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Filed Pursuant to Rule 424(b)(3)
Registration Statement Nos. 333-48915, 333-48915-01
PROSPECTUS
$190,000,000
TRANSAMERICA CAPITAL III
OFFER TO EXCHANGE ITS 7 5/8% CAPITAL TRUST PASS-THROUGH SECURITIES WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OF ITS
OUTSTANDING 7 5/8% CAPITAL TRUST PASS-THROUGH SECURITIES (LIQUIDATION AMOUNT
$1,000 PER CAPITAL SECURITY) FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED
HEREIN, BY TRANSAMERICA CORPORATION
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON MAY 15, 1998, UNLESS EXTENDED.
Transamerica Capital III (the "Trust"), a statutory business trust created
under the laws of the State of Delaware, together with Transamerica Corporation,
a Delaware corporation ("Transamerica"), as sponsor of the Trust, hereby offers
upon the terms and subject to the conditions set forth in this Prospectus (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 $190,000,000 aggregate liquidation amount
of its 7 5/8% Capital Trust Pass-through Securities (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 7 5/8% Capital Trust Pass-through Securities (the "Old
Capital Securities"), of which $190,000,000 aggregate liquidation amount is
outstanding. Pursuant to the Exchange Offer, Transamerica is also exchanging all
of its outstanding 7 5/8% Junior Subordinated Deferrable Interest Debentures due
2037 (the "Old Subordinated Debt Securities"), of which $195,877,000 aggregate
principal amount is outstanding, for a like aggregate principal amount of its
7 5/8% Junior Subordinated Deferrable Interest Debentures due 2037 (the "New
Subordinated Debt Securities"), which New Subordinated Debt Securities also have
been registered under the Securities Act. The Old Capital Securities and the Old
Subordinated Debt Securities are collectively referred to herein as the "Old
Securities" and the New Capital Securities and the New Subordinated Debt
Securities are collectively referred to herein as the "New Securities."
Transamerica's guarantee with respect to the payment of distributions and other
payments on liquidation or redemption of the Old Capital Securities (the
"Guarantee") will apply to the New Capital Securities. The Guarantee has also
been registered under the Securities Act. See "Prospectus Summary," "Description
of the Capital Securities," "Description of the Subordinated Debt Securities"
and "Description of the Guarantee."
The terms of the New Capital Securities are identical in all material
respects to the respective terms of the Old Capital Securities, except that (i)
the New Capital Securities have been registered under the Securities Act and
therefore will not be subject to certain restrictions on transfer applicable to
the Old Capital 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' and "Description of the Subordinated
Debt Securities."
(continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 16 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION RELEVANT TO HOLDERS WHO TENDER OLD CAPITAL SECURITIES IN THE
EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OF ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is April 10, 1998.
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The New Capital Securities are being offered for exchange in order to
satisfy certain obligations of Transamerica and the Trust under the Registration
Rights Agreement, dated November 14, 1997 (the "Registration Rights Agreement"),
among Transamerica, 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 will vote together
with the New Capital Securities issued in the Exchange Offer 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).
The Old Capital Securities represent, and the New Capital Securities when
issued will represent, undivided beneficial interests in the assets of the
Trust. The Old Capital Securities and the New Capital Securities are
collectively referred to herein as the "Capital Securities." Transamerica 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 collectively referred to herein as the
"Subordinated Debt Securities."
The Old Subordinated Debt Securities and the Guarantee are, and the New
Subordinated Debt Securities when issued will be, unsecured obligations of
Transamerica and are or will be, as the case may be, subordinate and junior in
right of payment to certain other indebtedness of Transamerica, 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 of distributions and payments upon
redemption, liquidation and otherwise.
Holders of the Capital Securities are entitled to receive cumulative cash
distributions at an annual rate of 7 5/8% per annum of the stated liquidation
amount of $1,000 per Capital Security, accruing from the date of original
issuance of the Old Capital Securities, and (subject to extensions of
distribution payment periods described below) payable semiannually in arrears on
November 15 and May 15 of each year, commencing May 15, 1998 ("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 Transamerica as provided in
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
Transamerica has made payments of interest or principal or other payments on the
Subordinated Debt Securities held by the Trust.
The Guarantee, when taken together with Transamerica'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
Transamerica 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
Transamerica 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 Transamerica, rank pari passu with the
obligations to or rights of Transamerica's other general unsecured creditors and
are also effectively subordinate to claims of creditors of Transamerica's
subsidiaries. As of December 31, 1997, Transamerica had $404.8 million of Senior
Indebtedness (excluding indebtedness of Transamerica's subsidiaries guaranteed
by Transamerica), and the indebtedness of Transamerica's subsidiaries aggregated
$5.8 billion. There are no terms in the Subordinated Debt Securities, the
Capital Securities or the Guarantee that limit the ability of Transamerica or
its subsidiaries to incur additional indebtedness, including indebtedness that
ranks senior to the Subordinated Debt Securities and the Guarantee.
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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. As a result, if Transamerica
does not make principal or interest payments on the Subordinated Debt
Securities, the Trust will not have sufficient funds to make distributions on
the Capital Securities, and the Guarantee will not apply to distributions for
which the Trust has insufficient funds available. In such event, a holder of
Capital Securities may institute a legal proceeding directly against
Transamerica to enforce payment of such distributions to such holder. See
"Description of the Capital Securities -- Declaration Events of Default."
Transamerica has the right, subject to 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 date 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 Transamerica (subject to
certain exceptions set forth herein) will not be permitted to declare or pay any
such distributions with respect to Transamerica's capital stock or to make any
payment with respect to debt securities of Transamerica that rank pari passu
with or junior to the Subordinated Debt Securities. During any Extension Period,
interest will continue to accrue on the Subordinated Debt Securities (and the
amount of distributions to which holders of the Capital Securities are entitled
will accumulate) at an annual rate of 7 5/8%, compounded semiannually (to the
extent permitted by applicable law), 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 the
deferred amount in their gross income for United States federal income tax
purposes 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 Distributions on Capital Securities" and "United States Federal Income
Taxation -- US Holders -- Original Issue Discount."
The Subordinated Debt Securities will mature on November 15, 2037. The
Subordinated Debt Securities are redeemable by Transamerica, in whole or in
part, at par, together with accrued and unpaid interest thereon to the date of
redemption, at any time upon the occurrence of a Tax Event (as defined herein)
and receipt of a Redemption Tax Opinion (as defined herein), but are not
otherwise redeemable at the option of Transamerica prior to maturity. If
Transamerica redeems the Subordinated Debt Securities upon the occurrence of a
Tax Event, or upon the maturity of the Subordinated Debt Securities, the Trust
must redeem on a pro rata basis Trust Securities having an aggregate stated
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 $1,000 per Trust Security plus accrued and unpaid distributions
on such Trust Security to the date fixed for redemption or maturity. See
"Description of the Capital Securities -- Redemption." The Trust Securities will
be redeemed upon maturity of the Subordinated Debt Securities, whereupon the
Trust will be dissolved.
Transamerica, as holder of all the outstanding Common Securities, has the
right at any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Tax Event under certain circumstances) and, after satisfaction
of liabilities to creditors of the Trust (to the extent not satisfied by
Transamerica), cause the Subordinated Debt Securities to be distributed to the
holders of the Capital Securities and the Common Securities of the Trust 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 liquidation, dissolution,
winding up or termination of the Trust, after satisfaction of liabilities to
creditors of the Trust (to the extent not satisfied by Transamerica), the
holders of the Capital Securities generally will be entitled to receive for each
Capital Security a liquidation amount of $1,000 plus accrued and unpaid
distributions thereon to the date of payment, unless, in connection
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with such dissolution, the Subordinated Debt Securities are distributed to the
holders of the Trust Securities as would be required in certain circumstances.
See "Description of the Capital Securities -- Liquidation Distribution Upon
Dissolution" and "Description of the Subordinated Debt Securities."
Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission"), as set forth in no-action letters issued to third
parties, Transamerica and the Trust believe that the New Capital 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 Transamerica or the Trust as defined under Rule 405 of the
Securities Act) without compliance with the registration and prospectus delivery
requirements of the Securities Act; provided that such New Capital Securities
are acquired 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
Capital Securities and have no arrangement or understanding with any person to
participate in the distribution of such New Capital Securities. However, the
staff of the Commission has not considered and will not consider 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 Transamerica and the Trust that: (i) it is not
an affiliate of Transamerica 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 ordinary course of its 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. Transamerica and the Trust have agreed that, starting on the date on
which the Exchange Offer is consummated and ending on the close of business 180
days 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 Participating Broker-Dealer (as defined herein) who
surrenders Old Capital Securities pursuant to the Exchange Offer will be deemed
to have agreed, by execution of the Letter of Transmittal, that, upon receipt of
notice from Transamerica 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
Participating Broker-Dealer will suspend the sale of New Capital Securities
pursuant to this Prospectus until Transamerica 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 Participating
Broker-Dealer, or Transamerica or the Trust has given notice that the sale of
the New Capital 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 the Initial Purchasers have informed Transamerica and the Trust that
they each currently intend to make a market in the New Capital Securities, they
are not obligated to do so, 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. Neither
Transamerica nor the
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Trust currently intends to apply for listing of the New Capital Securities on
any securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System.
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 Transamerica 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.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on May 15, 1998 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by Transamerica and the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is 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 certain events and conditions which
may be waived by Transamerica or the Trust and to the terms and provisions of
the Registration Rights Agreement. 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. Transamerica has agreed to pay all expenses
of the Exchange Offer, 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 November 14, 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 November 14, 1997. This Prospectus, together with
the Letter of Transmittal, is being sent to all registered holders of Old
Capital Securities as of April 15, 1998.
Neither Transamerica 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 "Plan of Distribution."
The New Capital Securities will be issued, and may be transferred, only in
blocks having a liquidation amount of not less than $100,000 (100 Capital
Securities). Any transfer, sale or other disposition of Capital Securities in a
block having a 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 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.
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THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL TRANSAMERICA OR THE TRUST
ACCEPT SURRENDERS 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.
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 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.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information....................................... 7
Incorporation of Certain Documents by Reference............. 8
Summary..................................................... 9
Risk Factors................................................ 16
Selected Consolidated Financial Information................. 22
Capitalization.............................................. 23
Accounting Treatment........................................ 23
Transamerica Corporation.................................... 23
The Trust................................................... 24
The Exchange Offer.......................................... 25
Description of the Capital Securities....................... 33
Description of the Guarantee................................ 46
Description of the Subordinated Debt Securities............. 49
Effect of Obligations Under the Subordinated Debt Securities
and the Guarantee......................................... 58
United States Federal Income Taxation....................... 59
Plan of Distribution........................................ 63
ERISA Considerations........................................ 63
Legal Matters............................................... 65
Experts..................................................... 65
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROSPECTUS DOES NOT 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. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF SUCH INFORMATION.
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AVAILABLE INFORMATION
Transamerica is subject to the reporting requirements of Sections 13 and
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and in accordance therewith files reports and other information with the
Commission. Any reports and other information filed by Transamerica with the
Commission may 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 may also be obtained by mail from the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants who file electronically with the
Commission. 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 Exchange, Inc., 301 Pine Street, San
Francisco, California 94104, on which the common stock of Transamerica is
traded.
No separate financial statements of the Trust have been included herein.
Transamerica does not consider that such financial statements would be material
to holders of Capital Securities because (i) all of the voting securities of the
Trust are owned by Transamerica, (ii) the Trust has no independent operations
and exists for the sole purpose of issuing and selling securities representing
undivided beneficial interests in the assets of the Trust, investing the
proceeds thereof in the Subordinated Debt Securities and engaging in activities
necessary or incidental thereto, including the Exchange Offer and (iii) the
obligations of the Trust under the Trust Securities are fully and
unconditionally guaranteed by Transamerica to the extent the Trust has funds
available to meet such obligations. In addition, Transamerica does not expect
that the Trust will be filing reports under the Exchange Act with the
Commission.
This Prospectus constitutes a part of a registration statement on Form S-4
(together with all exhibits thereto, the "Registration Statement") filed by
Transamerica and the Trust with the Commission under the Securities Act. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission, and reference is hereby made to the Registration
Statement for further information with respect to Transamerica and the New
Capital Securities. Any statements contained herein concerning the provisions of
any document are not necessarily complete, and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by Transamerica with the
Commission, are incorporated by reference in this Prospectus:
Transamerica's Annual Report on Form 10-K for the year ended December
31, 1997.
All documents filed by Transamerica 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 the offering hereunder 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.
TRANSAMERICA 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 IN THIS PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO
SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
THEREIN. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO: THE OFFICE OF THE
CORPORATE SECRETARY, TRANSAMERICA CORPORATION, 600 MONTGOMERY STREET, SAN
FRANCISCO, CALIFORNIA 94111 (TELEPHONE: (415) 983-4182). IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MAY 8, 1998.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
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.
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SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the financial statements,
including the notes thereto, appearing elsewhere or incorporated by reference
herein. Holders of Old Capital Securities should consider carefully the factors
set forth herein under "Risk Factors." As used in this Prospectus,
"Transamerica" includes its predecessors and subsidiaries, except as the context
otherwise may require.
