
received from the Debenture Issuer. The payment of Distributions out of moneys
held by the Trust is guaranteed by the Sponsor pursuant to the Capital
Securities Guarantee.
The Capital Securities shall be redeemable as provided in the
Declaration.
A-1-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Capital Security Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee) and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Capital Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:_________________________________________________________________
Signature:____________________________________________________________
(Sign exactly as your name appears on the other side of this Capital
Security Certificate)
Signature Guarantee:*
- --------
* Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Security registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Security registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
A-1-6
<PAGE>
EXHIBIT A-2
FORM OF EXCHANGE CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[Include if Capital Security is in global form and The Depository
Trust Company is the Clearing Agency -- UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OF TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[Include if Capital Security is in global form -- TRANSFERS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO
BELOW.]
Certificate Number Number of Capital Securities
CUSIP NO ___________
Aggregate Liquidation Amount
Certificate Evidencing Capital Securities
of
LEUCADIA CAPITAL TRUST I
8.65% Capital Pass-through Securities(SM) (TRUPS(SM))
(liquidation amount $1,000 per Capital Security)
LEUCADIA CAPITAL TRUST I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of securities of the Trust
representing undivided beneficial interests in the assets of the Trust,
designated the 8.65% Capital Trust Pass-through Securities(SM) (liquidation
amount $1,000 per Capital Security) (the "Capital Securities"). Subject to the
Declaration (as defined below), the
A-2-1
<PAGE>
Capital Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this Certificate duly
endorsed and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities represented hereby are issued pursuant to, and shall in all respects
be subject to, the provisions of the Amended and Restated Declaration of Trust
of the Trust dated as of January 21, 1997, among Barbara L. Lowenthal, Ruth
Klindtworth and Joseph A. Orlando as Administrators, Chase Manhattan Bank
Delaware, as Delaware Trustee, The Chase Manhattan Bank, as Institutional
Trustee, Leucadia National Corporation and the holders from time to time of
undivided beneficial interests in the assets of the Trust, as Sponsor, including
the designation of the terms of the Capital Securities as set forth in Annex I
to the Declaration, as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Capital Securities Guarantee to the extent provided therein. The Sponsor
will provide a copy of the Declaration, the Capital Securities Guarantee and the
Indenture to the Holder without charge upon written request to the Trust at its
principal place of business.
Upon receipt of this Security, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Security, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Capital Securities as evidence of beneficial ownership in the Debentures.
This Capital Security is governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to principles of
conflict of laws.
A-2-2
<PAGE>
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
LEUCADIA CAPITAL TRUST I
By:
Name:
Title: Administrator
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
THE CHASE MANHATTAN BANK, as the
Institutional Trustee
By:
Authorized Officer
A-2-3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a
rate per annum of 8.65% (the "Coupon Rate") of the stated liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Except as set forth below in
respect of an Extension Period, Distributions in arrears for more than a
semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions and any such
compounded interest and any Additional Interest (each as defined in the
Indenture) payable on the Debentures unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months and the
actual number of days elapsed per 30-day month.
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semiannually in arrears on January 15 and July 15 of each
year, commencing on July 15, 1997 when, as and if available for payment.
Distributions will be made by the Institutional Trustee, except as otherwise
described. The Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period (each an
"Extension Period") at any time and from time to time on the Debentures, subject
to certain conditions, although such interest will continue to accrue on the
Debentures at a rate of 8.65% per annum, compounded semiannually (to the extent
permitted by law) during any Extension Period. If such right is exercised,
semiannual Distributions on the Capital Securities will also be deferred (though
such Distributions would continue to accrue at the distribution rate of 8.65%
per annum, compounded semiannually (to the extent permitted by law)) during any
Extension Period. Such right to extend any interest payment period is limited to
Extension Periods, each not exceeding 10 consecutive semiannual periods,
provided, however, that no Extension Period may be initiated while accrued
interest from a prior, completed Extension Period is unpaid or while the
Debenture Issuer is in default in the payment of interest that has become due
and payable on the Debentures, and no Extension Period may extend beyond the
maturity of the Debentures; and, no Extension Period may extend beyond the date
of maturity of the Debentures. Prior to the termination of any such Extension
Period in respect of the Debentures, the Debenture Issuer may further extend the
interest payment period; provided that each such Extension Period in respect of
the Debentures, together with all such previous and further extensions thereof,
may not exceed 10 consecutive semiannual periods or extend beyond the maturity
of the Debentures. If Distributions are deferred, the Distributions due shall be
paid on the date that the related Extension Period terminates, or, if such date
is not a Distribution Payment Date, on the immediately following Distribution
Payment Date, to Holders of the Capital Securities as they appear on the books
and records of the Trust on the record date immediately preceding such date.
Distributions on the Capital Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such Distributions in the Property Account of the
Trust. The Trust's funds available for distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer.
A-2-4
<PAGE>
The payment of Distributions out of moneys held by the Trust is guaranteed by
the Sponsor pursuant to the Capital Securities Guarantee.
The Capital Securities shall be redeemable as provided in the
Declaration.
A-2-5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Capital Security Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee) and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Capital Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: ________________________________
Signature: ____________________________
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee:*_____________________________
- --------
* Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
A-2-6
<PAGE>
EXHIBIT A-3
FORM OF COMMON SECURITY CERTIFICATE
[THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN EFFECTIVE
REGISTRATION STATEMENT.]
[THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED.]
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
LEUCADIA CAPITAL TRUST I
LEUCADIA CAPITAL TRUST I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that Leucadia
National Corporation (the "Holder") is the registered owner of common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust (the "Common Securities"). The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued pursuant to, and shall in all respects
be subject to, the provisions of the Amended and Restated Declaration of Trust
of the Trust dated as of January 21, 1997, among Barbara L. Lowenthal, Ruth
Klindtworth and Joseph A. Orlando, as Administrators, Chase Manhattan Bank
Delaware, as Delaware Trustee, The Chase Manhattan Bank, as Institutional
Trustee, Leucadia National Corporation as Sponsor and the holders from time to
time of undivided beneficial interest in the assets of the Trust including the
designation of the terms of the Common Securities as set forth in Annex I to the
Declaration, as the same may be amended from time to time (the "Declaration").
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Common
Securities Guarantee to the extent provided therein. The Sponsor will provide a
copy of the Declaration, the Common Securities Guarantee and the Indenture to
the Holder without charge upon written request to the Sponsor at its principal
place of business.
As set forth in the Declaration, where an Event of Default has
occurred and continuing, the rights of Holders of Common securities to payment
in respect of Distributions and payments upon Liquidation, redemption or
otherwise are subordinated to the rights of payment of Holders of the Capital
Securities.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A-3-1
<PAGE>
By acceptance of this Certificate, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Common Securities as evidence of undivided beneficial ownership in the
Debentures.
This Common Security is governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to principles of
conflict of laws.
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of January, 1997.
LEUCADIA CAPITAL TRUST I
By:______________________________
Name:
Title: Administrator
A-3-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be identical in
amount to the Distributions payable on each Capital Security, which is at a rate
per annum of 8.65% (the "Coupon Rate") of the stated liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Except as set forth below in
respect of an Extension Period, Distributions in arrears for more than one
semiannual period will bear interest thereon compounded semiannually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions and any such
compounded interest and any Special Interest and Additional Interest (each as
defined in the Indenture) payable on the Debentures unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds available therefor. The amount of Distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed per 30-day month.
Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable (subject to extension of distribution payment periods)
semiannually in arrears on January 15 and July 15 of each year, commencing on
July 15, 1997 when, as and if available for payment. Distributions will be made
by the Institutional Trustee, except as otherwise described. The Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending interest payment period (each an "Extension Period") at any time and
from time to time on the Debentures, subject to certain conditions, although
such interest would continue to accrue on the Debentures at a rate of 8.65% per
annum, compounded semiannually (to the extent permitted by law) during any
Extension Period. If such right is exercised, semiannual distributions on the
Common Securities will also be deferred (though such Distributions would
continue to accrue at the Distribution rate of 8.65% per annum, compounded
semiannually (to the extent permitted by law)) during any Extension Period. Such
right to extend any distribution payment period is limited to Extension Periods,
each not exceeding 10 consecutive semiannual periods, and no Extension Period
shall be initiated while accrued interest from a prior, completed Extension
Period is unpaid or while the Debenture Issuer is in default in the payment of
interest that has become due and payable on the Debentures; and no Extension
Period shall extend beyond the date of maturity of the Debentures. Prior to the
termination of any such Extension Period in respect of the Debentures, the
Debenture Issuer may further extend the interest payment period; provided that
each such Extension Period in respect of the Debentures, together with all such
previous and further extensions thereof, may not exceed 10 consecutive
semiannual periods or extend beyond the maturity of the Debentures. Upon the
termination of any Extension Period of the Debentures and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements. If Distributions are deferred, the
Distributions due shall be paid on the date that the related Extension Period
terminates, or, if such date is not a Distribution Payment Date, on the
immediately following Distribution Payment Date, to Holders of the Common
Securities as they appear on the books and records of the Trust on the record
date immediately preceding such date. Distributions on the Common Securities
must be paid on the dates payable (after giving effect to any Extension Period)
to the extent that the Trust has funds available for the payment of such
Distributions in the Property Account of the Trust. The Trust's funds available
for distribution to the Holders of the Common Securities will be limited to
payments received from the Debenture Issuer.