TRANSAMERICA CAPITAL III
The Trust is a statutory business trust continued under Delaware law
pursuant to (i) an amended and restated declaration of trust executed by
Transamerica, as sponsor for the Trust, the Issuer Trustees (as defined herein)
and the Administrators (as defined herein) for the Trust and (ii) a certificate
of trust filed with the Delaware Secretary of State on October 31, 1997. The
Trust exists for the exclusive purposes of (i) issuing and selling the Trust
Securities representing undivided beneficial interests in the assets of the
Trust, (ii) investing the gross proceeds of the Trust Securities in the
Subordinated Debt Securities, (iii) effecting the Exchange Offer, and (iv)
engaging in only those other activities necessary or incidental thereto. All of
the Common Securities of the Trust are owned by Transamerica. The principal
place of business of the Trust is c/o Transamerica Corporation, 600 Montgomery
Street, San Francisco, California 94111 (Telephone: (415) 983-4000).
TRANSAMERICA CORPORATION
Transamerica Corporation is a financial services organization which
engages, primarily through its subsidiaries, in life insurance, commercial
lending, leasing and real estate services. At December 31, 1997, Transamerica
had consolidated assets of $51.2 billion and total stockholders' equity of $4.9
billion. For the year ended December 31, 1997, Transamerica had revenues of $5.7
billion and net income of $793.8 million. Transamerica was incorporated in
Delaware in 1928.
Because Transamerica is a holding company, the Subordinated Debt Securities
and the Guarantee are effectively subordinated to all existing and future
liabilities, including trade payables, of Transamerica's subsidiaries, except to
the extent that Transamerica is a creditor of the subsidiaries recognized as
such.
The principal executive offices of Transamerica are located at 600
Montgomery Street, San Francisco, California 94111 (Telephone: (415) 983-4000).
THE EXCHANGE OFFER
THE EXCHANGE OFFER Up to $190,000,000 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 Capital Securities) or any integral
multiple of $1,000 in excess thereof. Transamerica 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
Securities, see "The Exchange Offer -- Procedures for
Tendering Old Capital Securities."
EXPIRATION DATE 5:00 p.m., New York City time, on May 15, 1998 (such
time on such date being hereinafter called the
"Expiration Date") unless the Exchange Offer is extended
by Transamerica and the Trust (in which case the term
"Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended). See "The Exchange
Offer -- Expiration Date; Extensions; Amendments."
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CONDITIONS TO THE
EXCHANGE OFFER The Exchange Offer is subject to certain conditions,
which may be waived by Transamerica and the Trust in
their sole discretion. The Exchange Offer is not
conditioned upon any minimum liquidation amount of Old
Capital Securities being tendered. See "The Exchange
Offer -- Conditions to the Exchange Offer." Transamerica
and the Trust reserve the right in their sole and
absolute 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 if certain specified
conditions 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, or (iv) to waive any condition or
otherwise amend the terms of the Exchange Offer 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
Exchange Agent (as defined herein) in conformity with
certain procedures set forth below under "The Exchange
Offer -- Withdrawal Rights."
PROCEDURES FOR TENDERING
OLD CAPITAL SECURITIESTendering 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. 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
nominee 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 Transamerica 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."
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, Transamerica and the Trust believe that holders
of Old Capital Securities (other than any holder that is
an "affiliate" of Transamerica or the Trust as defined
under Rule 405 of the Securities Act) who exchange their
Old Capital Securities for New Capital Securities
pursuant to the Exchange Offer may offer such New
Capital Securities for resale, resell such New Capital
Securities and otherwise transfer such New Capital
Securities 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 are not engaged in, and do not intend to
engage in, a distribution of such New Capital Securities
and have no arrangement or understanding with any person
to participate in the distribution of such New Capital
Securities. However, the
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staff of the Commission has not considered and will not
consider 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.
However, any holder of Old Capital Securities who is an
"affiliate" of Transamerica or the Trust or who intends
to participate in the Exchange Offer for the purpose of
distributing the New Capital Securities, or any
broker-dealer who purchased the Old Capital Securities
from the Trust to resell pursuant to Rule 144A or any
other available exemption under the Securities Act, (a)
will not be able to rely on the interpretations of the
staff set forth in the above-mentioned interpretive
letters, (b) will not be permitted or entitled to tender
such Old Capital Securities in the Exchange Offer and
(c) 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. In addition, as
described below, if any broker-dealer holds Old Capital
Securities acquired for its own account as a result of
market-making or other trading activities and exchanges
such Old Capital Securities for New Capital Securities,
then such broker-dealer must deliver a prospectus
meeting the requirements of the Securities Act in
connection with any resales of such New Capital
Securities.
Each holder of Old Capital Securities (other than
certain specified holders) 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 Transamerica 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 is not engaged in, and does not intend to
engage in, a distribution (within the meaning of the
Securities Act) of such New Capital Securities and has
no arrangement or understanding to participate in a
distribution of 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 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, a broker-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 interpretive
letters referred to above, Transamerica and the Trust
believe that broker-dealers who acquired Old Capital
Securities for their own accounts as a result of
market-making activities or other trading activities
("Participating Broker-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. Accordingly, this Prospectus, as it
may be amended or supplemented from time to time, may be
used by a Participating 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 Participating
Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights
Agreement and to the limitations described below under
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<PAGE> 12
"The Exchange Offer -- Resales of New Capital
Securities," Transamerica and the Trust have agreed to
allow the Participating Broker-Dealers to use this
Prospectus in connection with resales of such New
Capital Securities for a period of 180 days after the
Expiration Date. See "Plan of Distribution." Any
Participating Broker-Dealer who is an "affiliate" of
Transamerica or the Trust may not rely on such
interpretive letters and must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with any resale
transaction. See "The Exchange Offer -- Resales of New
Capital Securities."
EXCHANGE AGENT The exchange agent with respect to the Exchange Offer is
The First National Bank of Chicago (the "Exchange
Agent"). The addresses, and telephone and facsimile
numbers of the Exchange Agent are set forth in "The
Exchange Offer -- Exchange Agent" and in the Letter of
Transmittal.
UNITED STATES FEDERAL
INCOME TAXATION,
ERISA CONSIDERATIONS Holders of Old Capital Securities and prospective
purchasers of New Capital Securities should review the
information set forth under "United States Federal
Income Taxation" and "ERISA Considerations" prior to
tendering Old Capital Securities in the Exchange Offer
or purchasing such New Capital Securities, as the case
may be.
THE NEW CAPITAL SECURITIES
SECURITIES OFFERED Up to $190,000,000 aggregate liquidation amount of the
Trust's 7 5/8% Capital Trust Pass-through Securities
which have been registered under the Securities Act
(liquidation amount $1,000 per Capital Security). The
New Capital Securities will be issued, and the Old
Capital Securities were issued, under the Declaration.
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 the Capital
Securities -- General." The terms of the New Capital
Securities are identical in all material respects to the
terms of the Old Capital Securities, except that the New
Capital Securities have been registered under the
Securities Act and therefore are not subject to certain
restrictions on transfer applicable to the Old Capital
Securities and will not provide for any increase in the
Distribution Rate thereon. See "The Exchange
Offer -- Purpose and Effect of the Exchange Offer" and
"Description of the Capital Securities."
DISTRIBUTIONS Holders of the New Capital Securities are entitled to
receive cumulative cash distributions at a rate per
annum of 7 5/8% of the stated liquidation amount of
$1,000 per Capital Security, accruing from the original
date of issuance of the Old Capital Securities, and
(subject to the possible extension of distribution
payment periods described below) payable semiannually,
in arrears, on November 15 and May 15 of each year,
commencing May 15, 1998. See "Description of the Capital
Securities -- Distributions."
OPTION TO EXTEND
INTEREST PAYMENT PERIOD Transamerica has the right, at any time, subject to
certain conditions, to defer payments of interest on the
Subordinated Debt Securities for one or more
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<PAGE> 13
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 Transamerica's
extension of the interest payment period on the
Subordinated Debt Securities, distributions on the
Capital Securities would be deferred but interest would
continue to accrue at an annual rate of 7 5/8%,
compounded semiannually (to the extent permitted by
law), during any such Extension Period. In the event
that Transamerica exercises its right to extend an
interest payment period, then during any Extension
Period, subject to certain exceptions, (i) Transamerica
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 the foregoing and (ii) Transamerica shall not
make any payment of interest on or principal of, or
repay, repurchase or redeem, any debt securities issued
by Transamerica 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, Transamerica 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 at an annual
rate of 7 5/8%, compounded semiannually (to the extent
permitted by law), for United States federal income tax
purposes notwithstanding the deferred receipt of
payments which accrue during the Extension Period. As a
result, such holders will be required to include such
interest 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
such Capital Securities prior to the record date for
payment of distributions. See "United States Federal
Income Taxation -- US Holders -- Original Issue
Discount."
REDEMPTION UPON MATURITYUpon the repayment of the Subordinated Debt Securities
at maturity, the proceeds from such repayment will be
applied by the Institutional Trustee (as defined herein)
to redeem a like amount of Trust Securities upon the
terms and conditions described herein. See "Description
of the Capital Securities -- Redemption."
TAX EVENT REDEMPTION Transamerica has the right to redeem the Subordinated
Debt Securities at any time, in whole or in part, upon
the occurrence of a Tax Event and receipt of a
Redemption Tax Opinion as described under "Description
of the Capital Securities -- Redemption," at a
redemption price equal to 100% of the principal amount
of Subordinated Debt Securities being redeemed plus any
accrued but unpaid interest to the redemption date. See
"Description of the Subordinated Debt
Securities -- Redemption." If Transamerica so redeems
the Subordinated Debt Securities, the proceeds from such
redemption will be applied by the Institutional Trustee
to redeem a like amount of Trust Securities outstanding
on a pro rata basis, upon the terms and conditions
described herein. See "Description of the Capital
Securities -- Redemption." The Subordinated Debt
Securities are not otherwise redeemable at the option of
Transamerica prior to maturity.
LIQUIDATION Transamerica, 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 under certain circumstances)
and, after
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satisfaction of liabilities to creditors of the Trust
(to the extent not satisfied by Transamerica), cause the
Subordinated Debt Securities to be distributed to the
holders of the Capital Securities and the Common
Securities of the Trust on a pro rata basis in
accordance with the aggregate stated liquidation amount
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 voluntary or involuntary
liquidation, dissolution, winding-up or termination of
the Trust, after satisfaction of liabilities to
creditors of the Trust (to the extent not satisfied by
Transamerica), holders of the Capital Securities will be
entitled to receive $1,000 per Capital Security plus an
amount equal to any accrued and unpaid distributions
thereon to the date of payment, unless the Subordinated
Debt Securities are distributed to holders of the Trust
Securities in exchange therefor. See "Description of
Capital Securities -- Liquidation Distribution Upon
Dissolution."
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 (as defined herein) except upon the occurrence
of an Indenture Event of Default (as defined herein).
See "Description of the Capital Securities -- Voting
Rights" and "-- Removal of Issuer Trustees; Appointment
of Successors."
THE GUARANTEE The payment of distributions on the Capital Securities
out of moneys held by the Trust, payment on liquidation
of the Trust and payment upon the redemption of the
Capital Securities are guaranteed by Transamerica 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
Transamerica has made payments of interest or principal
on the Subordinated Debt Securities. The Guarantee, when
taken together with Transamerica's obligations under the
Subordinated Debt Securities, the Declaration and the
Indenture, including its obligations to pay costs,
expenses, debts and other liabilities of the Trust
(other than with respect to the Trust Securities),
provides a full and unconditional guarantee on a
subordinated basis by Transamerica of amounts due on the
Capital Securities. Transamerica 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 will 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
(as defined herein), 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 will rank pari passu with $200,000,000
in aggregate principal amount of 9 1/8% Junior
Subordinated Deferrable Interest Debentures, Series A,
due 2024 of Transamerica (the "Outstanding Debentures
I"), $100,000,000 in aggregate principal amount of 7.80%
Junior Subordinated Deferrable Interest Debentures due
2026 of Transamerica (the "Outstanding
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<PAGE> 15
Debentures II") and $225,000,000 in aggregate principal
amount of 7.65% Junior Subordinated Deferrable Interest
Debentures due 2026 of Transamerica (the "Outstanding
Debentures III," and together with the Outstanding
Debentures I and the Outstanding Debentures II, the
"Outstanding Subordinated Debentures") and will be
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. See "Description
of the Subordinated Debt Securities -- Subordination."
The Guarantee will constitute an unsecured obligation of
Transamerica and will rank subordinate and junior in
right of payment to the extent and in the manner set
forth in the Guarantee to all Senior Indebtedness. See
"Description of the Guarantee."
RATINGS The New Capital Securities are expected to be rated "A-"
by Standard & Poor's Ratings Services and "a2" by
Moody's Investors Service, Inc. A security rating is not
a recommendation to buy, sell or hold securities and may
be subject to revision or withdrawal at any time by the
assigning rating organization.
TRANSFER RESTRICTIONS The Capital Securities will be issued and may be
transferred only in blocks having an aggregate stated
liquidation amount of not less than $100,000. Any such
transfer of the Capital Securities in a block having an
aggregate stated liquidation amount of less than
$100,000 shall be deemed to be void and of no legal
effect whatsoever. See "Description of the Capital
Securities -- Restrictions on Transfer."
ERISA CONSIDERATIONS Prospective purchasers must carefully consider the
restrictions on purchase set forth under "ERISA
Considerations."
FORM OF CAPITAL
SECURITIES The Old Capital Securities are represented by a global
certificate or certificates registered in the name of
Cede & Co., as nominee for DTC. Beneficial interests in
the New Capital Securities will be represented by a
global certificate or certificates and will be evidenced
by, and transfers thereof will be effected only through,
records maintained by the participants in DTC. Except in
limited circumstances described herein, New Capital
Securities in certificated form will not be issued in
exchange for the global certificate or certificates. See
"Description of the Capital Securities -- Book-Entry
Only Issuance -- The Depository Trust Company."
ABSENCE OF MARKET FOR
THE CAPITAL SECURITIES The Capital Securities will be a new issue of securities
for which there is currently no market. There can be no
assurance as to the development or liquidity of any
market for the Capital Securities.
TRADING PRICE 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 is likely to decline if interest
rates rise.
For additional information with respect to the Capital Securities, see
"Description of the Capital Securities," "Description of the Guarantee,"
"Description of the Subordinated Debt Securities," and "United States Federal
Income Taxation."
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RISK FACTORS
Prior to deciding whether to participate in the Exchange Offer, holders of
Old Capital Securities should carefully review the information contained
elsewhere, or incorporated by reference, in this Prospectus and should
particularly consider the following matters:
ABSENCE OF PUBLIC TRADING MARKET
The Old Capital Securities were issued to, and Transamerica believes are
currently owned by, a relatively small number of beneficial owners. The Old
Capital Securities have not been registered under the Securities Act and will be
subject to restrictions on transferability to the extent that they are not
exchanged for the New Capital Securities. Although the New Capital Securities
will generally be permitted to be resold or otherwise transferred by the holders
(who are not affiliates of Transamerica or the Trust) without compliance with
the registration requirements under the Securities Act, they will constitute a
new issue of securities with no established trading market. Capital Securities
may be transferred by the holders thereof only in blocks having a liquidation
amount of not less than $100,000 (100 Capital Securities). Transamerica and the
Trust have been advised by the Initial Purchasers that the Initial Purchasers
presently intend to make a market in the New Capital Securities. However, the
Initial Purchasers are not obligated to do so and any market-making activity
with respect to the New Capital Securities may be discontinued at any time
without notice. 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. Accordingly, no assurance can be given that an active
public or other market will develop for the New Capital Securities or the Old
Capital Securities or as to the liquidity of or the trading market for the New
Capital Securities or the Old Capital Securities. If an active public market
does not develop, the market price and liquidity of the New Capital Securities
may be adversely affected.
If a public trading market for the New Capital Securities develops, future
trading prices of such securities will depend on many factors, including, among
other things, prevailing interest rates, results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of
Transamerica, the New Capital Securities may trade at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of Transamerica or the Trust 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 broker-dealer that receives New Capital Securities for its own account
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, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See "Plan of
Distribution."
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED DEBT
SECURITIES
The obligations of Transamerica under the Guarantee and the Subordinated
Debt Securities are subordinate and junior in right of payment to all present
and future Senior Indebtedness of Transamerica and rank pari passu with
obligations to or rights of Transamerica's other general unsecured creditors,
including the holders of the Outstanding Subordinated Debentures. No payment of
principal of (including redemption payments, if any) or interest on the
Subordinated Debt Securities may be made if (i) any Senior Indebtedness of
Transamerica 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 Transamerica
has been accelerated because of a default. As of December 31, 1997, Transamerica
had $404.8 million of Senior Indebtedness (excluding indebtedness of
Transamerica's subsidiaries guaranteed by Transamerica), and the indebtedness of
Transamerica's subsidiaries aggregated $5.8 billion. There are no terms in the
Capital Securities, the Subordinated Debt Securities, or the Guarantee that
limit the ability of Transamerica or its subsidiaries to incur additional
indebtedness, including indebtedness
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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."
Because Transamerica is a holding company, the Subordinated Debt Securities
and the Guarantee are effectively subordinated to all existing and future
liabilities, including trade payables, of Transamerica's subsidiaries, except to
the extent that Transamerica is a creditor of the subsidiaries recognized as
such.
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 First National Bank of Chicago will act
as trustee (the "Guarantee Trustee"). The 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
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Capital Securities, to the extent the Trust has funds available therefor,
(ii) the Redemption Price, including all accrued and unpaid distributions to the
date of redemption with respect to Capital Securities called for redemption by
the Trust, to the extent the Trust has funds available therefor, and (iii) upon
a voluntary or involuntary liquidation, 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), 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, or (b) the amount of assets of the Trust remaining
available for distribution to holders of the Capital Securities in liquidation
of the Trust.
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 Transamerica 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 Transamerica 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 Transamerica
pursuant to the terms of the Subordinated Debt Securities or (ii) by such holder
of the Capital Securities of the Institutional Trustee's right against
Transamerica to enforce payments of principal of and interest on the
Subordinated Debt Securities having an aggregate principal amount equal to the
aggregate liquidation amount of Capital Securities of such holder. 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 and the Indenture, including the subordination
provisions thereof.
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 Transamerica. 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 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
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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
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 Transamerica 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
Transamerica to pay interest or principal on the Subordinated Debt Securities on
the respective dates such interest or principal 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 a legal
proceeding directly against Transamerica 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 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, Transamerica, as the holder of the Common
Securities, will be subrogated to the rights of such holder of the Capital
Securities under the Declaration to the extent of any payment made by
Transamerica to the 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. See "Description
of the Capital Securities -- Declaration Events of Default."
OPTION TO EXTEND INTEREST PAYMENT PERIOD FOR UP TO FIVE YEARS AND CONSEQUENT
DEFERRAL
OF DISTRIBUTIONS ON CAPITAL SECURITIES
Transamerica has the right, subject to certain conditions, 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 one or more
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. 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 extent permitted by law, by the Trust. In the event
Transamerica exercises this right to defer interest payments and such deferral
is continuing, or if there shall have occurred and be continuing any Indenture
Event of Default or if Transamerica shall fail to perform any of its payment or
other obligations under the Guarantee, (i) Transamerica 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 (a) purchases or
acquisitions of shares of any such capital stock or rights to acquire such
capital stock in connection with the satisfaction by Transamerica of its
obligations under any employee benefit plans, (b) as a result of a
reclassification of Transamerica's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or series of
Transamerica's capital stock or rights to acquire such capital stock for another
class or series of Transamerica's capital stock or rights to acquire such
capital stock, (c) the purchase of fractional interests in shares of
Transamerica's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged or (d)
dividends and distributions made on Transamerica's capital stock or rights to
acquire such capital stock with Transamerica's capital stock or rights to
acquire such capital stock) or make any guarantee payments with respect to the
foregoing and (ii) Transamerica shall not make any payment of interest or
principal on or repay, repurchase or redeem any debt securities issued by
Transamerica that rank pari passu with or junior to the Subordinated Debt
Securities. Prior to the termination of any such Extension Period, Transamerica
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 consecutive extensions, may not exceed 10 consecutive semiannual
periods or extend beyond the maturity date of the Subordinated Debt Securities.
Upon the termination of any Extension Period and the payment of all amounts then
due, Transamerica may commence a new Extension Period, subject to the terms set
forth herein. See "Description of the Capital Securities --
18
<PAGE> 19
Distributions" and "Description of the Subordinated Debt Securities -- Option to
Extend Interest Payment Period" and "-- Certain Covenants."
During each Extension Period, each holder of the 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, which will be allocated but not distributed to holders of
the Capital Securities. 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 "United States Federal Income
Taxation -- US Holders -- Original Issue Discount."
Transamerica has no current intention of exercising its right to defer
payments of interest on the Subordinated Debt Securities. However, should
Transamerica 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 Transamerica'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 other securities on which OID accrues that do not have
such rights.
EXCHANGE OF CAPITAL SECURITIES FOR SUBORDINATED DEBT SECURITIES; TAX EVENT
REDEMPTION
Transamerica, 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 the receipt of a Redemption Tax Opinion)
and, after satisfaction of liabilities to creditors of the Trust (to the extent
not paid by Transamerica), cause the Subordinated Debt Securities to be
distributed to the holders of the Capital Securities and the Common Securities
on a pro rata basis in accordance with the aggregate stated liquidation amount
thereof, in liquidation of the Trust. See "Description of the Capital
Securities -- Liquidation Distribution Upon Dissolution." Upon the occurrence of
a Tax Event and receipt of a Redemption Tax Opinion as described under
"Description of the Capital Securities -- Redemption," Transamerica 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 on a pro rata basis to
the same extent the Subordinated Debt Securities are redeemed by Transamerica.
See "Description of the Capital Securities -- Redemption."
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 "United States Federal Income
Taxation -- US Holders -- Receipt of Subordinated Debt Securities or Cash upon
Liquidation of 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 or liquidation of the Trust
were to occur. Accordingly, the Capital Securities that an investor may
purchase, whether pursuant to the offering made hereby or in the secondary
market, or the Subordinated Debt Securities that a holder of Capital Securities
may receive on dissolution and liquidation of the Trust, may trade in the
secondary market at a discount to the price paid to purchase the Capital
Securities offered hereby. Because the ability of the Trust to pay amounts due
on the Capital Securities is wholly dependent upon Transamerica 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, prospective 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 Transamerica. See "Description of the Capital Securities" and
"Description of the Subordinated Debt Securities."
19
<PAGE> 20
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
The Indenture contains no 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 Transamerica 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 an Indenture Event of Default. Holders of Capital Securities
will not be entitled to appoint, remove or replace the Administrators. The
Institutional Trustee and holders of a majority of the stated liquidation amount
of the Common Securities may amend the Declaration without the consent of
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 be registered as an investment company under the 1940 Act (as
defined herein) or to ensure that the Declaration will be qualified under the
Trust Indenture Act, even if such action adversely affects the interests of such
holders. See "Description of the Capital Securities -- Voting Rights,"
"-- Removal of the Issuer Trustees; Appointment of Successors" and
"-- Modification of the Declaration."
POSSIBLE DECLINE OF 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 A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
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). Transamerica 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, and 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 the Capital Securities -- General." If, under certain
circumstances set forth in the Registration Rights Agreement, the Exchange Offer
is not consummated on or prior to the 225th day following the date of original
issuance of the Old Subordinated Debt Securities and the Old Capital Securities
(subject to extension in certain circumstances), interest will accrue (in
addition to the stated interest thereon) from and including the next day
following such 225-day period. Such additional interest (the "Special Payment")
will be payable in cash semiannually in arrears on each Distribution Payment
Date or
20
<PAGE> 21
each Interest Payment Date (as defined herein), at a rate per annum equal to
0.25% of the principal amount or liquidation amount, as applicable, of the Old
Subordinated Debt Securities and the Old Capital Securities. The aggregate
amount of Special Payment payable pursuant to the above provisions will in no
event exceed 0.25% per annum of the principal amount or the liquidation amount,
as applicable, of the Old Subordinated Debt Securities and the 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. See "The Exchange Offer -- Purpose and Effect of
the Exchange Offer."
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 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. The Trust is under no duty to give
notification of defects or irregularities with respect to the tenders of Old
Capital Securities for exchange.
21
<PAGE> 22
SELECTED CONSOLIDATED FINANCIAL INFORMATION
TRANSAMERICA CORPORATION
The selected consolidated financial information contained in the following
table is qualified in its entirety by, and should be read in conjunction with,
the detailed information and financial statements and notes thereto included in
the documents incorporated by reference herein. See "Incorporation of Certain
Documents by Reference."
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------------------------------------
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
(IN MILLIONS, EXCEPT FOR SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues.................................. $ 4,159.0 $ 4,663.9 $ 5,170.3 $ 5,311.7 $ 5,726.5
Income from continuing operations......... $ 354.5 $ 336.9 $ 390.1 $ 501.5 $ 532.0
Income (loss) from discontinued
operations.............................. 46.0 90.3 80.4 (45.2) 261.8
Extraordinary loss on early extinguishment
of debt................................. (23.1)
--------- --------- --------- --------- ---------
Net income................................ $ 377.4 $ 427.2 $ 470.5 $ 456.3 $ 793.8
========= ========= ========= ========= =========
Earnings per common share:
Basic:
Income from continuing operations......... $ 4.22 $ 4.21 $ 5.41 $ 7.27 $ 8.12
Income (loss) from discontinued
operations.............................. 0.58 1.24 1.17 (0.68) 4.05
Extraordinary loss on early extinguishment
of debt................................. (0.29)
--------- --------- --------- --------- ---------
Net income................................ $ 4.51 $ 5.45 $ 6.58 $ 6.59 $ 12.17
========= ========= ========= ========= =========
Diluted:
Income from continuing operations......... $ 4.12 $ 4.13 $ 5.31 $ 7.10 $ 7.87
Income (loss) from discontinued
operations.............................. 0.57 1.23 1.15 (0.66) 3.92
Extraordinary loss on early extinguishment
of debt................................. (0.28)
--------- --------- --------- --------- ---------
Net income................................ $ 4.41 $ 5.36 $ 6.46 $ 6.44 $ 11.79
========= ========= ========= ========= =========
Average number of common shares
outstanding............................. 78.5 72.6 68.8 66.6 64.7
Ratio of earnings from continuing
operations to fixed charges(1).......... 2.47 2.55 2.36 2.52 2.32
Balance sheet data (at period end):
Total assets.............................. $35,956.6 $40,299.0 $47,952.6 $49,931.2 $51,172.9
Notes and loans payable:
Short-term and current portion of
long-term debt....................... 2,023.0 1,684.0 996.3 1,241.3 998.6
Long-term debt.......................... 5,681.0 7,489.1 9,341.5 9,087.0 5,236.7
Stockholders' equity(2)................... 3,363.5 2,735.8 4,299.9 4,140.6 4,881.3
Book value per common share(2)............ 38.46 34.87 58.61 57.99 77.60
</TABLE>
- ---------------
(1) The consolidated ratios of earnings from continuing operations to fixed
charges were computed by dividing income from continuing operations before
fixed charges and income taxes by the fixed charges. Fixed charges consist
of interest and debt expense, minority interest charges related to certain
securities of affiliates and one-third of rent expense, which approximates
the interest factor.