A-3-3
<PAGE>
The payment of Distributions out of moneys held by the Trust is guaranteed by
the Guarantor pursuant to the Common Securities Guarantee.
The Common Securities shall be redeemable as provided in the
Declaration.
A-3-4
<PAGE>
EXHIBIT B
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED BY IAIs
__________, 199__
Leucadia National Corporation
Leucadia Capital Trust I
c/o Leucadia National Corporation
215 Park Avenue South
New York, New York 10010
Re: Purchase of $1,000 stated liquidation amount of 8.65% Capital Trust
Pass-through Securities(SM)(TruPS)(SM)(the "Capital Securities") of
Leucadia Capital Trust I (the "Trust")
Ladies and Gentlemen:
In connection with our purchase of the Capital Securities we confirm
that:
1. We understand that the 8.65% Capital Trust Pass-through
Securities(SM) (the "Capital Securities") (including the guarantees (the
"Guarantees") of Leucadia National Corporation ("Leucadia") executed in
connection therewith) and the 8.65% Junior Subordinated Deferrable Interest
Debentures due 2027 (the "Subordinated Debt Securities") of Leucadia (the
Capital Securities, the Guarantees, and Subordinated Debt Securities together
being referred to herein as "Offered Securities") have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered or sold except as permitted in the following sentence. We agree on our
own behalf and on behalf of any investor account for which we are purchasing the
Offered Securities that, if, prior to the date which is three years after the
later of the date of original issue of the Offered Securities and the last date
on which Leucadia, the Trust or any affiliate of Transamerica or the Trust was
the owner of such Offered Securities (the "Resale Restriction Termination
Date"), we decide to offer, sell or otherwise transfer any such Offered
Securities, such offer, sale or transfer will be made only (a) to Leucadia or
the Trust, (b) pursuant to an effective registration statement under the
Securities Act, (c) so long as the Offered Securities are eligible for resale
pursuant to Rule 144A under the Securities Act, to a person we reasonably
believe is a qualified institutional buyer under Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB and to whom notice is
given that the transfer is being made in reliance on Rule 144A, (d) to an
institutional "accredited investor" with the meaning of subparagraph (a) (1),
(2), (3) or (7) of Rule 501 under the Securities Act that is acquiring Offered
Securities for its own account or for the account of such an institutional
accredited investor for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution thereof in violation of the
Securities Act, or (e) pursuant to another available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirements of law that the disposition of our property
or compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Offered Securities is
B-1
<PAGE>
proposed to be made pursuant to clause (d) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to The Chase Manhattan Bank as Transfer
Agent, which shall provide as applicable, among other things, that the
transferee is an institutional "accredited investor" within the meaning of
subparagraph (a)1 (1), (2), (3) or (7) of Rule 501 under the Securities Act that
is acquiring such Securities for investment purposes and not for distribution in
violation of the Securities Act. We acknowledge on our behalf and on behalf of
any investor account for which we are purchasing Securities that the Trust and
Leucadia reserve the right prior to any offer, sale or other transfer pursuant
to clauses (d) or (e) prior to the Resale Restriction Termination Date of the
Securities to require the delivery of any opinion of counsel, certifications
and/or other information satisfactory to the Trust and Leucadia. We understand
that the certificates for any Offered Security that we receive will bear a
legend substantially to the effect of the foregoing.
2. We are an institutional "accredited investor" with the meaning of
subparagraph (a) (1), (2), (3) or (7) of Rule 501 under the Securities Act
purchasing for our own account or for the account of such an institutional
"accredited investor," and we are acquiring the Offered Securities for the
investment purposes and not with view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act and we have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Offered Securities, and
we and any account for which we are acting are each able to bear the economic
risks of our or its investment.
3. We are acquiring the Offered Securities purchased by us for our own
account (or for one or more accounts as to each of which we exercise sole
investment discretion and have authority to make, and do make, the statements
contained in this letter) and not with a view to any distribution of the Offered
Securities, subject, nevertheless, to the understanding that the disposition of
our property will at all times be and remain within our control.
4. In the event that we purchase any Capital Securities or any
Subordinated Debt Securities, we will acquire such Capital Securities having an
aggregate stated liquidation amount of not less than $100,000 or such
Subordinated Debt Securities having an aggregate principal amount not less than
$100,000, for our own account and for each separate account for which we are
acting.
5. We acknowledge that we either (A) are not a fiduciary of a pension,
profit-sharing or other employee benefit plan subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") (a "Plan"), or an entity whose
assets include "plan assets" by reason of any Plan's investment in the entity
and are not purchasing the Offered Securities on behalf of or with "plan assets"
by reason of any Plan's investment in the entity and is not purchasing the
Offered Securities on behalf of or with "plan assets" of any Plan or (B) are
eligible for the exemptive relief available under one ore more of the following
prohibited transaction class exemptions ("PTCEs") issued by the U.S. Department
of Labor: PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
6. We acknowledge that Leucadia and the Trust and others will rely
upon the truth and accuracy of the foregoing acknowledges, representations,
warranties and agreements and agrees that if any of the acknowledgments,
representations, warranties and agreements deemed to have been made by our
purchase of the Offered Securities are no longer accurate, we shall promptly
notify the Initial
B-2
<PAGE>
Purchasers. If we are acquiring any Offered Securities as a fiduciary or agent
for one or more investor accounts, we represent that we have sole discretion
with respect to each such investor account and that we have full power to make
the foregoing acknowledgments, representations and agreement on behalf of each
such investor account.
Very truly yours,
----------------------------------
(Name of Purchaser)
By: ______________________________
Date: _____________________________
Upon transfer of the Offered Securities would be registered in the
name of the new beneficial owner as follows.
Name:
Address:
Taxpayer ID Number:
B-3
<PAGE>
EXHIBIT C
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED FOR QIBs
__________, 199__
Leucadia National Corporation
Leucadia Capital Trust I
c/o Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
Re: Purchase of $1,000 stated liquidation amount of 8.65% Capital Trust
Pass-through Securities(SM) (TRUPS)(SM) (the "Capital Securities")
of Leucadia Capital Trust I (the "Trust")
Reference is hereby made to the Amended and Restated Declaration
dated as of January 21, 1997 (the "Declaration") among Barbara L. Lowenthal,
Ruth Klindtworth and Joseph A. Orlando, as Administrators, Chase Manhattan Bank
Delaware, as Delaware Trustee, The Chase Manhattan Bank, as Institutional
Trustee, Leucadia National Corporation as Sponsor and the holders from time to
time of undivided beneficial interest in the assets of the Trust. Capitalized
terms used but not defined herein shall have the meanings given them in the
Declaration.
This letter relates to $_______ aggregate liquidation amount of
Capital Securities which are held in the name of [name of transferor] (the
"Transferor") to effect the transfer of such Capital Securities in exchange for
an equivalent beneficial interest in the Rule 144A Global Capital Security.
In connection with such request, and in respect to such Capital
Securities, the transferor does hereby certify that such Capital Securities are
being transferred in accordance with (i) the transfer restrictions set forth in
the Capital Securities and (ii) Rule 144A under the United States Securities Act
of 1933, as amended ("Rule 144A"), to a transferee that the Transferor
reasonably believes is purchasing the Capital Securities for its own account or
an account with respect to which the transferee exercises sole investment
discretion and the transferee and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A, in a transaction meeting the
requirements of Rule 144A and in accordance with applicable securities laws of
any state of the United States or any other jurisdiction.