(2) In the first quarter of 1994, Transamerica adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," which resulted in all of Transamerica's investments
in debt securities being reported at fair value. There is no effect on the
income statement from the adoption of this new accounting standard and prior
periods have not been restated.
22
<PAGE> 23
CAPITALIZATION
The following table sets forth the consolidated short-term obligations and
capitalization of Transamerica as of December 31, 1997, which reflects the sale
of the Capital Securities and the application of the net proceeds thereof. The
issuance of the New Capital Securities in the Exchange Offer will have no effect
on the capitalization of Transamerica.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------
(IN MILLIONS)
<S> <C>
Short-term debt and current portion of long-term debt....... $ 998.6
Life insurance policy liabilities........................... 30,141.9
Other liabilities........................................... 2,096.9
Long-term debt(1)........................................... 5,236.7
Minority interest in capital securities of affiliates(2).... 715.0
Stockholders' equity:
Common stock, par value $1.00 per share; 150,000,000
shares authorized; 62,904,108 shares outstanding, after
deducting 16,834,354 shares in treasury................ 62.9
Retained earnings........................................... 3,330.8
Net unrealized gain from investments marked to fair value... 1,533.6
Foreign currency translation adjustments.................... (46.0)
---------
Total stockholders' equity............................. 4,881.3
Total capitalization (excluding life insurance policy
liabilities, other liabilities and short-term
obligations).......................................... $10,833.0
=========
</TABLE>
- ---------------
(1) Senior Indebtedness of Transamerica, for purposes of the subordination
provisions of the Subordinated Debt Securities, includes only indebtedness
of Transamerica on an unconsolidated basis. As of December 31, 1997, such
Senior Indebtedness aggregated $404.8 million. Because Transamerica is a
holding company, the Subordinated Debt Securities are also effectively
subordinated to all other long-term debt and short-term obligations set
forth in the above table, as well as other liabilities of Transamerica's
subsidiaries.
(2) As described herein, the sole assets of the Trust are the Subordinated Debt
Securities with a principal amount of $190 million. The Subordinated Debt
Securities bear interest at the rate of 7 5/8% per annum and will mature on
November 15, 2037. Transamerica owns all of the Common Securities of the
Trust. Upon redemption of the Subordinated Debt Securities, the Capital
Securities will be mandatorily redeemable.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as an affiliate
of Transamerica and, accordingly, the accounts of the Trust will be included in
the consolidated financial statements of Transamerica. The Capital Securities
will be presented in the consolidated balance sheet of Transamerica as a
separate line item directly above stockholders' equity under the caption
"Minority interest in capital securities of affiliates" and appropriate
disclosures about the Capital Securities, the Guarantee and the Subordinated
Debt Securities will be included in the notes to the consolidated financial
statements. For financial reporting purposes, Transamerica will record
distributions payable on the Capital Securities as an expense in its
consolidated statement of income.
TRANSAMERICA CORPORATION
Transamerica is a financial services organization which engages, primarily
through its subsidiaries, in life insurance, commercial lending, leasing and
real estate services. At December 31, 1997, Transamerica had consolidated assets
of $51.2 billion and total stockholders' equity of $4.9 billion. For the year
ended December 31, 1997, Transamerica had revenues of $5.7 billion and net
income of $793.8 million. Transamerica was incorporated in Delaware in 1928.
The principal executive offices of Transamerica are located at 600
Montgomery Street, San Francisco, California 94111 (Telephone: (415) 983-4000).
23
<PAGE> 24
THE TRUST
The Trust is a statutory business trust continued under Delaware law
pursuant to (i) an amended and restated declaration of trust (the "Declaration")
executed by Transamerica, as sponsor for the Trust (the "Sponsor"), the Issuer
Trustees (as defined herein) and the Administrators (as defined herein) for the
Trust and (ii) a certificate of trust filed with the Delaware Secretary of State
on October 31, 1997. The Trust exists for the exclusive purpose of (i) issuing
and selling the Trust Securities representing undivided beneficial interests in
the assets of the Trust, (ii) investing the gross proceeds of the Trust
Securities in the Subordinated Debt Securities, (iii) effecting the Exchange
Offer, including exchanging up to $195,877,000 aggregate principal amount of the
Old Subordinated Debt Securities for up to $195,877,000 aggregate principal
amount of the New Subordinated Debt Securities, and (iv) engaging in only those
other activities necessary or incidental thereto. All of the Common Securities
are directly owned by Transamerica. The Common Securities rank pari passu, and
payments will be made thereon pro rata, with the Capital Securities, except
that, upon a Declaration Event of Default, the rights of the holders of the
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Capital Securities. Transamerica acquired the 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. Transamerica, 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
the receipt of a Redemption Tax Opinion) and, after satisfaction of liabilities
to creditors of the Trust (to the extent not satisfied by Transamerica), cause
the Subordinated Debt Securities to be distributed to the holders of the Capital
Securities and the Common Securities on a pro rata basis in accordance with the
aggregate stated liquidation amount thereof, in liquidation of the Trust.
The Trust's business and affairs are conducted by its trustees and the
Administrators, as set forth in the Declaration. The holders of the Capital
Securities are not entitled to appoint, remove or replace any of the Trust's
trustees except upon the occurrence of an Indenture Event of Default. The duties
and obligations of the Trust's trustees are governed by the Declaration. One of
the Trust's trustees is required to be a financial institution that is
unaffiliated with Transamerica and is eligible to act as (i) institutional
trustee (the "Institutional Trustee"), (ii) guarantee trustee under the
Guarantee (the "Guarantee Trustee"), and (iii) indenture trustee pursuant to the
Indenture (the "Indenture Trustee"). The First National Bank of Chicago, a
national banking association, is the Institutional Trustee, Guarantee Trustee
and Indenture Trustee. One of the Trust's trustees is required to be an entity
that maintains its principal place of business in the State of Delaware (the
"Delaware Trustee" and together with the Institutional Trustee, the "Issuer
Trustees"). First Chicago Delaware Inc., an affiliate of the Institutional
Trustee, is acting as Delaware Trustee. In addition, three individuals who are
employees or officers of or affiliated with the holder of the majority in
liquidation amount of the Common Securities, act as administrators with respect
to the Trust (the "Administrators"). The Administrators were selected by the
holders of a majority in liquidation amount of the Common Securities. The
Administrators have only those ministerial duties set forth in the Declaration
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 of Capital
Securities.
The Institutional Trustee holds title to the Subordinated Debt Securities
for the benefit of the holders of the Trust Securities, and the Institutional
Trustee 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. 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. Transamerica, as Sponsor, will not have the right to remove or replace
the Institutional Trustee or the Delaware Trustee. The Indenture Trustee may be
removed only under limited circumstances as provided in the Indenture.
Transamerica has agreed 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
24
<PAGE> 25
Securities. See "Description of the Subordinated Debt
Securities -- Miscellaneous." The rights of the holders of the Capital
Securities, including economic rights, rights to information and voting rights,
are set forth in the Declaration, the Delaware Business Trust Act, as amended
(the "Trust Act"), and the Trust Indenture Act. See "Description of the Capital
Securities." The principal place of business of the Trust is c/o Transamerica
Corporation, 600 Montgomery Street, San Francisco, California 94111 (Telephone:
(415) 983-4000).
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, Transamerica and
the Trust entered into the Registration Rights Agreement with the Initial
Purchasers, pursuant to which Transamerica and the Trust agreed, among other
things, to file and to use their best efforts to cause to become effective with
the Commission a registration statement with respect to the exchange of the Old
Capital Securities for capital securities which have been registered under the
Securities Act with terms identical in all material respects to the terms of the
Old Capital Securities. The Guarantee, which has been registered under the
Securities Act, will apply to the New Capital Securities. 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
Transamerica 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 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 will not
provide for any increase in the Distribution Rate thereon. In that regard, if,
under certain circumstances set forth in the Registration Rights Agreement, the
Exchange Offer is not consummated on or prior to the 225th day following the
date of original issuance of the Old Subordinated Debt Securities and the Old
Capital Securities (subject to extension in certain circumstances), interest
will accrue (in addition to the stated interest thereon) from and including the
next day following such 225-day period. Such Special Payment will be payable in
cash semiannually in arrears on each Distribution Payment Date or each Interest
Payment Date (as defined herein), at a rate per annum equal to 0.25% of the
principal amount or liquidation amount, as applicable, of the Old Subordinated
Debt Securities and the Old Capital Securities. The aggregate amount of Special
Payment payable pursuant to the above provisions will in no event exceed 0.25%
per annum of the principal amount or the liquidation amount, as applicable, of
the Old Subordinated Debt Securities and the Old Capital Securities. Upon
consummation of the Exchange Offer, holders of Old Capital Securities that
remain outstanding 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. See "Risk Factors -- Consequences
of a Failure to Exchange Old Capital Securities."
The Exchange Offer is not being made to, nor will Transamerica or the Trust
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, Transamerica will exchange as
soon as practicable after the date hereof, $195,877,000 aggregate principal
amount of the Old Subordinated Debt Securities for a like aggregate principal
amount of the New Subordinated Debt Securities. The New Subordinated Debt
Securities have also been registered under the Securities Act.
25
<PAGE> 26
TERMS OF THE EXCHANGE
Transamerica and the Trust hereby offer, upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal, to exchange up to $190,000,000 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 (as defined
below) 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 $190,000,000 of New Capital Securities in exchange
for a like 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.
The Exchange Offer is not conditioned upon any minimum liquidation amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$190,000,000 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."
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.
Transamerica 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 TRANSAMERICA NOR THE ADMINISTRATORS OR
ISSUER TRUSTEES 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.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on May 15,
1998 unless the Exchange Offer is extended by Transamerica and the Trust (in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended). Transamerica and the Trust expressly
reserve the right in their sole and absolute 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 Transamerica and the Trust determine, in their sole and absolute 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
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withdraw their tendered Old Capital Securities as described under "-- Withdrawal
Rights," and (iv) to waive any condition or otherwise amend the terms of the
Exchange Offer in any respect. If the Exchange Offer is amended in a manner
determined by Transamerica and the Trust to constitute a material change, or if
Transamerica and the Trust waive a material condition of the Exchange Offer,
Transamerica or the Trust will promptly disclose such amendment or waiver by
means of a prospectus supplement that will be distributed to the registered
holders of the Old Capital Securities, and Transamerica and the Trust will
extend the Exchange Offer to the extent required by Rule 14e-1 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 Transamerica or the Trust may choose to make any public
announcement and subject to applicable law, neither Transamerica nor the Trust
shall have any 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,
Transamerica and 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, (ii) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, 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.
Subject to the terms and conditions of the Exchange Offer, Transamerica 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
Transamerica or the Trust gives oral or written notice to the Exchange Agent of
Transamerica'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 Transamerica 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 Transamerica's and the Trust's
acceptance for exchange of Old Capital Securities) or Transamerica or the Trust
extends the Exchange Offer or is unable to accept for exchange or exchange Old
Capital Securities tendered pursuant to the Exchange Offer, then, without
prejudice to Transamerica's or the Trust's rights set forth herein, the Exchange
Agent may, nevertheless, on behalf of Transamerica 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, 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
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and agree that it will, upon request, execute and deliver any additional
documents deemed by Transamerica, 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 and any other required documents, must be
received by the Exchange Agent at its address set forth under "-- Exchange
Agent," and either (i) tendered Old Capital Securities must be received by the
Exchange Agent on or prior to the Expiration Date, 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 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 a tendering holder's Old Capital Securities are
tendered, the tendering holder should fill in the amount of Old Capital
Securities being tendered in the appropriate box on 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 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 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 (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) 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 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 (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
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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 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 properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees and
any other documents required by the Letter of Transmittal, are received by the
Exchange 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), 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
with respect to Old Capital Securities and other required documents are received
by the Exchange Agent.
The acceptance by Transamerica and the Trust for exchange of Old Capital
Securities tendered pursuant to any of the procedures described above will
constitute a binding agreement among the tendering holder, Transamerica 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 Transamerica and the
Trust, in their sole discretion, whose determination shall be final and binding
on all parties. Transamerica and the Trust reserve the absolute right, in their
sole and absolute 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 Transamerica and the Trust, be unlawful. Transamerica 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
the 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.
Transamerica'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 Transamerica, the Trust, any
affiliates or assigns of Transamerica 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 Transamerica
or the Trust, proper evidence satisfactory to Transamerica or the Trust, in
their sole discretion, of such person's authority to so act must be submitted.
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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.
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, Transamerica and the Trust believe
that holders of Old Capital Securities (other than any holder that is an
"affiliate" of Transamerica or the Trust as defined under Rule 405 of the
Securities Act) who exchange their Old Capital Securities for New Capital
Securities pursuant to the Exchange Offer may offer such New Capital Securities
for resale, resell such New Capital Securities and otherwise transfer such New
Capital Securities 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 are not engaged in, and do not intend to engage in, a distribution
of such New Capital Securities and have no arrangement or understanding with any
person to participate in the distribution of such New Capital Securities.
However, the staff of the Commission has not considered and will not consider
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. However, any holder of Old Capital
Securities who is an "affiliate" of Transamerica or the Trust or who intends to
participate in the Exchange Offer for the purpose of distributing New Capital
Securities, or any broker-dealer who purchased Old Capital Securities from the
Trust to resell pursuant to Rule 144A or any other available exemption under the
Securities Act, (a) will not be able to rely on the interpretations of the staff
of the Commission set forth in the above-mentioned interpretive letters, (b)
will not be permitted or entitled to tender such Old Capital Securities in the
Exchange Offer and (c) 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. In addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Capital
Securities for New Capital Securities, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such New Capital Securities.
Each holder of Old Capital Securities (other than certain specified
holders) who wishes to exchange them for New Capital Securities in the Exchange
Offer will be required to represent that: (i) it is not an "affiliate" of
Transamerica 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 is not
engaged in, and does not intend to engage in, a distribution (within the meaning
of the Securities Act) of such New Capital Securities and has no arrangement or
understanding to participate in a distribution of 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 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, a broker-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 interpretive letters
referred to above, Transamerica and the Trust believe that broker-dealers who
acquired Old Capital Securities for their own accounts as a result of
market-making activities or other trading activities 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. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, Transamerica
and the Trust have agreed to allow the Participating Broker-Dealers to use
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this Prospectus, as it may be amended or supplemented from time to time, in
connection with resales of such New Capital Securities for a period of 180 days
after the Expiration Date. See "Plan of Distribution." Any Participating
Broker-Dealer who is an "affiliate" of Transamerica or the Trust may not rely on
such interpretive 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 Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that, upon receipt of notice from
Transamerica 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, such Participating Broker-Dealer
will suspend the sale of New Capital Securities pursuant to this Prospectus
until Transamerica 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 Participating Broker-Dealer or Transamerica or
the Trust has given notice that the sale of the New Capital 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 serial 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," then 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 re-tendered 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 Transamerica and the
Trust, in their sole discretion, whose determination shall be final and binding
on all parties. Neither Transamerica, the Trust, any affiliates or assigns of
Transamerica 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.
DISTRIBUTIONS ON THE 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
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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 November 14, 1997. However,
because Distributions on the New Capital Securities will accumulate from such
date, the amount of the Distributions received by holders whose Old Capital
Securities are accepted for exchange will not be affected by the exchange.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, Transamerica 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
Transamerica 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 Transamerica's and the Trust's judgment,
would reasonably be expected to impair the ability of the Trust or
Transamerica to proceed with the Exchange Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in Transamerica's and the Trust's judgment, would reasonably
be expected to impair the ability of the Trust or Transamerica 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 Transamerica's and the
Trust's judgment, would reasonably be expected to impair the ability of the
Trust or Transamerica 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 authority which, in Transamerica's and
the Trust's judgment, would reasonably be expected to impair the ability of
the Trust or Transamerica 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
Transamerica or the Trust, threatened for that purpose or any government
approval has not been obtained, which approval Transamerica 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 Transamerica or any of
its subsidiaries has occurred which, in the sole judgment of Transamerica
and the Trust, might materially impair the ability of the Trust or
Transamerica to proceed with the Exchange Offer.
If Transamerica and the Trust determine in their sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, Transamerica and the Trust may, subject to applicable
law, terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore
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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, Transamerica and the Trust
will promptly disclose such amendment or waiver by means of a prospectus
supplement that will be distributed to the registered holders of the Old Capital
Securities, and Transamerica and the Trust will extend the Exchange Offer to the
extent required by Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
The First National Bank of Chicago has been appointed as Exchange Agent for
the Exchange Offer. Delivery of the Letter 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 First National Bank of Chicago
c/o First Chicago Trust
Company of New York
14 Wall Street,
8th Floor, Window 2
New York, New York 10005
Telephone: (212) 240-8801
Facsimile: (212) 240-8938
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
Transamerica 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. Transamerica 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 Transamerica nor the Trust will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
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 acts as trustee for the Capital Securities under the Declaration. The
Declaration has been qualified under the Trust Indenture Act. The terms of the
Capital Securities include those stated in the Declaration and those made part
of such Declaration by the Trust Indenture Act and the Trust Act. The following
summary of the material terms and provisions of 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 may be obtained from Transamerica
or the Trust), the Trust Act and the Trust Indenture Act.
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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 Transamerica.
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 purchased by the Trust 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
or upon liquidation of the Trust, are guaranteed by Transamerica as described
under "Description of the Guarantee." The Guarantee will be held by the
Guarantee Trustee for the benefit of the holders of the Capital Securities. The
Guarantee does not cover payment of distributions or other payments in respect
of Capital Securities to the extent the Trust does not have available funds to
pay such amounts. In such event, the remedy of holders of the 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 "-- Declaration Events of Default" and "-- Voting Rights."
DISTRIBUTIONS
Distributions on the Capital Securities are fixed at a rate per annum of
7 5/8% of the stated liquidation amount of $1,000 per Capital Security (the
"Distribution Rate"). Distributions in arrears for more than one semiannual
period will accrue on the Capital Securities at the distribution rate per annum
of 7 5/8% thereof, compounded semiannually, to the extent permitted by law. The
term "distribution" as used herein includes 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.
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.
Distributions on the Capital Securities will be cumulative, will accrue
from the original date of issuance of the Capital Securities, and will be
payable, subject to extension of distribution payment periods as described
herein, semiannually in arrears on November 15 and May 15 of each year (each, a
"Distribution Payment Date"), commencing May 15, 1998, when, as and if available
for payment. Distributions will be made by the Institutional Trustee, except as
otherwise described below.
Transamerica has the right under the Indenture to defer payments of
interest on the Subordinated Debt Securities by extending at any time and from
time to time the interest payment period for one or more Extension Periods,
subject to the conditions described below, although such interest would continue
to accrue on the Subordinated Debt Securities at a rate of 7 5/8% 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 7 5/8% 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
one or more 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 Transamerica is in default
in the payment of interest that has become due and payable on the Subordinated
Debt Securities, and no Extension Period may extend beyond the maturity date of
the Subordinated Debt Securities. In the event that Transamerica exercises this
right, then, during any Extension Period (i) Transamerica 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 (a) purchases or
acquisitions of shares of any such capital stock or rights to
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acquire such capital stock in connection with the satisfaction by Transamerica
of its obligations under any employee benefit plans, (b) as a result of a
reclassification of Transamerica's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or series of
Transamerica's capital stock or rights to acquire such capital stock for another
class or series of Transamerica's capital stock or rights to acquire such
capital stock, (c) the purchase of fractional interests in shares of
Transamerica's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged or (d)
dividends and distributions made on Transamerica's capital stock or rights to
acquire such capital stock with Transamerica's capital stock or rights to
acquire such capital stock), or make guarantee payments with respect to the
foregoing, and (ii) Transamerica shall not make any payment of interest or
principal on or repay, repurchase or redeem any debt securities issued by
Transamerica that rank pari passu with or junior to the Subordinated Debt
Securities. Prior to the termination of any such Extension Period in respect of
the Subordinated Debt Securities, Transamerica 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 date of the Subordinated Debt Securities. Upon the
termination of any Extension Period, Transamerica 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
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 Transamerica 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 Transamerica 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 herein) 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 Capital Securities are not held solely in book-entry form, the
Administrators shall select record dates, which shall be 15 days prior to the
relevant Distribution 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 are scheduled to mature on November 15,
2037. The Subordinated Debt Securities may be redeemed by Transamerica at par,
together with accrued and unpaid interest thereon to the date of redemption, in
whole or in part, at any time upon the occurrence of a Tax Event and receipt of
a Redemption Tax Opinion, but are not otherwise redeemable at the option of
Transamerica prior to maturity.
Upon the repayment or payment of the Subordinated Debt Securities (other
than following the distribution of the Subordinated Debt Securities to the
holders of the Trust Securities), whether at maturity or upon redemption, the
proceeds from such repayment or payment shall simultaneously be applied to
redeem,
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on a pro rata basis, at the Redemption Price, 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, the Capital Securities will be redeemed
on a pro rata basis; provided that the 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" means that the Institutional Trustee shall have received an
opinion of a nationally recognized independent tax counsel to Transamerica
experienced in such matters to the effect that, as a result of (i) 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, (ii) 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 (iii) 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 November 7, 1997, there is more than an
insubstantial risk that (a) 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, (b)
any portion of interest payable by Transamerica to the Trust on the Subordinated
Debt Securities is not, or within 90 days of the date thereof will not be,
deductible by Transamerica for United States federal income tax purposes, or (c)
Transamerica 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).
If, at any time, a Tax Event shall occur and be continuing, and
Transamerica receives an opinion (a "Redemption Tax Opinion") of 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 Transamerica
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," Transamerica 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 the holders, 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, and, following such redemption, Trust Securities with an aggregate
liquidation amount equal to the aggregate principal amount of such Subordinated
Debt Securities so redeemed shall be redeemed by the Trust on a pro rata basis
at the applicable Redemption Price; provided, however, that if (i) at the time
there is available to Transamerica 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,
Transamerica or the holders of the Trust Securities and (ii) if such notice has
not been given, Transamerica or the Trust will pursue such measure in lieu of
redemption.
The rights of Transamerica described above if a Tax Event occurs are in
addition to the right of Transamerica, as the holder of the Common Securities,
at any time to dissolve the Trust, after satisfaction of liabilities to
creditors of the Trust and cause the Subordinated Debt Securities to be
distributed to holders of the Trust Securities as described above.
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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 the
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 the Capital
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, provided that Transamerica has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related
redemption of the Subordinated Debt Securities, the Institutional Trustee will
irrevocably deposit with DTC or its nominee funds sufficient to pay the
applicable Redemption Price with respect to Capital Securities held in
book-entry form and will give DTC 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
the Capital Securities that are Certificated Securities (as defined herein),
provided that Transamerica has paid to the Institutional Trustee a sufficient
amount of cash in connection with the related redemption 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 and all rights of
holders of such Capital Securities so called for redemption 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 is
improperly withheld or refused and not paid by the Institutional Trustee or by
Transamerica 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 Capital Securities are
to be redeemed, Capital Securities will be redeemed on a pro rata basis,
provided that 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."
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
Capital 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.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), Transamerica 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 any 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 Transamerica), 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 Distribu-
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tion"), unless, in connection with such Liquidation, the Subordinated Debt
Securities in an aggregate stated principal amount equal to the aggregate stated
liquidation amount of the Capital Securities have been distributed on a pro rata
basis to the holders of the Capital Securities.
Transamerica, 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 the receipt of a Redemption Tax Opinion)
and, after satisfaction of liabilities to creditors of the Trust (to the extent
not satisfied by Transamerica), cause the Subordinated Debt Securities to be
distributed to the holders of the Capital Securities and the Common 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) November 15, 2052, the expiration of the term of the Trust, (ii) the
bankruptcy of Transamerica, (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 Transamerica or the Trust or upon
the revocation of the charter of Transamerica and the expiration of 90 days
after the date of revocation without a reinstatement thereof, (iv) the
distribution to the holders of the Trust Securities of Subordinated Debt
Securities, upon the exercise of the right of the holder of all of the
outstanding Common Securities to dissolve the Trust as described above, (v) the
entry of a decree of a judicial dissolution of Transamerica or the Trust, or
(vi) 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 of the Trust occurs as described in clause (i), (ii),
(iii) or (v) of the preceding paragraph, the Trust shall be liquidated by the
Institutional Trustee as expeditiously as such Institutional Trustee determines
to be possible by distributing, after satisfaction of liabilities to creditors
of the Trust (to the extent not satisfied by Transamerica), to the holders of
the Trust Securities 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 Transamerica), 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, after satisfaction of liabilities to creditors of the Trust (to
the extent not satisfied by Transamerica), to the holders of the Trust
Securities and such distribution occurs.
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 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 preference
over the Common Securities with regard to such distributions.
Upon any such Liquidation of the Trust involving a distribution of the
Subordinated Debt Securities, if at the time of such Liquidation, the Capital
Securities were rated by at least one nationally-recognized statistical rating
organization, Transamerica will use its reasonable best efforts to obtain from
at least one such or other rating organization a rating for the Subordinated
Debt Securities.
After the date for any distribution of the Subordinated Debt Securities
upon dissolution of the Trust, (i) the Trust Securities will be deemed to be no
longer outstanding, (ii) the Depositary or its nominee, as the record holder of
the Capital Securities issued in book-entry form, will receive a registered
Global Security (as defined herein) representing the Subordinated Debt
Securities 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 the 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 Transamerica or its agent for transfer or reissuance.
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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 Liquidation of the Trust were to occur.
Accordingly, the Capital Securities that an investor may purchase in the
secondary market, or the Subordinated Debt Securities that an investor may
receive if Liquidation of the Trust were to occur, may trade at a discount to
the price paid to purchase the Capital Securities offered hereby.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture in respect of the Subordinated Debt
Securities issued to the Trust (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 the 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 Transamerica to enforce the Institutional Trustee's rights
under such 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 Transamerica
to pay interest or principal on the Subordinated Debt Securities on the
respective dates such interest or principal is payable, as deferred, if
applicable (or in the case of redemption, the redemption date), then a holder of
record of the Capital Securities may institute a Direct Action against
Transamerica for enforcement of payment, on or after the respective due dates
specified in the Subordinated Debt Securities, to such holder directly, of
principal or interest on the Subordinated Debt Securities in an aggregate
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such holder. In connection with such Direct Action, Transamerica,
as the holder of the Common Securities, will be subrogated to the rights of such
holder of Capital Securities under the Declaration to the extent of any payment
made by Transamerica 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 and interest
on the Subordinated Debt Securities to be immediately due and payable.