C-1
<PAGE>
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
(Name of Transferor)
By:
Name:
Title:
Date:
C-2
[Letterhead of Richards, Layton & Finger]
April 7, 1997
Leucadia Capital Trust I
Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
Re: Leucadia Capital Trust I
--------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for Leucadia National
Corporation, a New York corporation (the "Company"), and Leucadia Capital Trust
I, a Delaware business trust (the "Trust"), in connection with the matters set
forth herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated January 10, 1997
(the "Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on January 10, 1997;
(b) The Declaration of Trust of the Trust, dated as of January 10,
1997, between the Company, as sponsor, and the trustee of the Trust named
therein;
(c) The Amended and Restated Declaration of Trust of the Trust,
dated as of January 21, 1997 (including Annex I and Exhibits A-1 and A-2
thereto) (the "Declaration"),
1
<PAGE>
Leucadia Capital Trust I
April 7, 1997
Page 2
among the Company, as sponsor, the trustees of the Trust named therein, and the
holders, from time to time, of undivided beneficial interests in the assets of
the Trust;
(d) Amendment No. 1 to the Registration Statement on Form S-4,
including a preliminary prospectus ("Prospectus"), relating to the 8.65% Capital
Trust Pass-through Securities of the Trust representing undivided beneficial
interests in the assets of the Trust (each, a "Capital Security" and
collectively, the "Capital Securities"), as proposed to be filed by the Company
and the Trust with the Securities and Exchange Commission on or about April 7,
1997; and
(e) A Certificate of Good Standing for the Trust, dated April 7,
1997, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined
are used as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents
other than the documents listed in paragraphs (a) through (e) above. In
particular, we have not reviewed any document (other than the documents listed
in paragraphs (a) through (e) above) that is referred to in or incorporated by
reference into the documents reviewed by us. We have assumed that there exists
no provision in any document that we have not reviewed that is inconsistent with
the opinions stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i)
the authenticity of all documents submitted to us as authentic originals, (ii)
the conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the
Declaration constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation, and termination of the Trust, and that the Declaration and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation,
2
<PAGE>
Leucadia Capital Trust I
April 7, 1997
Page 3
organization or formation, (iii) the legal capacity of natural persons who are
parties to the documents examined by us, (iv) that each of the parties to the
documents examined by us has the power and authority to execute and deliver, and
to perform its obligations under, such documents, (v) the due authorization,
execution and delivery by all parties thereto of all documents examined by us,
(vi) the receipt by each Person to whom a Capital Security is to be issued by
the Trust (collectively, the "Capital Security Holders") of a Certificate
Evidencing Capital Securities of the Trust for such Capital Security and the
payment for the Capital Security acquired by it, in accordance with the
Declaration and the Registration Statement, and (vii) that the Capital
Securities are issued and sold to the Capital Security Holders in accordance
with the Declaration and the Registration Statement. We have not participated in
the preparation of the Registration Statement and assume no responsibility for
its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Capital Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Capital Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Capital Security
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition, we
hereby consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing
3
<PAGE>
Leucadia Capital Trust I
April 7, 1997
Page 4
consents, we do not thereby admit that we come within the category of Persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder. Except as stated above, without our prior written consent, this
opinion may not be furnished or quoted to, or relied upon by, any other Person
for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
BJK/dgw
4
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
212-310-8000
(FAX) 212-310-8007
April 14, 1997
Leucadia National Corporation
315 Park Avenue South
New York, NY 10010
Ladies and Gentlemen:
We have acted as counsel to Leucadia National Corporation, a
New York corporation (the "Company"), in connection with the preparation and
filing of a Registration Statement on Form S-4 (the "Registration Statement")
under the Securities Act of 1933, as amended, with respect to $150,000,000
aggregate principal amount of 8.65% Junior Subordinated Deferrable Interest
Debentures due 2027 (the "Debentures") of the Company, $150,000,000 aggregate
liquidation amount of 8.65% Capital Trust Pass-through Securities (the "Capital
Securities") of Leucadia Capital Trust I, a business trust created under the
laws of the State of Delaware (the "Trust"), and the guarantee with respect to
the Capital Securities (the "Guarantee") executed and delivered by the Company
for the benefit of the holders from time to time of the Capital Securities.
In so acting, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of the Registration Statement, the
Prospectus that is a part of the Registration Statement (the "Prospectus"), the
Indenture (the "Indenture") and the First Supplemental Indenture (the "First
Supplemental Indenture"), each dated as of January 21, 1997, between the Company
and The Chase Manhattan Bank, as trustee (the "Trustee"), the form of Debenture
set forth in the First Supplemental Indenture, and such corporate records,
agreements, documents and other instruments, and such certificates or comparable
documents of public officials and of officers and representatives of the
Company, and have made such inquiries of such officers and representatives of
the Company as we have
<PAGE>
Leucadia National Corporation
April 14, 1997
Page 2
deemed relevant and necessary as a basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been independently established, we
have relied upon certificates or comparable documents of officers and
representatives of the Company.
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
1. The Debentures, when duly executed by the Company,
authenticated by the Trustee pursuant to the terms of the Indenture and the
First Supplemental Indenture, and delivered and paid for in accordance with the
terms of the Indenture and the First Supplemental Indenture, and as contemplated
by the Registration Statement, will be validly issued and will constitute the
legally binding obligations of the Company entitled to the benefits of the
Indenture and the First Supplemental Indenture, in accordance with their terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
2. The Guarantee constitutes the legally binding obligation of
the Company, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
The opinions herein are limited to the laws of the State of
New York and the corporate laws of the State of Delaware, and we express no
opinion as to the effect on the
<PAGE>
Leucadia National Corporation
April 14, 1997
Page 3
matters covered by this opinion of the laws of any other jurisdiction.
The opinions expressed herein are rendered solely for your
benefit in connection with the transactions described herein. Those opinions may
not be used or relied upon by any other person, nor may this letter or any
copies thereof be furnished to a third party, filed with a governmental agency,
quoted, cited or otherwise referred to without our prior written consent.
We understand that you have received an opinion from Richards,
Layton & Finger, LLP, special Delaware counsel for the Company and the Trust. We
are expressing no opinion with respect to the matters contained in such opinion.
We hereby consent to the use of this opinion as an exhibit to
the Registration Statement. We also consent to any and all references to our
firm under the caption "Legal Matters" in the Prospectus.
Very truly yours,
Weil, Gotshal & Manges LLP
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
212-310-8000
(FAX) 212-310-8007
April 15, 1997
Leucadia National Corporation
315 Park Avenue South
New York, NY 10010
Ladies and Gentlemen:
We have acted as counsel to Leucadia National Corporation, a New
York corporation (the "Company"), and Leucadia Capital Trust I, a Delaware
business trust (the "Trust"), in connection with (i) the preparation and filing
with the Securities and Exchange Commission (the "Commission") of the
Registration Statement on Form S-4, as amended to the date hereof, filed with
the Commission (the "Registration Statement") under the Securities Act of 1933,
as amended, and of the Prospectus forming a part of the Registration Statement
(the "Prospectus") with respect to $150,000,000 aggregate principal amount of
8.65% Junior Subordinated Deferrable Interest Debentures (the "Subordinated Debt
Securities") of the Company and $150,000,000 aggregate liquidation amount of
8.65% Capital Trust Pass-through Securities (the "Capital Securities") of the
Trust and (ii) the Exchange Offer of the Capital Securities specified in the
Prospectus. All capitalized terms not otherwise defined herein shall have the
same meaning ascribed thereto in the Prospectus.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Registration Statement, the
Prospectus, the Declaration, the form of the Capital Securities, the form of
Indenture and the First Supplemental Indenture, and the Capital Securities
Guarantee Agreement (collectively, the "Agreements"). In addition, we have
examined originals or copies, certified or otherwise identified to our
satisfaction, of such corporate records, agreements, documents and other
instruments, and have made such inquiries of, and obtained such representations
from, such officers and representatives of the Company and the Trust as we have
deemed
<PAGE>
Leucadia National Corporation
April 15, 1997
Page 2
relevant and necessary as a basis for the opinion hereinafter set
forth.
In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such latter
documents. We have further assumed (i) that the Capital Securities as executed
and delivered by the requisite signatories thereto will conform in substance and
form in all material respects to the form thereof examined by us, (ii) the
accuracy of the Company's representations set forth in the certificate delivered
to us by the Company, (iii) full and timely compliance by all parties to the
Agreements with the terms thereof (without waiver or amendment of any of the
terms thereof) and (iv) that the Agreements constitute all the agreements,
arrangements and understandings among the parties thereto with respect to the
transactions contemplated therein and that the representations and warranties
contained therein are true.
The terms of the Agreements and the Capital Securities are
incorporated herein by reference.
Based on the foregoing, it is our opinion that the discussion
contained in the Prospectus, under the caption "Certain Federal Income Tax
Consequences," insofar as such discussion describes statements of law or legal
conclusions and except to the extent qualified therein, fairly summarizes the
principal United States federal income tax consequences to the holders of
Capital Securities attributable to the purchase, ownership, and disposition of
Capital Securities.
The foregoing opinion is based on current provisions of the Internal
Revenue Code of 1986, as amended, the Treasury Regulations promulgated
thereunder (including proposed Treasury Regulations), published pronouncements
of the Internal Revenue Service, and case law, any of which may be changed at
any time with retroactive effect. We express no opinion as to matters not
specifically covered by the foregoing opinion or as to the effect on the matters
covered by this opinion of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion with the Commission
as an exhibit to the Registration Statement and to the references to our firm
under the captions "Certain Federal
<PAGE>
Leucadia National Corporation
April 15, 1997
Page 3
Income Tax Consequences" and "Legal Matters" in the Prospectus. This opinion may
not be used for any other purpose and may not otherwise be relied upon by, or
quoted, referred or disclosed to, any other person.
Very truly yours,
Weil, Gotshal & Manges LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
Leucadia National Corporation and Leucadia Capital Trust I on Form S-4 (File
Nos. 333-21195 and 333-21195-01) of our report dated March 21, 1997 on our
audits of the consolidated financial statements and financial statement
schedules of Leucadia National Corporation and Subsidiaries as of December 31,
1996 and 1995, and for the years ended December 31, 1996, 1995, and 1994, which
report is included in the Annual Report on Form 10-K of Leucadia National
Corporation. We also consent to the reference to our firm under the caption
"Experts".
/s/ Coopers & Lybrand L.L.P.
New York, New York
April 14, 1997
1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
LEUCADIA NATIONAL CORPORATION
(Exact name of obligor as specified in its charter)
NEW YORK 13-2615557
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
315 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10010-3607
(Address of principal executive offices) (Zip Code)
---------------------------------------------
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
(Title of the indenture securities)
-------------------------------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 11TH day of FEBRUARY, 1997.
THE CHASE MANHATTAN BANK
By /s/ P. Kelly
--------------------
P. Kelly
Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................................$ 11,095
Interest-bearing balances .................................... 4,998
Securities: ......................................................