Transamerica and the Trust are each required to file annually with the
Institutional Trustee an officer's certificate as to whether they have complied
with all conditions and covenants under the Declaration.
VOTING RIGHTS
Except as described herein, under the Trust Act and under "-- Removal of
Issuer 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.
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Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of 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 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 (or Super-Majority, as the case may
be) in liquidation amount of the 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 directly against
Transamerica 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 Transamerica to pay principal
of or interest on the Subordinated Debt Securities on the respective dates such
principal or interest is payable (or in the case of redemption, the redemption
date), then a holder of record of the Capital Securities may institute a Direct
Action against Transamerica 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 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 Indenture
Event of Default actually known to the Institutional Trustee with respect to the
Subordinated Debt Securities unless (a) such defaults have been cured prior to
the giving of such notice or (b) 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 interest 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 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 grantor trust for United States federal income tax purposes.
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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 the 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 the 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 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 Transamerica or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, Transamerica, 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.
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."
REMOVAL OF THE ISSUER TRUSTEES; APPOINTMENT OF SUCCESSORS
If an Indenture Event of Default has occurred and is continuing, an Issuer
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
Transamerica as the holder of the Common Securities. No resignation or removal
of an Issuer 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.
MODIFICATION OF THE DECLARATION
The Declaration may be amended from time to time by the Institutional
Trustee and the holders of a majority in 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 the Declaration
that may be defective or inconsistent with any other provision of the
Declaration, (iii) add to the covenants, restrictions or obligations of
Transamerica, (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"), (v)
modify, eliminate or add to any provision of the Declaration to such an extent
as may be necessary to ensure that the Declaration will be qualified under the
Trust Indenture Act upon effectiveness of the Registration Statement with
respect to the Capital Securities, and (vi) modify, eliminate and add to any
provision of such Declaration, provided that no such modification, elimination
or addition referred to in clauses (i), (ii), (iii) and (vi) shall adversely
affect the powers, preferences or special rights of the holders of such Capital
Securities.
In addition to the foregoing, the Declaration may be modified and amended
if approved by the Institutional Trustee and the holders of a majority in
liquidation amount 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
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, in
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each case, 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 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 adversely affect
only the Capital Securities or the Common Securities, then only the affected
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, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) 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 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, except for a deferral of
distributions during an Extension Period as provided therein.
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 under "Liquidation Distribution Upon Dissolution." The Trust
may, with the consent of the Institutional Trustee and without the consent of
the Delaware Trustee or 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 (a) expressly assumes all of
the obligations of the Trust under the Trust Securities or (b) 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 such 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)
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, (iv) 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), (v) such
successor entity has a purpose substantially identical to that of the Trust,
(vi) prior to such merger, consolidation, amalgamation or replacement, the
Institutional Trustee 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, (vii) Transamerica guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee and (viii) prior to such merger, consolidation,
amalgamation or replacement, the Institutional Trustee shall have received an
officers' certificate of the Administrators and an opinion of counsel, each to
the effect that all conditions precedent specified in this paragraph to such
transaction have been satisfied. Notwithstanding the foregoing, the Trust shall
not, except with the consent of holders of 100%
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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.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
DTC is acting as securities depository for the Capital Securities. 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, 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 Transamerica 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 Direct
or 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 or holder of
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the Capital Securities represented thereby for all purposes under the
Declaration and such Capital Securities. Accordingly, each Beneficial Owner must
rely on the procedures of DTC and, if such Beneficial Owner is not a
Participant, on the procedures of the Participant through which such Beneficial
Owner owns its interest to exercise any rights of a holder under the
Declaration.
DTC has advised Transamerica 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 as Global
Certificates will be sent to Cede & Co. If less than all of the Capital
Securities are being redeemed, Capital Securities held as Global Certificates
will be redeemed in accordance with the procedures of DTC, which currently is to
redeem by lot.
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 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 as Global Certificates 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
Transamerica, 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 Transamerica, the Trust
or the Issuer 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
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 obtained, Capital Security certificates
will be required to be printed and delivered. Additionally, the Administrators
(with the consent of Transamerica) may decide to discontinue use of the system
of book-entry transfers through DTC (or a
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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 Transamerica and the Trust believe to be
reliable, but neither Transamerica nor the Trust takes responsibility for the
accuracy thereof.
RESTRICTIONS ON TRANSFER
The Old Capital Securities were, and the New Capital Securities will be,
issued and may be transferred only in blocks having an aggregate liquidation
amount of not less than $100,000 (100 Old Capital Securities or New Capital
Securities, as the case may be). Any such transfer of the Old Capital Securities
or New Capital Securities in a block having an aggregate 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 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.
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, 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") is The
First National Bank of Chicago. The Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Institutional Trustee. In the
event that The First National Bank of Chicago shall no longer be the Paying
Agent, the Institutional Trustee shall appoint a successor to act as Paying
Agent (which shall be a bank or trust company).
REGISTRAR AND TRANSFER AGENT
The Institutional Trustee initially is acting as registrar and transfer
agent (the "Transfer Agent") for the Capital Securities.
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 Transamerica may require) in respect of
any tax or other government charges which may be imposed in relation to it.
In the event of any redemption of the Capital Securities in part, the Trust
shall not be required to (i) issue, register the transfer of or exchange any
Capital Security during a period beginning at the opening of business 15 days
before any selection for redemption of the 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 the 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 Certificated Securities being redeemed in part.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a Declaration Event
of Default and after the curing of any Declaration Event of Default that may
have occurred, undertakes to perform only such duties as are specifically set
forth in the Declaration and, after a Declaration Event of Default, shall
exercise such of the rights and powers vested in it by the 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 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
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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 Guarantee Trustee and the Indenture Trustee.
Whenever the Institutional Trustee in the exercise of its rights or powers
or the performance of its duties under the Declaration 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 in accordance with
such instructions.
Transamerica and certain of its subsidiaries maintain a banking
relationship with the Institutional Trustee in the ordinary course of their
business.
GOVERNING LAW
The Declaration and the Capital Securities will be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to conflict of laws principles.
MISCELLANEOUS
The Administrators, the Institutional Trustee and the holders of a majority
in aggregate liquidation amount of the Common Securities 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. Transamerica has agreed to conduct its affairs so that the
Subordinated Debt Securities will be treated as indebtedness of Transamerica for
United States federal income tax purposes. In this connection, the Institutional
Trustee and the holders of a majority in aggregate liquidation amount of Common
Securities are authorized to take any action, not inconsistent with applicable
law or the Declaration that the Institutional Trustee and the holders of a
majority in aggregate liquidation amount 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 rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee which
has been executed and delivered by Transamerica for the benefit of the holders
from time to time of the Capital Securities. The Guarantee will apply to the New
Capital Securities. The First National Bank of Chicago is acting as trustee (the
"Guarantee Trustee") under the Guarantee. The terms of the Guarantee will be
those set forth in the Guarantee and those made part of such Guarantee by the
Trust Indenture Act. The 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 and the Trust Indenture Act. The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Capital Securities.
GENERAL
Pursuant to the Guarantee, Transamerica 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 the Capital Securities, to the extent not paid by the
Trust (the "Guarantee Payments"), will be subject to the Guarantee (without
duplication): (i) any accrued and unpaid distributions which are required to be
paid on the Capital Securities, to the extent the Trust shall have funds
available therefor; (ii) the Redemption Price, to the extent
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the Trust has funds available therefor, with respect to any Capital Securities
called for redemption by the Trust; and (iii) upon a voluntary or involuntary
dissolution, liquidation, 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), 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. Transamerica's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by Transamerica to the holders of Capital Securities or by
causing the Trust to pay such amounts to such holders.
The Guarantee will not apply to any payment of distributions or other
payments in respect of the Capital Securities except to the extent the Trust
shall have funds available therefor, which funds will not be available except to
the extent Transamerica has made payments of interest or principal or other
payments on the Subordinated Debt Securities. See "Description of the
Subordinated Debt Securities -- Certain Covenants." The Guarantee, when taken
together with Transamerica's obligations under the Subordinated Debt Securities,
the Declaration and the Indenture, including its obligations to pay costs,
expenses, debts, liabilities and other obligations of the Trust (other than with
respect to the Trust Securities), will provide a full and unconditional
guarantee on a subordinated basis by Transamerica 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 Transamerica as
guarantor, rather than having to proceed against the Trust before attempting to
collect from Transamerica, and Transamerica waives any right or remedy to
require that any action be brought against the Trust or any other person or
entity before proceeding against Transamerica. Such obligations will not be
discharged except by payment of the Guarantee Payments in full. The Guarantee
will be 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.
Transamerica has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Common Securities
(the "Common Securities Guarantee") to the same extent as the Guarantee, except
that upon a Declaration Event of Default, holders of Capital Securities shall
have priority over holders of the Common Securities with respect to payments
made by Transamerica on or in respect of the Trust Securities under the
Guarantee and the Common Securities Guarantee.
CERTAIN COVENANTS OF TRANSAMERICA UNDER THE GUARANTEE
In the Guarantee, Transamerica has covenanted that so long as any Capital
Securities remain outstanding, during any Extension Period or if Transamerica
shall fail to perform any of its payment or other obligations under such
Guarantee or if there shall have occurred and be continuing any event that would
constitute a Declaration Event of Default, then (i) Transamerica 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 Transamerica's
capital stock or rights to acquire such capital stock (other than (a) purchases
or acquisitions of shares of any such capital stock or rights to acquire such
capital stock in connection with the satisfaction by Transamerica of its
obligations under any employee benefit plans, (b) as a result of a
reclassification of Transamerica's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or series of
Transamerica's capital stock or rights to acquire such capital stock for another
class or series of Transamerica's capital stock or rights to acquire such
capital stock, (c) the purchase of fractional interests in shares of
Transamerica's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged, or (d)
dividends and distributions made on Transamerica's capital stock or rights to
acquire such capital stock with Transamerica's capital stock or rights to
acquire such capital stock), or make any guarantee payments with respect to the
foregoing and (ii) Transamerica shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by Transamerica that rank pari passu with or junior to the
Subordinated Debt Securities.
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MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of 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 Transamerica 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 (i) upon full
payment of the Redemption Price of all Capital Securities, (ii) upon
distribution of the Subordinated Debt Securities to the holders of the Capital
Securities, or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon Liquidation 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 the Capital
Securities or the Guarantee.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of
Transamerica to perform any of its payment or other obligations thereunder.
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 Transamerica 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, Transamerica 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 Transamerica.
STATUS OF THE GUARANTEE
Transamerica's obligations under the Guarantee are subordinate and junior
in right of payment to all present and future Senior Indebtedness of
Transamerica and are also effectively subordinated to claims of creditors of
Transamerica's subsidiaries. The Guarantee does not limit the aggregate amount
of Senior Indebtedness that may be issued by Transamerica. The terms of the
Capital Securities provide that each holder of Capital Securities issued by the
Trust by acceptance thereof agrees to the subordination provisions and other
terms of the Guarantee relating thereto.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of an event of default with
respect to the Guarantee, undertakes to perform only such duties as are
specifically set forth in the Guarantee and, after an event of default, shall
exercise such of the rights and powers vested in it by the 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 Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by a 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.
Transamerica and certain of its subsidiaries maintain a banking
relationship with the Guarantee Trustee in the ordinary course of their
business.
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GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York, without regard to conflict of laws principles.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
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 December 5, 1996 (the "Base Indenture"), among
Transamerica and The First National Bank of Chicago, as trustee (the "Indenture
Trustee"), as supplemented by a Second Supplemental Indenture to be dated as of
November 14, 1997 (the Base Indenture, as so supplemented, the "Indenture"). The
terms of the Indenture are those set forth in the Indenture and those made part
thereof by the Trust Indenture Act. The Indenture, by its terms, requires
Transamerica and the Indenture Trustee to comply with the Trust Indenture Act.
The Indenture has been qualified under the Trust Indenture Act. 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 and the Trust Indenture Act. Certain capitalized
terms used herein are defined in the Indenture.
The Outstanding Debentures II and the Outstanding Debentures III were
issued under the Base Indenture, as supplemented by a First Supplemental
Indenture, dated as of December 5, 1996.
Under certain circumstances, the 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 Capital Securities, the Trust
invested the proceeds thereof, together with the consideration paid by
Transamerica for the Common Securities, in the Old Subordinated Debt Securities
issued by Transamerica. 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.
The Subordinated Debt Securities will be limited to an amount equal to the sum
of the aggregate stated liquidation amount 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 November 15, 2037.