Held to maturity securities........................................ 3,231
Available for sale securities...................................... 38,078
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ............................................ 8,018
Securities purchased under agreements to resell ............... 731
Loans and lease financing receivables:
Loans and leases, net of unearned income $130,513
Less: Allowance for loan and lease losses 2,938
Less: Allocated transfer risk reserve .... 27
--------
Loans and leases, net of unearned income,
allowance, and reserve ........................................ 127,548
Trading Assets ..................................................... 48,576
Premises and fixed assets (including capitalized
leases)............................................................. 2,850
Other real estate owned ............................................ 300
Investments in unconsolidated subsidiaries and
associated companies........................................... 92
Customer's liability to this bank on acceptances
outstanding ................................................... 2,777
Intangible assets .................................................. 1,361
Other assets ....................................................... 12,204
TOTAL ASSETS .......................................................$261,859
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices .............................................$80,163
Noninterest-bearing .......................$30,596
Interest-bearing .......................... 49,567
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ....................................................... 65,173
Noninterest-bearing .......................$ 3,616
Interest-bearing .......................... 61,557
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased ......................................... 14,594
Securities sold under agreements to repurchase .................. 14,110
Demand notes issued to the U.S. Treasury ............................. 2,200
Trading liabilities .................................................. 30,136
Other Borrowed money:
With a remaining maturity of one year or less ................... 16,895
With a remaining maturity of more than one year ...................... 449
Mortgage indebtedness and obligations under capitalized
leases........................................................... 49
Bank's liability on acceptances executed and outstanding.............. 2,764
Subordinated notes and debentures .................................... 5,471
Other liabilities..................................................... 13,997
TOTAL LIABILITIES ....................................................246,001
-------
Limited-Life Preferred stock and related surplus 550
EQUITY CAPITAL
Common stock ......................................................... 1,209
Surplus
...................................................................... 10,176
Undivided profits and capital reserves ............................... 4,385
Net unrealized holding gains (Losses)
on available-for-sale securities ..................................... (481)
Cumulative foreign currency translation adjustments .................. 19
TOTAL EQUITY CAPITAL ................................................. 15,308
------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL .......................................$261,859
========
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER ) DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
LEUCADIA CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
DELAWARE APPLIED FOR
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
315 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10010-3607
(Address of principal executive offices) (Zip Code)
---------------------------------------------
CAPITAL TRUST PASS-THROUGH SECURITIES
(Title of the indenture securities)
-------------------------------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 11TH day of FEBRUARY, 1997.
THE CHASE MANHATTAN BANK
By /s/ P. Kelly
----------------------
P. Kelly
Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................................$ 11,095
Interest-bearing balances .................................... 4,998
Securities: ......................................................
Held to maturity securities........................................ 3,231
Available for sale securities...................................... 38,078
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ............................................ 8,018
Securities purchased under agreements to resell ............... 731
Loans and lease financing receivables:
Loans and leases, net of unearned income $130,513
Less: Allowance for loan and lease losses 2,938
Less: Allocated transfer risk reserve .... 27
--------
Loans and leases, net of unearned income,
allowance, and reserve ........................................ 127,548
Trading Assets ..................................................... 48,576
Premises and fixed assets (including capitalized
leases)............................................................. 2,850
Other real estate owned ............................................ 300
Investments in unconsolidated subsidiaries and
associated companies........................................... 92
Customer's liability to this bank on acceptances
outstanding ................................................... 2,777
Intangible assets .................................................. 1,361
Other assets ....................................................... 12,204
TOTAL ASSETS .......................................................$261,859
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices .............................................$80,163
Noninterest-bearing .......................$30,596
Interest-bearing .......................... 49,567
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ....................................................... 65,173
Noninterest-bearing .......................$ 3,616
Interest-bearing .......................... 61,557
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased ......................................... 14,594
Securities sold under agreements to repurchase .................. 14,110
Demand notes issued to the U.S. Treasury ............................. 2,200
Trading liabilities .................................................. 30,136
Other Borrowed money:
With a remaining maturity of one year or less ................... 16,895
With a remaining maturity of more than one year ...................... 449
Mortgage indebtedness and obligations under capitalized
leases........................................................... 49
Bank's liability on acceptances executed and outstanding.............. 2,764
Subordinated notes and debentures .................................... 5,471
Other liabilities..................................................... 13,997
TOTAL LIABILITIES ....................................................246,001
-------
Limited-Life Preferred stock and related surplus 550
EQUITY CAPITAL
Common stock ......................................................... 1,209
Surplus
...................................................................... 10,176
Undivided profits and capital reserves ............................... 4,385
Net unrealized holding gains (Losses)
on available-for-sale securities ..................................... (481)
Cumulative foreign currency translation adjustments .................. 19
TOTAL EQUITY CAPITAL ................................................. 15,308
------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL .......................................$261,859
========
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER ) DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
LEUCADIA NATIONAL CORPORATION
(Exact name of obligor as specified in its charter)
NEW YORK 13-2615557
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
315 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10010-3607
(Address of principal executive offices) (Zip Code)
---------------------------------------------
GUARANTEE
(LEUCADIA CAPITAL TRUST I)
(Title of the indenture securities)
-------------------------------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 11TH day of FEBRUARY, 1997.
THE CHASE MANHATTAN BANK
By /s/ P. Kelly
---------------
P. Kelly
Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................................$ 11,095
Interest-bearing balances .................................... 4,998
Securities: ......................................................
Held to maturity securities........................................ 3,231
Available for sale securities...................................... 38,078
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ............................................ 8,018
Securities purchased under agreements to resell ............... 731
Loans and lease financing receivables:
Loans and leases, net of unearned income $130,513
Less: Allowance for loan and lease losses 2,938
Less: Allocated transfer risk reserve .... 27
--------
Loans and leases, net of unearned income,
allowance, and reserve ........................................ 127,548
Trading Assets ..................................................... 48,576
Premises and fixed assets (including capitalized
leases)............................................................. 2,850
Other real estate owned ............................................ 300
Investments in unconsolidated subsidiaries and
associated companies........................................... 92
Customer's liability to this bank on acceptances
outstanding ................................................... 2,777
Intangible assets .................................................. 1,361
Other assets ....................................................... 12,204
TOTAL ASSETS .......................................................$261,859
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices .............................................$80,163
Noninterest-bearing .......................$30,596
Interest-bearing .......................... 49,567
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ....................................................... 65,173
Noninterest-bearing .......................$ 3,616
Interest-bearing .......................... 61,557
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased ......................................... 14,594
Securities sold under agreements to repurchase .................. 14,110
Demand notes issued to the U.S. Treasury ............................. 2,200
Trading liabilities .................................................. 30,136
Other Borrowed money:
With a remaining maturity of one year or less ................... 16,895
With a remaining maturity of more than one year ...................... 449
Mortgage indebtedness and obligations under capitalized
leases........................................................... 49
Bank's liability on acceptances executed and outstanding.............. 2,764
Subordinated notes and debentures .................................... 5,471
Other liabilities..................................................... 13,997
TOTAL LIABILITIES ....................................................246,001
-------
Limited-Life Preferred stock and related surplus 550
EQUITY CAPITAL
Common stock ......................................................... 1,209
Surplus
...................................................................... 10,176
Undivided profits and capital reserves ............................... 4,385
Net unrealized holding gains (Losses)
on available-for-sale securities ..................................... (481)
Cumulative foreign currency translation adjustments .................. 19
TOTAL EQUITY CAPITAL ................................................. 15,308
------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL .......................................$261,859
========
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER ) DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
EXHIBIT 99.1
LETTER OF TRANSMITTAL AND CONSENT
LEUCADIA CAPITAL TRUST I
TO TENDER FOR EXCHANGE ITS
8.65% CAPITAL TRUST PASS-THROUGH SECURITIESSM (TRUPSSM)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
8.65% CAPITAL TRUST PASS-THROUGH SECURITIESSM (TRUPSSM)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
AND
TO CONSENT TO A PROPOSED AMENDMENT TO
THE REGISTRATION RIGHTS AGREEMENT
PURSUANT TO THE PROSPECTUS AND CONSENT SOLICITATION
DATED _______________, 1997
-----------------------------------------------------------------------
THE EXCHANGE OFFER, THE CONSENT SOLICITATION AND WITHDRAWAL
RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ________
__, 1997 UNLESS THE OFFER IS EXTENDED. REVOCATION RIGHTS
FOR CONSENTS WILL EXPIRE AT THE TIME AND DATE ON WHICH THE REQUISITE
CONSENTS TO THE PROPOSED AMENDMENT ARE RECEIVED.
-----------------------------------------------------------------------
The Chase Manhattan Bank
(the Exchange Agent)
By Mail, Hand or Overnight Delivery:
The Chase Manhattan Bank
55 Water Street
Room 234
New York, New York 10016
Attention: Lewis Padilla
By Facsimile Transmission
(For Eligible Institutions Only):
(212) 638-7375
(212) 344-9367
CONFIRM BY TELEPHONE:
Lewis Padilla: (212) 638-0458
Delivery of this instrument to an address other than as set forth above or
transmission of instructions via a facsimile number other than the ones listed
above will not constitute a valid
1
<PAGE>
delivery. The instructions accompanying this Letter of Transmittal and Consent
(the "Letter of Transmittal") should be read carefully before this Letter of
Transmittal is completed.