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 the Capital Securities held
as a Global Certificate, initially be issued as a Global Security (as defined
herein) having an aggregate principal amount equal to the stated liquidation
amount of such Capital Securities and, with respect to such Capital Securities
held as Certificated Securities, will initially be represented by such
certificates and to have an aggregate principal amount equal to the stated
liquidation amount of such Capital Securities. As described herein, under
certain limited circumstances, Subordinated Debt Securities may be issued in
certificated form in exchange for a Global Security. See "-- Book-Entry And
Settlement" below. Subordinated Debt Securities represented by a Global Security
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 form, principal and
interest 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 Indenture Trustee in New
York, New York; provided that payment of interest may be made at the option of
Transamerica by check mailed to the address of the holder
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entitled thereto or by wire transfer to an account appropriately designated by
the holder entitled thereto. Notwithstanding the foregoing, so long as the
holder of any Subordinated Debt Securities is the Institutional Trustee, the
payment of principal of and interest on the Subordinated Debt Securities held by
the Institutional Trustee will be made by transfer of immediately available
funds 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 Transamerica 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 Transamerica. No payment of principal (including redemption
payments) of 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 Transamerica 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 Transamerica has been accelerated
because of a default. Upon any distribution of assets of Transamerica 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 Transamerica 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
Transamerica 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 Transamerica (i) the
principal, premium, if any, and interest in respect of (a) indebtedness of
Transamerica for money borrowed and (b) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by Transamerica, (ii) all
capital lease obligations of Transamerica, (iii) all obligations of Transamerica
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of Transamerica and all obligations of Transamerica under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of Transamerica 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
Transamerica 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 Transamerica
(whether or not such obligation is assumed by Transamerica), except for (a) any
such indebtedness that contains express terms, or is issued under a deed,
indenture or other instrument that contains express terms, providing that it is
subordinate to or ranks pari passu with the Subordinated Debt Securities, (b)
any indebtedness between or among Transamerica or any affiliate of Transamerica
and (c) all other debt securities and guarantees in respect of those debt
securities, in any case issued by Transamerica to (1) any other Delaware
business trust, or other similar trust, of which Transamerica is the sponsor,
created for the purpose of issuing capital securities in connection with the
issuance of debt securities under the Base Indenture or a trustee of such trust
and (2) any other trust, or a trustee of such trust, partnership or other entity
affiliated with Transamerica that is a financing vehicle of Transamerica (a
"financing entity") in connection with the issuance by such financing entity of
preferred securities or capital securities of a similar nature to the Capital
Securities or of other securities that rank pari passu with, or junior to, the
Capital Securities (including, without limitation, the Outstanding Subordinated
Debentures). The Outstanding Subordinated Debentures shall rank pari passu with
the Subordinated Debt Securities. Such Senior
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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 Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by Transamerica or the aggregate amount that may be incurred
by its subsidiaries. As of December 31, 1997, Senior Indebtedness of
Transamerica aggregated $404.8 million (excluding indebtedness of subsidiaries
of Transamerica guaranteed by Transamerica) and the indebtedness of
Transamerica's subsidiaries aggregated $5.8 billion.
REDEMPTION
The Subordinated Debt Securities may be redeemed by Transamerica at any
time upon the occurrence of a Tax Event and receipt of a Redemption Tax Opinion
as described under "Description of the Capital Securities -- 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, but are not otherwise redeemable at the option of
Transamerica prior to maturity.
INTEREST
The Subordinated Debt Securities bear interest at the rate of 7 5/8% per
annum from the original date of issuance, payable semiannually in arrears on
November 15 and May 15 of each year (each an "Interest Payment Date"),
commencing May 15, 1998, to the persons in whose names the Subordinated Debt
Securities are 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 or Additional Interest or any
Special Payment payable unless otherwise stated. At any time when Subordinated
Debt Securities are not held solely as Global Securities, Transamerica shall
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 Transamerica 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, Transamerica 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
one or more Extension Periods, each not exceeding 10 consecutive semiannual
periods and none extending beyond the maturity date of the Subordinated Debt
Securities, and on the date on which each such Extension Period ends, or, if
such date is not an Interest Payment Date on the immediately following Interest
Payment Date, Transamerica shall pay all interest then accrued and unpaid,
together with interest thereon at an annual rate of 7 5/8% compounded
semiannually, to the extent permitted by applicable law. During any Extension
Period (i) Transamerica 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 (a) purchases or acquisitions of shares
of any such capital stock or rights to acquire such capital stock in connection
with the satisfaction by Transamerica of its obligations under any employee
benefit plans, (b) as a result of a reclassification of Transamerica's capital
stock or rights to acquire such capital stock or the exchange or conversion of
one class or series of Transamerica's capital stock or rights to acquire such
capital stock for another class or series of Transamerica's capital stock or
rights to acquire such capital stock, (c) the
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purchase of fractional interests in shares of Transamerica's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged or (d) dividends and distributions made on
Transamerica's capital stock or rights to acquire such capital stock with
Transamerica's capital stock or rights to acquire such capital stock), or make
any guarantee payments with respect to the foregoing, and (ii) Transamerica
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by Transamerica that rank
pari passu with or junior to the Subordinated Debt Securities. Prior to the
termination of any such Extension Period, Transamerica 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 date of such Subordinated Debt Securities. Upon the
termination of any Extension Period and the payment of all amounts then due,
Transamerica may commence a new Extension Period, subject to the terms set forth
herein. 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.
Transamerica 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, Transamerica shall give the Administrators, the Institutional
Trustee and the Indenture Trustee notice of its initiation of any Extension
Period one Business Day prior to the earlier of (i) the next succeeding
Distribution Payment Date or (ii) the date the Administrators are required to
give notice to holders of the Capital Securities 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 Transamerica's initiation of any Extension Period to the holders
of the Capital Securities. If the Institutional Trustee shall not be the sole
holder of the Subordinated Debt Securities, Transamerica shall give the holders
of the Subordinated Debt Securities notice of its initiation of such Extension
Period at least 10 Business Days prior to the earlier of (i) the next succeeding
Interest Payment Date or (ii) the date upon which Transamerica is required to
give notice to holders of such Subordinated Debt Securities of the record date
or Interest Payment Date, in each case, with respect to interest payments the
payment of which is being deferred.
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, Transamerica 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.
CERTAIN COVENANTS
If (i) there shall have occurred and be continuing any event that would
constitute an Indenture Event of Default (as defined herein), (ii) Transamerica
shall have failed to perform its payment or any other obligations under the
Guarantee or the Common Securities Guarantee, or (iii) Transamerica 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) Transamerica 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 its capital stock or rights to acquire such capital stock (other than
(1) purchases or acquisitions of shares of any such capital stock or rights to
acquire such capital stock in connection with the satisfaction by Transamerica
of its obligations under any employee benefit plans, (2) as a result of a
reclassification of Transamerica's capital stock or rights to acquire such
capital stock or the exchange or conversion of one class or series of
Transamerica's capital stock or rights to acquire such capital stock for another
class or series of Transamerica's capital stock or rights to acquire such
capital stock, (3) the purchase of fractional interests in shares of
Transamerica's capital stock
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pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged or (4) dividends and distributions made on
Transamerica's capital stock or rights to acquire such capital stock with
Transamerica's capital stock or rights to acquire such capital stock), or make
any guarantee payments (other than payments under the Guarantee and the Common
Securities Guarantee) with respect to the foregoing, and (b) Transamerica shall
not make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by Transamerica that rank pari
passu with or junior to the Subordinated Debt Securities.
For so long as the Trust Securities remain outstanding, Transamerica has
agreed to maintain 100% ownership of the Common Securities; provided, however,
that any permitted successor of Transamerica under the Indenture may succeed to
Transamerica's ownership of such Common Securities. The Administrators and the
holder of a majority in liquidation amount of the Common Securities each has
agreed 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, and (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 Transamerica with or into any other
corporation (whether or not affiliated with Transamerica) or successive
consolidations or mergers in which Transamerica or its successor or successors
shall be a party, or shall prevent any sale, conveyance, transfer or other
disposition of the property of Transamerica or its successor or successors as an
entirety, or substantially as an entirety, to any other corporation (whether or
not affiliated with Transamerica or its successor or successors) authorized to
acquire and operate the same; provided, however, that Transamerica shall, upon
any such consolidation, merger, sale, conveyance, transfer or other disposition,
cause the obligations of Transamerica under the Subordinated Debt Securities and
under the Indenture to be expressly assumed by supplemental indenture
satisfactory in form to the Indenture Trustee and executed and delivered to the
Indenture Trustee by the successor entity formed by such consolidation or into
which Transamerica shall have been merged or which shall have acquired such
property. Upon execution and delivery of such supplemental indenture to the
Indenture Trustee, such successor entity will be substituted under the Indenture
and the Subordinated Debt Securities and thereupon Transamerica 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 (an "Indenture Event of Default"):
(i) default for 30 days in payment of any interest on the Subordinated
Debt Securities, including any Compounded Interest, Additional Interest or
Special Payments in respect thereof, when due; provided, however, that a
valid extension of the interest payment period by Transamerica shall not
constitute a default in the payment of interest for this purpose;
(ii) default in payment of principal on the Subordinated Debt
Securities when due either at maturity, upon redemption, by declaration or
otherwise; provided, however, that a valid extension of the maturity of
such Subordinated Debt Securities shall not constitute a default for this
purpose;
(iii) default by Transamerica 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;
(iv) default resulting in acceleration of other indebtedness of
Transamerica for borrowed money where the aggregate principal amount so
accelerated exceeds $50 million and such acceleration is not
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rescinded or annulled within 30 days after the written notice thereof to
Transamerica by the Trustee or to Transamerica and the Trustee by the
holders of 25% in aggregate principal amount of the Subordinated Debt
Securities then outstanding;
(v) certain events of bankruptcy, insolvency or reorganization of
Transamerica; or
(vi) the Liquidation of the Trust, except in connection with the
distribution of the 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 Indenture 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 on the Subordinated Debt Securities) if the Indenture Trustee
considers it in the interest of such holders to do so.
The Indenture provides that if an Indenture Event of Default shall have
occurred and be continuing, either the Indenture 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 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 (or of all
series, as the case may be) 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 Indenture Trustee written
notice of a continuing Indenture Event of Default and unless the holders of not
less than 25% in aggregate principal amount of the Subordinated Debt Securities
then outstanding shall have given the Indenture Trustee a written request to
institute such action, suit or proceeding and shall have offered to the
Indenture Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred thereby, and the Indenture 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 the Subordinated Debt Securities. Notwithstanding the
foregoing, the right of any holder of any Subordinated Debt Security to receive
payment of the principal of, 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 affected and
then outstanding Subordinated Debt Securities and debt securities of any other
series issued under the Base Indenture (including, without limitation,
Outstanding Debentures II and Outstanding Debentures III) (voting as one class),
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 Indenture Trustee under the Indenture; provided, however,
that, except under certain circumstances, the Indenture Trustee may decline to
follow any such direction if the Indenture 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 Indenture Trustee in
personal liability. The Indenture requires the annual filing by Transamerica
with the Indenture Trustee of a certificate as to the absence or occurrence of
certain defaults under the Indenture.
An Indenture Event of Default also constitutes a Declaration Event of
Default. The holders of Capital Securities in certain circumstances have the
right to direct the Institutional Trustee 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
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occurred and is continuing and such event is attributable to the failure of
Transamerica to pay principal of or interest on the Subordinated Debt Securities
on the respective dates such principal or interest is payable, as deferred, if
applicable (or in the case of redemption, on the redemption date), Transamerica
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 the
Subordinated Debt Securities, to such holder directly of the principal of 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 Transamerica in connection with a Direct Action, Transamerica shall remain
obligated to pay the principal of or interest on the Subordinated Debt
Securities, and Transamerica, as holder of the Common Securities, shall be
subrogated to the rights of such holder of such Capital Securities under the
Declaration to the extent of any payments made by Transamerica 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 Transamerica and the Indenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the affected and then outstanding Subordinated Debt
Securities and debt securities of any other series issued under the Base
Indenture (including, without limitation, Outstanding Debentures II and
Outstanding Debentures III) (voting as one class), 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
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.
Transamerica and the Indenture 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 Transamerica
and the assumption by the successor corporation of the covenants, agreements and
obligations of Transamerica pursuant to the Indenture, (ii) to add to the
covenants of Transamerica 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 Indenture 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 Subordinated Debt Securities to provide for transfer
procedures and restrictions substantially similar to those 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 Indenture 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 Indenture 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
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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.
DEFEASANCE AND DISCHARGE
The Indenture provides that Transamerica, at Transamerica's option (i) will
be discharged from any and all obligations in respect of the Subordinated Debt
Securities (except for certain obligations to register the transfer or exchange
of Subordinated Debt Securities, replace stolen, lost or mutilated Subordinated
Debt Securities, maintain paying agencies and hold moneys for payment in trust)
or (ii) need not comply, with respect to the Subordinated Debt Securities, with
certain restrictive covenants of the Indenture (including those described under
"-- Certain Covenants" above), in each case if Transamerica deposits, in trust
with the Indenture Trustee or the Defeasance Agent (as defined in the
Indenture), money or U.S. Government Obligations (as defined in the Indenture)
which through the payment of interest thereon and principal thereof in
accordance with their terms will provide money in an amount sufficient to pay
all the principal of, and interest on, the Subordinated Debt Securities on the
dates such payments are due in accordance with the terms of the Subordinated
Debt Securities. To exercise any such option, Transamerica is required to
deliver to the Indenture Trustee and the Defeasance Agent, if any, an opinion of
counsel to the effect that (a) the deposit and related defeasance would not
cause the holders of the Subordinated Debt Securities to recognize income, gain
or loss for federal income tax purposes and, in the case of a discharge pursuant
to clause (i), such opinion shall be accompanied by a private letter ruling to
such effect received from the United States Internal Revenue Service or a
revenue ruling pertaining to a comparable form of transaction to such effect
published by the United States Internal Revenue Service, and (b) if listed on
any national securities exchange, the Subordinated Debt Securities would not be
delisted from such exchange as a result of the exercise of such option.