The undersigned hereby acknowledges receipt of the Prospectus and Consent
Solicitation dated __________, 1997 (the "Prospectus") of Leucadia Capital Trust
I (the "Trust") and this Letter of Transmittal, which together constitute the
Trust's offer (the "Exchange Offer") to exchange up to $150,000,000 aggregate
liquidation amount of its 8.65% Capital Trust Pass-through SecuritiesSM
(TRUPSSM) (liquidation amount $1,000 per Capital Security) (the "New Capital
Securities"), which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement on Form S-4
of Leucadia National Corporation (the "Company") and the Trust (File Nos.
333-21195 and 333-21195-01), of which the Prospectus is a part, for a like
liquidation amount of its outstanding 8.65% Capital Trust Pass-through
SecuritiesSM (TRUPSSM) (liquidation amount $1,000 per Capital Security) (the
"Old Capital Securities"), of which $150,000,000 aggregate liquidation amount is
outstanding. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on __________, 1997, unless the Exchange Offer and Consent Solicitation
are extended, in which case the term "Expiration Date" means the latest date and
time to which the Exchange Offer is extended. Capitalized terms used but not
defined herein have the meaning given to them in the Prospectus.
Concurrently with the Exchange Offer, the Company and the Trust are
soliciting consents (the "Consent Solicitation") from holders of the Old Capital
Securities to approve an amendment (the "Proposed Amendment") to the
Registration Rights Agreement, dated January 21, 1997 (the "Registration Rights
Agreement"), among the Company, the Trust and Salomon Brothers Inc, as
representative of the Initial Purchasers (as defined in the Prospectus) of the
Old Capital Securities. The Proposed Amendment to the Registration Rights
Agreement will delete the requirement that the Company use its reasonable best
efforts to cause the New Capital Securities to be duly authorized for listing on
the New York Stock Exchange and thereafter maintain such listing. Holders of Old
Capital Securities should be aware that a tender of Old Capital Securities for
exchange pursuant to the Exchange Offer also will constitute a consent to the
Proposed Amendment with respect to such tendered Old Capital Securities. The
Exchange Offer is conditioned upon, among other things, there having been
received and not revoked, the consents of holders of a majority in liquidation
amount of the outstanding Old Capital Securities.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE
FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL
COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED
TO THE EXCHANGE AGENT.
This Letter of Transmittal is to be completed by holders of Old Capital
Securities either if (i) Old Capital Securities are to be forwarded herewith or
(ii) tenders of Old Capital Securities are to be made by book-entry transfer to
an account maintained by The Chase Manhattan Bank (the "Exchange Agent") at The
Depository Trust Company ("DTC") pursuant to the procedures set forth under "The
Exchange Offer -- Procedures for Tendering Old Capital Securities" in the
Prospectus and an Agent's Message (as defined herein) is not delivered.
2
<PAGE>
Holders of Old Capital Securities whose certificates (the "Certificates")
for such Old Capital Securities are not immediately available or who cannot
deliver their Certificates and all other required documents to the Exchange
Agent on or prior to the Expiration Date or who cannot complete the procedures
for book-entry transfer on or prior to the Expiration Date, must tender their
Old Capital Securities according to the guaranteed delivery procedures set forth
in "The Exchange Offer -- Procedures for Tendering Old Capital Securities" in
the Prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
DESCRIPTION OF OLD CAPITAL SECURITIES TENDERED AND CONSENTS
CERTIFICATE AGGREGATE
NUMBER(S)* LIQUIDATION AMOUNT LIQUIDATION AMOUNT
(ATTACH OF OLD CAPITAL OF OLD CAPITAL
NAME(S) AND ADDRESS(ES) ADDITIONAL SECURITIES (ATTACH SECURITIES
REGISTERED HOLDER LIST IF ADDITIONAL LIST IF TENDERED (IF LESS
PLEASE FILL IN, IF BLANK NECESSARY) NECESSARY) THAN ALL)**
$ $
TOTAL AMOUNT TENDERED: $ $
* Need not be completed by book-entry holders. Such holders should check the
appropriate box below and provide the requested information.
** Need not be completed if tendering for exchange all Old Capital Securities
held. Old Capital Securities may be tendered in whole or in part in
denominations of $100,000 and integral multiples of $1,000 in excess
thereof, provided that if any Old Capital Securities are tendered for
exchange in part, the untendered Liquidation Amount thereof must be
$100,000 or any integral multiple of $1,000 in excess thereof. All Old
Capital Securities held shall be deemed tendered unless a lesser number is
specified in this column. A tender of Old Capital Securities pursuant to
the Exchange Offer also will constitute a consent to the Proposed Amendment
with respect to all such tendered Old Capital Securities.
3
<PAGE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS (DEFINED IN
INSTRUCTION 1) ONLY)
[ ] CHECK HERE IF TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE
AGENT WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution_______________________________
DTC Account Number__________________________________________
Transaction Code Number_____________________________________
By crediting the Old Capital Securities to the Exchange Agent's account at
the DTC in accordance with DTC's Automated Tender Offer Program ("ATOP") and by
complying with applicable ATOP procedures with respect to the Exchange Offer,
including transmitting an Agent's Message to the Exchange Agent in which the
holder of the Old Capital Securities acknowledges and agrees to be bound by the
terms of this Letter of Transmittal, the participant in ATOP confirms on behalf
of itself and the beneficial owners of such Old Capital Securities all
provisions of this Letter of Transmittal applicable to it and such beneficial
owners as fully as if it had completed the information required herein and
executed and transmitted this Letter of Transmittal to the Exchange Agent.
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name of Registered Holder______________________________________________________
Window Ticket Number (if any)_______________________________
Date of Execution of Notice of Guaranteed
Delivery____________________________________________________
Name of Institution which Guaranteed Delivery
- ------------------------------------------------------------
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution________________________________________
DTC Account Number__________________________________________
Transaction Code Number_____________________________________
4
<PAGE>
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED
OLD CAPITAL SECURITIES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT
NUMBER SET FORTH ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING
ACTIVITIES (AN "EXCHANGING DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:_______________________________________________________
Address:____________________________________________________
Area Code and Telephone Number:_____________________________
Contact Person:_____________________________________________
5
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Leucadia Capital Trust I, a Delaware
statutory business trust (the "Trust"), and Leucadia National Corporation, a New
York corporation, as Sponsor (the "Company"), the above-described aggregate
liquidation amount of the Trust's 8.65% Capital Trust Pass-through SecuritiesSM
(TRUPSSM) (the "Old Capital Securities") in exchange for a like aggregate
liquidation amount of the Trust's 8.65% Capital Trust Pass-through SecuritiesSM
(TRUPSSM) (the "New Capital Securities") which have been registered under the
Securities Act of 1933 (the "Securities Act"), upon the terms and subject to the
conditions set forth in the Prospectus and Consent Solicitation dated
_______________, 1997 (as the same may be amended or supplemented from time to
time, the "Prospectus"), receipt of which is acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitutes the "Exchange
Offer"). The undersigned hereby consents with respect to the above-described
aggregate liquidation amount of Old Capital Securities to the proposed amendment
(the "Proposed Amendment") to the Registration Rights Agreement, dated January
21, 1997 (the "Registration Rights Agreement"), among the Company, the Trust and
Salomon Brothers Inc, as representative of the Initial Purchasers (as defined in
the Prospectus) of the Old Capital Securities, to delete the requirement that
the Company use its reasonable best efforts to cause the New Capital Securities
to be duly authorized for listing on the New York Stock Exchange and thereafter
maintain such listing.
On the terms and subject to the conditions of the Exchange Offer,
including, without limitation, the condition that there have been received and
not revoked the requisite consents to adopt the Proposed Amendment, subject to
and effective upon the acceptance for exchange of all or any portion of the Old
Capital Securities tendered herewith in accordance with the terms and conditions
of the Exchange Offer (including, if the Exchange Offer is extended or amended,
the terms and conditions of any such extension or amendment), the undersigned
hereby sells, assigns and transfers to or upon the order of the Trust all right,
title and interest in and to such Old Capital Securities as are being tendered
herewith. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent as its agent and attorney-in-fact (with full knowledge that the
Exchange Agent is also acting as agent of the Company and the Trust in
connection with the Exchange Offer) with respect to the tendered Old Capital
Securities, with full power of substitution (such power of attorney being deemed
to be an irrevocable power coupled with an interest), subject only to the right
of withdrawal described in the Prospectus to (i) deliver Certificates for Old
Capital Securities to the Trust together with all accompanying evidences of
transfer and authenticity to, or upon the order of, the Trust, upon receipt by
the Exchange Agent, as the undersigned's agent, of the New Capital Securities to
be issued in exchange for such Old Capital Securities, (ii) present Certificates
for such Old Capital Securities for registration of transfer, and to transfer
the Old Capital Securities on the books of the Trust, and (iii) receive for the
account of the Trust all benefits and otherwise exercise all rights of
beneficial ownership of such Old Capital Securities, all in accordance with the
terms and conditions of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
CAPITAL SECURITIES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE TRUST WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OLD
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CAPITAL SECURITIES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR
PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL
DOCUMENTS DEEMED BY THE COMPANY, THE TRUST OR THE EXCHANGE AGENT TO BE NECESSARY
OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE OLD
CAPITAL SECURITIES TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS
OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ
AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name and address of the registered holder of the Old Capital
Securities tendered hereby should be printed above, if they are not already set
forth above, as they appear on the Certificates representing such Old Capital
Securities. The Certificate numbers and the Old Capital Securities that the
undersigned wishes to tender should be indicated in the appropriate boxes above.
If any tendered Old Capital Securities are not exchanged pursuant to the
Exchange Offer for any reason, or if Certificates are submitted for more Old
Capital Securities than are tendered or accepted for exchange, Certificates for
such nonexchanged or nontendered Old Capital Securities will be returned (or, in
the case of Old Capital Securities tendered by book-entry transfer, such Old
Capital Securities will be credited to an account maintained at DTC), without
expense to the tendering holder, promptly following the expiration or
termination of the Exchange Offer.
The undersigned understands that tenders of Old Capital Securities
pursuant to any one of the procedures described under "The Exchange Offer --
Procedures for Tendering Old Capital Securities" in the Prospectus and in the
instructions herein will, upon the Company's and the Trust's acceptance for
exchange of such tendered Old Capital Securities, constitute a binding agreement
between the undersigned, the Company and the Trust upon the terms and subject to
the conditions of the Exchange Offer. The undersigned recognizes that, under
certain circumstances set forth in the Prospectus, the Company and the Trust may
not be required to accept for exchange any of the Old Capital Securities
tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the New Capital
Securities be issued in the name of the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, that such New Capital Securities
be credited to the account indicated above maintained at DTC. If applicable,
substitute Certificates representing Old Capital Securities not exchanged or not
accepted for exchange will be issued to the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, will be credited to the account
indicated above maintained at DTC. Similarly, unless otherwise indicated under
"Special Delivery Instructions" below, please deliver New Capital Securities to
the undersigned at the address shown below the undersigned's signature.
BY TENDERING OLD CAPITAL SECURITIES AND EXECUTING THIS LETTER OF
TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (i) THE
UNDERSIGNED IS NOT AN "AFFILIATE" OF THE COMPANY OR THE TRUST WITHIN THE MEANING
OF RULE 405 UNDER THE SECURITIES ACT, (ii) ANY NEW CAPITAL SECURITIES TO BE
RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS
BUSINESS, AND (iii) THE UNDERSIGNED HAS NO
7
<PAGE>
ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION
(WITHIN THE MEANING OF THE SECURITIES ACT) OF NEW CAPITAL SECURITIES TO BE
RECEIVED IN THE EXCHANGE OFFER. IF THE UNDERSIGNED IS A BROKER-DEALER THAT WILL
RECEIVE NEW CAPITAL SECURITIES FOR ITS OWN ACCOUNT IN EXCHANGE FOR OLD CAPITAL
SECURITIES THAT WERE ACQUIRED AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER
TRADING ACTIVITIES, IT ACKNOWLEDGES THAT IT WILL DELIVER A PROSPECTUS MEETING
THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALES OF SUCH
NEW CAPITAL SECURITIES; HOWEVER, BY SO ACKNOWLEDGING AND BY DELIVERING A
PROSPECTUS, THE UNDERSIGNED WILL NOT BE DEEMED TO ADMIT THAT IT IS AN
"UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT.
THE COMPANY AND THE TRUST HAVE AGREED THAT, SUBJECT TO THE PROVISIONS OF
THE REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY AN EXCHANGING DEALER IN
CONNECTION WITH RESALES OF NEW CAPITAL SECURITIES RECEIVED IN EXCHANGE FOR OLD
CAPITAL SECURITIES, WHERE SUCH OLD CAPITAL SECURITIES WERE ACQUIRED BY SUCH
EXCHANGING DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR
OTHER TRADING ACTIVITIES, FOR A PERIOD ENDING ONE YEAR AFTER THE EXPIRATION DATE
(SUBJECT TO EXTENSION UNDER CERTAIN LIMITED CIRCUMSTANCES DESCRIBED IN THE
PROSPECTUS). IN THAT REGARD, EACH EXCHANGING DEALER WHO ACQUIRED OLD CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING
ACTIVITIES, BY TENDERING SUCH OLD CAPITAL SECURITIES AND EXECUTING THIS LETTER
OF TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY OR THE
TRUST OF THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT WHICH MAKES
ANY STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN
ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A MATERIAL
FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY
REFERENCE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING, OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE
REGISTRATION RIGHTS AGREEMENT, SUCH EXCHANGING DEALER WILL SUSPEND THE SALE OF
NEW CAPITAL SECURITIES PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY OR THE TRUST
HAS AMENDED OR SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR
OMISSION AND HAS FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO
THE EXCHANGING BROKER-DEALER, OR THE COMPANY OR THE TRUST HAS GIVEN NOTICE THAT
THE SALE OF THE NEW CAPITAL SECURITIES MAY BE RESUMED, AS THE CASE MAY BE. IF
THE COMPANY OR THE TRUST GIVES SUCH NOTICE TO SUSPEND THE SALE OF THE NEW
CAPITAL SECURITIES, IT SHALL EXTEND THE ONE- YEAR PERIOD REFERRED TO ABOVE
DURING WHICH EXCHANGING DEALERS ARE ENTITLED TO USE THE PROSPECTUS IN CONNECTION
WITH THE RESALE OF NEW CAPITAL SECURITIES BY THE NUMBER OF DAYS DURING THE
PERIOD FROM AND INCLUDING THE DATE OF THE GIVING OF SUCH NOTICE TO AND INCLUDING
THE DATE WHEN EXCHANGING DEALERS SHALL HAVE RECEIVED COPIES OF THE SUPPLE-
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<PAGE>
MENTED OR AMENDED PROSPECTUS NECESSARY TO PERMIT RESALES OF THE NEW CAPITAL
SECURITIES OR TO AND INCLUDING THE DATE ON WHICH THE COMPANY OR THE TRUST HAS
GIVEN NOTICE THAT THE SALE OF NEW CAPITAL SECURITIES MAY BE RESUMED, AS THE CASE
MAY BE.
Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive accumulated distributions on such Old
Capital Securities for any period from and after the last Distribution Payment
Date to which distributions have been paid or duly provided for on such Old
Capital Securities prior to the original issue date of the New Capital
Securities or, if no such distributions have been paid or duly provided for,
will not receive any accrued distributions on such Old Capital Securities, and
the undersigned waives the right to receive any interest on such Old Capital
Securities accrued from and after such Distribution Payment Date or, if no such
distributions have been paid or duly provided for, from and after January 21,
1997.
The undersigned authorizes the Exchange Agent to deliver this Letter of
Transmittal, as evidence of the undersigned's consent to the Proposed Amendment
with respect to the Old Capital Securities tendered hereby, to the Trust and the
Company.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
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<PAGE>
HOLDERS SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 CONTAINED HEREIN)
(NOTE: SIGNATURES MUST BE GUARANTEED IF REQUIRED BY
INSTRUCTION 2)
Must be signed by registered holder exactly as name appears on Certificate
for the Old Capital Securities hereby tendered or on a security position
listing, or by any person authorized to become the registered holder by
endorsements and documents transmitted herewith (including such opinions of
counsel, certifications and other information as may be required by the Trust or
the Institutional Trustee for the Old Capital Securities to comply with the
restrictions on transfer applicable to the Old Capital Securities). If signature
is by an attorney-in-fact, executor, administrator, trustee, guardian, officer
of a corporation or another acting in a fiduciary capacity or representative
capacity, please set forth the signer's full title. See Instruction 5.
----------------------------------
----------------------------------
(Signature of Holder(s) or
Authorized Signatory)
Date:________________________, 1997
Name(s)
-------------------------------------------------------
-------------------------------------------------------
(Please Print)
Capacity (full title)
-----------------------------------------
Address
-------------------------------------------------------
-------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
--------------------------------
Tax Identification or Social Security Number
------------------
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SIGNATURE GUARANTEE
(IF REQUIRED -- SEE INSTRUCTIONS 2 AND 5)
-----------------------------------
(Authorized Signature)
Date: , 1997
----------------
Name of Eligible Institution Guaranteeing Signatures
--------------------------
Capacity (full title)
---------------------------------------------------------
(Please Print)
Address
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
------------------------------------------------
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<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the New Capital Securities or any Old Capital Securities
that are not tendered are to be issued in the name of someone other than the
registered holder of the Old Capital Securities whose name appears above.
Issue
[ ] New Capital Securities and/or
[ ] Old Capital Securities not tendered
to:
Name
---------------------------------------------
Address
------------------------------------------
------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
-------------------------------
Tax Identification or Social Security Number
-----------------
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<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the New Capital Securities or any Old Capital Securities
that are not tendered are to be sent to someone other than the registered holder
of the Old Capital Securities whose name appears above, or to such registered
holder at an address other than that shown above.
Mail
[ ] New Capital Securities and/or
[ ] Old Capital Securities not tendered
to:
Name
------------------------------------------------------
Address
---------------------------------------------------
---------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
----------------------------
Tax Identification or Social Security Number
--------------
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<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES;
GUARANTEED DELIVERY PROCEDURES. This Letter of Transmittal is to be completed
either if (a) Certificates are to be forwarded herewith or (b) tenders are to be
made pursuant to the procedures for tender by book-entry transfer set forth
under "The Exchange Offer -- Procedures for Tendering Old Capital Securities" in
the Prospectus and an Agent's Message is not delivered. Certificates, or
book-entry confirmation of a book-entry transfer of such Old Capital Securities
into the Exchange Agent's account at DTC, as well as this Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at its address set forth
herein on or prior to the Expiration Date. Tenders by book-entry transfer may
also be made by delivering an Agent's Message in lieu of this Letter of
Transmittal. The term "book-entry confirmation" means a timely confirmation of
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the tendering
Participant, which acknowledgment states that such participant has received and
agrees to be bound by the Letter of Transmittal and that the Trust and the
Company may enforce the Letter of Transmittal against such Participant. Old
Capital Securities may be tendered in whole or in part in the liquidation amount
of $100,000 (100 Capital Securities) and integral multiples of $1,000 in excess
thereof, provided that, if any Old Capital Securities are tendered for exchange
in part, the untendered liquidation amount thereof must be $100,000 (100 Capital
Securities) or any integral multiple of $1,000 in excess thereof.
Holders who wish to tender their Old Capital Securities and (i) whose
Old Capital Securities are not immediately available or (ii) who cannot deliver
their Old Capital Securities, this Letter of Transmittal and all other required
documents to the Exchange Agent on or prior to the Expiration Date or (iii) who
cannot complete the procedures for delivery by book-entry transfer on or prior
to the Expiration Date, may tender their Old Capital Securities by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth under "The Exchange Offer -- Procedures
for Tendering Old Capital Securities" in the Prospectus. Pursuant to such
procedures: (i) such tender must be made by or through an Eligible Institution
(as defined below); (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the Company and
the Trust, must be received by the Exchange Agent on or prior to the Expiration
Date; and (iii) the Certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with a
Letter of Transmittal (or facsimile thereof or Agent's Message in lieu thereof),
properly completed and duly executed, with any required signature guarantees and
any other documents required by this Letter of Transmittal, must be received by
the Exchange Agent within three New York Stock Exchange trading days after the
date of execution of such Notice of Guaranteed Delivery, all as provided in "The
Exchange Offer -- Procedures for Tendering Old Capital Securities" in the
Prospectus.
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<PAGE>
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such Notice. For
Old Capital Securities to be properly tendered pursuant to the guaranteed
delivery procedure, the Exchange Agent must receive a Notice of Guaranteed
Delivery on or prior to the Expiration Date. As used herein and in the
Prospectus, "Eligible Institution" means a firm or other entity identified in
Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein) (i) a bank; (ii) a broker, dealer,
municipal securities broker or dealer or government securities broker or dealer;
(iii) a credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association recognized program.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY ON OR
PRIOR TO THE EXPIRATION DATE. NO DOCUMENTS SHOULD BE SENT TO THE COMPANY OR THE
TRUST. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
Neither the Company nor the Trust will accept any alternative,
conditional or contingent tenders. Each tendering holder, by execution of a
Letter of Transmittal (or facsimile thereof or Agent's Message in lieu thereof),
waives any right to receive any notice of the acceptance of such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this document, shall include any
Participant in DTC whose name appears on a security position listing as
the owner of the Old Capital Securities) of Old Capital Securities
tendered herewith, unless such holder has completed either the box
entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" above, or
(ii) such Old Capital Securities are tendered for the account of a
firm that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the
signature on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Capital Securities" is inadequate, the Certificate numbers
and/or the liquidation amount of Old Capital Securities and any other required
information should be listed on a separate signed schedule which is attached to
this Letter of Transmittal.
15
<PAGE>
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Capital
Securities will be accepted only in the liquidation amount of $100,000 (100
Capital Securities) and integral multiples of $1,000 in excess thereof, provided
that if any Old Capital Securities are tendered for exchange in part, the
untendered liquidation amount thereof must be $100,000 (100 Capital Securities)
or any integral multiple of $1,000 in excess thereof. If less than all of the
Old Capital Securities evidenced by any Certificate submitted are to be
tendered, fill in the liquidation amount of Old Capital Securities which are to
be tendered in the box entitled "Liquidation Amount of Old Capital Securities
Tendered (If Less than All)." In such case, a new Certificate for the remainder
of the Old Capital Securities that were evidenced by your Old Certificate will
be sent to the holder of the Old Capital Securities, promptly after the
Expiration Date unless the appropriate boxes on this Letter of Transmittal are
completed. All Old Capital Securities represented by Certificates delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
Except as otherwise provided herein, tenders of Old Capital Securities
may be withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective, a written or facsimile transmission of such notice
of withdrawal must be timely received by the Exchange Agent at its address set
forth above or in the Prospectus on or prior to the Expiration Date. Any such
notice of withdrawal must specify the name of the person who tendered the Old
Capital Securities to be withdrawn, the aggregate liquidation amount of Old
Capital Securities to be withdrawn, and (if Certificates for Old Capital
Securities have been tendered) the name of the registered holder of the Old
Capital Securities as set forth on the Certificate for the Old Capital
Securities, if different from that of the person who tendered such Old Capital
Securities. If Certificates for the Old Capital Securities have been delivered
or otherwise identified to the Exchange Agent, then prior to the physical
release of such Certificates for the Old Capital Securities, the tendering
holder must submit the serial numbers shown on the particular Certificates for
the Old Capital Securities to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution, except in the case of
Old Capital Securities tendered for the account of an Eligible Institution. If
Old Capital Securities have been tendered pursuant to the procedures for
book-entry transfer set forth under "The Exchange Offer--Procedures for
Tendering Old Capital Securities," the notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawal of Old
Capital Securities, in which case a notice of withdrawal will be effective if
delivered to the Exchange Agent by written or facsimile transmission on or prior
to the Expiration Date. Withdrawals of tenders of Old Capital Securities may not
be rescinded. Old Capital Securities properly withdrawn will not be deemed
validly tendered for purposes of the Exchange Offer, but may be retendered at
any subsequent time on or prior to the Expiration Date by following any of the
procedures described in the Prospectus under "The Exchange Offer -- Procedures
for Tendering Old Capital Securities."
Consents to the Proposed Amendment may be revoked at any time prior to
the time and date of receipt of the requisite consents to the Proposed Amendment
(such time and date hereinafter referred to as the "Consent Date"). A holder of
Old Capital Securities shall be deemed to have revoked his consent to the
Proposed Amendments if, and only if, such holder effectively withdraws his
tender of Old Capital Securities prior to the Consent Date in accordance with
the instructions set forth in the Prospectus under "The Exchange Offer --
Withdrawal Rights."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Company or the
Trust, in their sole discretion, whose
16
<PAGE>
determination shall be final and binding on all parties. Neither the Company or
the Trust, any affiliates or assigns of the Company or the Trust, the Exchange
Agent nor any other person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification. Any Old Capital Securities which have
been tendered but which are withdrawn on or prior to the Expiration Date will be
returned to the holder thereof without cost to such holder promptly after
withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder
of the Old Capital Securities tendered hereby, the signature must correspond
exactly with the name as written on the face of the Certificates or on a
security position listing without alteration, enlargement or any change
whatsoever.
If any of the Old Capital Securities tendered hereby are owned of record
by two or more joint owners, all such owners must sign this Letter of
Transmittal.
If any tendered Old Capital Securities are registered in different names
on several Certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles thereof or Agent's Messages
in lieu thereof) as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit proper
evidence satisfactory to the Company and the Trust, in their sole discretion, of
such persons' authority to so act.
When this Letter of Transmittal is signed by the registered owner of the
Old Capital Securities listed and transmitted hereby, no endorsement of
Certificates or separate bond powers are required unless New Capital Securities
are to be issued in the name of a person other than the registered holder.
Signatures on such Certificates or bond powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner of the Old Capital Securities listed, the Certificates must be
endorsed or accompanied by appropriate bond powers, signed exactly as the name
of the registered owner appears on the Certificates, and also must be
accompanied by such opinions of counsel, certifications and other information as
the Company, the Trust or the Exchange Agent may require in accordance with the
restrictions on transfer applicable to the Old Capital Securities. Signatures on
such Certificates or bond powers must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Capital Securities
are to be issued in the name of a person other than the signer of this Letter of
Transmittal, or if New Capital Securities are to be sent to someone other than
the signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Old Capital Securities not exchanged will be returned by mail
or, if
17
<PAGE>
tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC unless the appropriate boxes on this Letter of Transmittal
are completed. See Instruction 4.
7. IRREGULARITIES. The Company and the Trust will determine, in their
sole discretion, all questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tender of Old Capital Securities, which determination shall be final and binding
on all parties. The Company and the Trust reserve the absolute right to reject
any and all tenders determined by either of them not to be in proper form or the
acceptance of which, or exchange for, may, in the view of counsel to the Company
or the Trust, be unlawful. The Company and the Trust also reserve the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange Offer -- Conditions to
Exchange Offer," or any conditions or irregularities in any tender of Old
Capital Securities of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders. The Company and the
Trust's interpretation of the terms and conditions of the Exchange Offer
(including this Letter of Transmittal and the instructions hereto) will be final
and binding. No tender of Old Capital Securities will be deemed to have been
validly made until all irregularities with respect to such tender have been
cured or waived. The Company, the Trust, any affiliates or assigns of the
Company, the Trust, the Exchange Agent, or any other person shall not be under a
duty to give notification of any irregularities in tenders or incur any
liability for failure to give such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES.
Questions and requests for assistance may be directed to the Exchange Agent at
its address and telephone number set forth on the front of this Letter of
Transmittal. Additional copies of the Prospectus, the Notice of Guaranteed
Delivery and the Letter of Transmittal may be obtained from the Exchange Agent
or from your broker, dealer, commercial bank, trust company or other nominee.
9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificates
representing Old Capital Securities have been lost, destroyed or stolen, the
holder should promptly notify the Exchange Agent. The holder will then be
instructed as to the steps that must be taken in order to replace the
Certificates. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificates have been followed.
10. SECURITY TRANSFER TAXES. Holders who tender their Old Capital
Securities for exchange will not be obligated to pay any transfer taxes in
connection therewith. If, however, New Capital Securities are to be delivered
to, or are to be issued in the name of, any person other than the registered
holder of the Old Capital Securities tendered, or if a transfer tax is imposed
for any reason other than the exchange of Old Capital Securities in connection
with the Exchange Offer, then the amount of any such transfer tax (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
11. INCORPORATION OF LETTER OF TRANSMITTAL. This Letter of Transmittal
shall be deemed to be incorporated in and acknowledged and accepted by any
tender through the
18
<PAGE>
DTC's ATOP procedures by any participant in DTC on behalf of itself and the
beneficial owners of any Old Capital Securities so tendered.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF OR AN AGENT'S
MESSAGE IN LIEU HEREOF) AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE
EXCHANGE AGENT AT OR PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
19
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a holder whose tendered Old Capital
Securities are accepted for exchange is required by law to provide the Exchange
Agent with such holder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 included herein or otherwise establish a basis for exemption
from backup withholding. If such holder is an individual, the TIN is his social
security number. If the Exchange Agent is not provided with the correct TIN, the
Internal Revenue Service may subject the holder or transferee to a $50 penalty.
In addition, delivery of such holder's New Capital Securities may be subject to
backup withholding. Failure to comply truthfully with the backup withholding
requirements also may result in the imposition of severe criminal and/or civil
fines and penalties.
Certain holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Exchange Agent. A foreign person, including entities, may qualify as
an exempt recipient by submitting to the Exchange Agent a properly completed
Internal Revenue Service Form W-8, signed under penalties of perjury, attesting
to that holder's foreign status. See the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.
If backup withholding applies, the Exchange Agent is required to
withhold 31% of any payments made to the holder or other transferee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to Old
Capital Securities exchanged in the Exchange Offer, the holder is required to
provide the Exchange Agent with either: (i) the holder's correct TIN by
completing the form included herein, certifying that the TIN provided on
Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and that
(A) the holder has not been notified by the Internal Revenue Service that the
holder is subject to backup withholding as a result of failure to report all
interest or dividends or (B) the Internal Revenue Service has notified the
holder that the holder is no longer subject to backup withholding; or (ii) an
adequate basis for exemption.
NUMBER TO GIVE THE DEPOSITARY
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered holder of
the Old Capital Securities. If the Old Capital Securities are held in more than
one name or are held not in the name of the actual owner, consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.
20
<PAGE>
EXCHANGE AGENT'S NAME: THE CHASE MANHATTAN BANK
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PART 1-PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT Social Security Number or
FORM W-9 AND CERTIFY BY SIGNING AND DATING BELOW. Employer
Identification Number
.........................
-----------------------------------------------------------------------------------
Department of the PART 2-CERTIFICATION-UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
Treasurer Internal
Revenue Service (1) The number shown on this form is my correct Taxpayer Identification Number (or
I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding either because I have not been notified
by the Internal Revenue Service (the "IRS") that I am subject to backup
PAYER'S REQUEST withholding as a result of a failure to report all interest or dividends, or
FOR TAXPAYER the IRS has notified me that I am no longer subject to backup withholding.
IDENTIFICATION CERTIFICATION INSTRUCTIONS-You must cross out item (2) above if you have been
NUMBER ("TIN") notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return. However,
if after being notified by the IRS that you were subject to backup withholding
you received another notification from the IRS that you are no longer subject
to backup withholding, do not cross out such item (2).
------------------------
PART 3
SIGNATURE................. DATE.................. Awaiting TIN [ ]
- ---------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld, but that such amounts
will be refunded to me if I then provide a Taxpayer Identification Number within
60 days.
................................ ................, 1997
Signature Date
- --------------------------------------------------------------------------------
21
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY AND CONSENT
TO BE USED IN CONNECTION WITH
LEUCADIA CAPITAL TRUST I
OFFER TO EXCHANGE ITS
8.65% CAPITAL TRUST PASS-THROUGH SECURITIESSM (TRUPSSM)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
8.65% CAPITAL TRUST PASS-THROUGH SECURITIESSM (TRUPSSM)
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF
LEUCADIA CAPITAL TRUST I
AND
CONSENT SOLICITATION
TO A PROPOSED AMENDMENT
TO THE REGISTRATION RIGHTS AGREEMENT
----------------------------------------------------
THE EXCHANGE OFFER, THE CONSENT SOLICITATION AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON ___________ __, 1997
UNLESS THE OFFER IS EXTENDED. REVOCATION RIGHTS
FOR CONSENTS WILL EXPIRE AT THE TIME AND DATE ON
WHICH THE REQUISITE CONSENTS TO THE PROPOSED
AMENDMENT ARE RECEIVED.
----------------------------------------------------
As set forth in the Exchange Offer (as defined below), this Notice of
Guaranteed Delivery, or one substantially equivalent to this form, must be used
to accept the Exchange Offer (as defined below) and consent to the Proposed
Amendment (as defined below) if (i) certificates for the Trust's (as defined
below) 8.65% Capital Trust Pass-through SecuritiesSM (TRUPSSM) (the "Old Capital
Securities") are not immediately available, (ii) the Old Capital Securities, the
Letter of Transmittal and all other required documents cannot be delivered to
The Chase Manhattan Bank (the "Exchange Agent") on or prior to the Expiration
Date (as defined in the Prospectus referred to below) or (iii) the procedures
for delivery by book-entry transfer cannot be completed on or prior to the
Expiration Date. This Notice of Guaranteed Delivery may be delivered by hand,
overnight courier or mail, or transmitted by facsimile transmission, to the
Exchange Agent on or prior to the Expiration Date. See "The Exchange Offer --
Procedures for Tendering Old Capital Securities" in the Prospectus.
1
<PAGE>
THE CHASE MANHATTAN BANK, EXCHANGE AGENT
BY MAIL, HAND OR OVERNIGHT DELIVERY:
The Chase Manhattan Bank
55 Water Street
Room 234
New York, New York 10016
Attn: Lewis Padilla
FACSIMILE TRANSMISSION
(FOR ELIGIBLE INSTITUTIONS ONLY):
(212) 638-7375
(212) 344-9367
CONFIRM BY TELEPHONE:
Lewis Padilla:
(212) 638-0458
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE,
OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Leucadia Capital Trust I, a Delaware
statutory business trust (the "Trust"), and Leucadia National Corporation, a New
York corporation, as Sponsor, upon the terms and subject to the conditions set
forth in the Prospectus and Consent Solicitation dated _______________, 1997 (as
the same may be amended or supplemented from time to time, the "Prospectus"),
and the related Letter of Transmittal (which together constitute the "Exchange
Offer"), receipt of which is hereby acknowledged, the aggregate liquidation
amount of Old Capital Securities set forth below pursuant to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offer -- Procedures for Tendering Old Capital Securities."
The undersigned further, with respect to the Old Capital Securities set
forth below, consents to the adoption of the Proposed Amendment.
Aggregate Liquidation Name of Registered Holder:
-----------------
Amount Tendered: __________________
Certificate Nos. Address:
(if available): ____________________ -----------------------------------
Area Code and Telephone Number:
------------
The undersigned understands that tenders of Old Capital Securities will be
accepted only in liquidation amounts of $100,000 and integral multiples of
$1,000 in excess thereof.
The undersigned understands that tenders of Old Capital Securities also
will constitute a consent to the Proposed Amendment with respect to all such
tendered Old Capital Securities.
If Old Capital Securities will be tendered by book-entry transfer, provide the
following information:
Signature:
-------------------------------------------------------------------
DTC Account Number:
-----------------------------------------------------------
Date: , 1997
----------------
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
3
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker, government securities dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent, at its address set forth above, either the Old Capital
Securities tendered hereby in proper form for transfer, or confirmation of the
book-entry transfer of such Old Capital Securities to the Exchange Agent's
account at The Depository Trust Company, pursuant to the procedures for
book-entry transfer set forth in the Prospectus, in either case together with
one or more properly completed and duly executed Letters of Transmittal (or
facsimile thereof or Agent's Message in lieu thereof) and any other required
documents within three New York Stock Exchange trading days after the date of
execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letters of
Transmittal (or facsimile thereof or Agent's Message in lieu thereof) and the
Old Capital Securities tendered hereby (or a book-entry confirmation) to the
Exchange Agent within the time period set forth above and that failure to do so
could result in a financial loss to the undersigned.
Name of Firm
-----------------------------------------------------------------
(Authorized Signature)
-------------------------------------------------------
Title:
Address
----------------------------------------------------------------------
----------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
-----------------------------------------------
Date
-------------------------
4
<PAGE>
NOTE: DO NOT SEND OLD CAPITAL SECURITIES WITH THIS NOTICE OF GUARANTEED
DELIVERY. ACTUAL SURRENDER OF OLD CAPITAL SECURITIES MUST BE MADE
PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL (OR AN AGENT'S MESSAGES IN LIEU THEREOF)
AND ANY OTHER REQUIRED DOCUMENTS.
5