THE INDENTURE TRUSTEE
Transamerica and certain of its subsidiaries maintain a banking
relationship with the Indenture Trustee in the ordinary course of their
business.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Capital Securities in connection with the
Liquidation of the Trust, the Subordinated Debt Securities will, with respect to
such Capital Securities held as Global Certificates, 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 certificated 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 certificated 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 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
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.
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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 (the "Depositary") for the Subordinated Debt Securities
issued by the Trust with respect to Capital Securities held as Global
Certificates. 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, redemptions and payments with respect
to the Capital Securities apply in all material respects to any debt obligations
represented by one or more Global Securities held by DTC. Transamerica 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 Transamerica, the Trust, the Institutional Trustee, the Indenture
Trustee, any paying agent and any other agent of Transamerica, the Trust, the
Institutional Trustee or the Indenture 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 Transamerica that it is unwilling or unable to
continue as a depositary for such Global Security and no successor depositary
shall have been appointed within 90 days, (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 within 90 days, (iii)
Transamerica, 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.
RESTRICTIONS ON TRANSFER
The Old Subordinated Debt Securities were, and the new Subordinated Debt
Securities will be, issued and may be transferred only in blocks having an
aggregate principal amount of not less than $100,000 (and integral multiples of
$1,000 in excess thereof). Any such transfer of the Old Subordinated Debt
Securities or New Subordinated Debt Securities in a block having an aggregate
principal 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 Subordinated Debt Securities for any purpose, including but not
limited to the receipt of payments on such Subordinated Debt Securities, and
such transferee shall be deemed to have no interest whatsoever in such
Subordinated Debt Securities.
GOVERNING LAW
The Indenture and the Subordinated Debt Securities will be 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 Transamerica 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 Issuer Trustees and Administrators and
(iv) the enforcement by the Institutional Trustee of the rights of the holders
of the Capital Securities.
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Transamerica has 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 Transamerica; provided that, in the event of any such assignment,
Transamerica will remain liable for all of its obligations. Subject to the
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 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 Transamerica in accordance with the
Trust Securities, to effect the Exchange Offer and to engage in certain other
limited activities described herein.
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 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) Transamerica shall pay
all, and the Trust shall not be obligated to pay directly or indirectly any,
costs, expenses, debts, and obligations of the Trust (other than with respect to
the Trust Securities); and (iv) the Declaration further provides that the Issuer
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 Transamerica as described
under "Description of the Guarantee." If Transamerica does not make payments on
the Subordinated Debt Securities, it is expected that the Trust will not have
sufficient funds to pay distributions on the Capital Securities. The Guarantee
will not apply to any payment of distributions or other payments in respect of
Capital Securities except to the extent that the Trust has funds available for
the payment of such amounts. The Guarantee will cover the payment of
distributions and other payments on the Capital Securities only if and to the
extent that Transamerica has made payments of principal of or interest on the
Subordinated Debt Securities held by the Trust as its sole assets. The
Guarantee, when taken together with Transamerica's obligations under the
Subordinated Debt Securities, the Declaration and the Indenture, including its
obligations to pay costs, expenses, debts and liabilities of the Trust (other
than with respect to the Trust Securities), provides a full and unconditional
guarantee on a subordinated basis by Transamerica of amounts due on the Capital
Securities.
If Transamerica 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 the 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
Transamerica 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 Transamerica to pay interest or
principal on the Subordinated Debt Securities on the respective dates such
interest or principal is payable, as deferred, if applicable (or in the case of
redemption, on the redemption date), then a holder of record of the Capital
Securities may institute a Direct Action for payment on or after
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the respective due dates specified in the Subordinated Debt Securities. In
connection with such Direct Action, Transamerica, as the holder of the Common
Securities, will be subrogated to the rights of such holder of Capital
Securities under the Declaration to the extent of any payment made by
Transamerica to such holder of such 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.
Because Transamerica is a holding company, the Subordinated Debt Securities
and the Guarantee are effectively subordinated to all existing and future
liabilities, including trade payables, of Transamerica's subsidiaries, except to
the extent that Transamerica is a creditor of the subsidiaries recognized as
such. The Subordinated Debt Securities and the Guarantee are also subordinated
to all present and future Senior Indebtedness of Transamerica. See "Description
of the Subordinated Debt Securities -- Subordination."
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
In the opinion of Orrick, Herrington & Sutcliffe LLP, special counsel to
Transamerica ("Counsel"), the discussion that follows is a summary of certain of
the material United States federal income tax consequences of the Exchange Offer
and of the 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.
Except as otherwise stated, this summary deals only with a Capital Security
held as a capital asset by a holder that (i) purchased Capital Securities upon
original issuance at their initial offering price (an "Initial Holder") and (ii)
is a US Holder (as defined below). It does not deal with all aspects of United
States federal income taxation, nor with the particular United States federal
income tax (hereafter, "income tax") consequences that 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 (i) the income tax
consequences to shareholders in, or partners or beneficiaries of, a holder of
Capital Securities, (ii) the United States federal alternative minimum tax
consequences of the purchase, ownership or disposition of Capital Securities, or
(iii) any state, local or foreign tax consequences of the purchase, ownership or
disposition of Capital Securities.
A "US Holder" is a holder of Capital Securities that is a citizen or
individual resident (or is treated as a citizen or individual resident) of the
United States for income tax purposes, a corporation or partnership created or
organized (or treated as created or organized for income tax purposes) in or
under the laws of the United States or any political subdivision thereof, an
estate the income of which is includible in its gross income for income tax
purposes without regard to its source, or a trust if (i) a court within the
United States is able to exercise primary supervision over the administration of
the trust and (ii) one or more United States persons have the authority to
control all substantial decisions of the trust.
EXCHANGE OFFER
The exchange of an Old Capital Security for a New Capital Security pursuant
to the terms and conditions of the Exchange Offer should have no United States
federal income tax consequences. The New Capital Security received in exchange
for the Old Capital Security should be treated for United States federal income
tax purposes as a continuation of the exchanged Old Capital Security.
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US HOLDERS
CHARACTERIZATION OF THE TRUST
In connection with the issuance of the Capital Securities, Counsel has
rendered its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration (and 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 will not be characterized as an association
taxable as a corporation for such purposes. Accordingly, for income tax
purposes, each holder of Capital Securities generally will be considered the
owner of an undivided interest in the Subordinated Debt Securities, and each US
Holder will be required to include all income or gain recognized for income tax
purposes with respect to its allocable share of the Subordinated Debt Securities
on its own income tax return.
CHARACTERIZATION OF THE SUBORDINATED DEBT SECURITIES
In connection with the issuance of the Subordinated Debt Securities,
Counsel has 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, such Subordinated Debt Securities will be characterized for
income tax purposes as debt of Transamerica.
ORIGINAL ISSUE DISCOUNT
Under the terms of the Subordinated Debt Securities, Transamerica 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 such 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 Transamerica's option to defer payments of interest if the
likelihood of deferral is "remote."
Transamerica has concluded, and this discussion assumes, that, as of the
date of this Prospectus, the likelihood of exercise of that option is "remote"
within the meaning of the applicable regulations, in part because exercising
that option would prevent Transamerica from declaring dividends on its stock and
would prevent Transamerica from making any payments with respect to debt
securities that rank pari passu or junior to the Subordinated Debt Securities.
Therefore, the Subordinated Debt Securities should not be treated as issued with
OID by reason of Transamerica'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 income tax purposes. It should be noted, however, that these
regulations have not yet been addressed in any rulings or other interpretations
by the Internal Revenue Service (the "Service"). Accordingly, it is possible
that the Service could take a position contrary to the interpretation described
herein.
In the event Transamerica subsequently exercises its option to defer
payments of interest on the Subordinated Debt Securities, the Subordinated Debt
Securities would be treated as 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 income tax purposes) over the remaining term of the
Subordinated Debt Securities (including any period of interest deferral),
without regard to the timing of cash payments under the Subordinated Debt
Securities. The amount of OID that accrued in any period would generally
approximate the amount of interest that accrued 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 that 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 Transamerica'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 Securities (plus de minimis OID). 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.
CHARACTERIZATION OF INCOME
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
income tax purposes).
RECEIPT OF SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF TRUST
Under the circumstances described under the caption "Description of the
Capital Securities -- Liquidation Distribution Upon Dissolution," above, the
Subordinated Debt Securities may be distributed to holders in exchange for the
Capital Securities and in liquidation of the Trust. Except as discussed below,
such a distribution would not be a taxable event for income tax purposes, and
each US Holder would have an aggregate adjusted basis in its Subordinated Debt
Securities for income tax purposes equal to such US Holder's aggregate adjusted
basis in its Capital Securities. For 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 such Capital Securities were held by
such US Holder. If, however, the relevant event is a Tax Event that results in
the Trust being treated as an association taxable as a corporation, the
distribution likely would constitute a taxable event to US Holders of such
Capital Securities.
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."
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. A US Holder's adjusted
basis in the Capital Securities generally will be its initial purchase price,
increased by OID previously included (or currently includible) in such US
Holder's gross income to the date of disposition, and decreased by payments
received on the Capital Securities (other than any interest received with
respect to the period prior to the effective date of Transamerica's first
exercise of its option to defer payments of interest). Any such gain or loss
generally will be capital gain or loss, and generally will be a long-term
capital gain or loss if such Capital Securities have been held for more than one
year. The Taxpayer Relief Act of 1997 generally reduces tax rates on capital
gains recognized by individuals in respect of capital assets held for more than
18 months. US Holders are advised to consult with their own tax advisors as to
the consequences of the Taxpayer Relief Act of 1997 in their particular
circumstances.
A holder that disposes of his Capital Securities between record dates for
payments of distributions thereon will be required to include accrued but unpaid
interest (or OID) on the Subordinated Debt Securities through the date of
disposition in its taxable income for United States federal income tax purposes
(notwithstanding that the holder may receive a separate payment from the
purchaser with respect to accrued interest), and to deduct that amount from the
sales proceeds received (including the separate payment, if any,
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with respect to accrued interest) for the Capital Securities (or as to OID only,
to add such amount to such holder's adjusted tax basis in its Capital
Securities). To the extent the selling price is less than the holder's adjusted
tax basis (which will include accrued but unpaid OID, if any), a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for income tax purposes.
NON-US HOLDERS
The following discussion applies to an Initial Holder that is not a US
Holder (a "Non-US Holder").
Payments to a holder of a Capital Security that is a Non-US Holder will
generally not be subject to withholding of income tax, provided that (i) 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 Transamerica entitled to vote, (ii) the beneficial
owner of such Capital Security is not a controlled foreign corporation that is
related to Transamerica through stock ownership, and (iii) either (a) the
beneficial owner of such 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 (b) 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 Security in such
capacity, certifies to the Trust or its agent, under penalty 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.
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.
A Non-US Holder that holds Capital Securities in connection with the active
conduct of a United States trade or business will be subject to income tax on
all income and gains recognized with respect to its proportionate share of the
Subordinated Debt Securities.
INFORMATION REPORTING
In general, information reporting requirements will apply to payments made
on, and proceeds from the sale of, Capital Securities held by a noncorporate US
Holder within the United States. In addition, payments made on, and payments of
the proceeds from the sale of, Capital Securities to or through the United
States office of a broker are subject to information reporting unless the holder
thereof certifies as to its non-United States status or otherwise establishes an
exemption from information reporting and backup withholding. See "-- Backup
Withholding." Taxable income on the Capital Securities for a calendar year
should be reported to US Holders on Forms 1099 by the following January 31st.
BACKUP WITHHOLDING
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,
conditioned on the required information being 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
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. 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.
Transamerica and the Trust have agreed that, starting on the date on which
the Exchange Offer is consummated and ending on the close of business 180 days
after such date, 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 July 9, 1998, all dealers effecting transactions in the New
Capital Securities may be required to deliver a prospectus.
Transamerica 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 any 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 180 days after the date on which the Exchange Offer is
consummated, Transamerica 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.
Transamerica 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.
ERISA CONSIDERATIONS
Each 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"), 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.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons,
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),
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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.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Trust would be deemed to be
"plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code if
"plan assets" of the Plan were used to acquire equity interests in the Trust and
no exception were applicable under the Plan Assets Regulation. An "equity
interest" is defined under the Plan Assets Regulation as any interest in an
entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Trust would not be deemed to be "plan assets" of investing Plans
if, 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, other employee benefit plans not subject to ERISA or Section
4975 of the Code (such as governmental, church and foreign plans), and entities
holding assets deemed to be "plan assets" (collectively, "Benefit Plan
Investors"). No assurance can be given that the value of the Capital Securities
held by Benefit Plan Investors will be less than 25% of the total value of the
Capital Securities at the completion of the initial offering or thereafter, and
no monitoring or other measures will be taken with respect to the satisfaction
of the conditions to this exception. All of the Common Securities will be
purchased and held by Transamerica.
Certain transactions involving the Trust could be deemed to constitute
direct or indirect prohibited transactions under ERISA and Section 4975 of the
Code with respect to a Plan if the Capital Securities of the Trust were acquired
with "plan assets" of such Plan and assets of the Trust were deemed to be "plan
assets." For example, if Transamerica is a Party in Interest with respect to an
investing Plan (either directly or by reason of its ownership of its
subsidiaries), extensions of credit between Transamerica and the Trust (as
represented by the Subordinated Debt Securities and the Guarantee) 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 prohibited transaction class exemptions ("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" (see above). Those class
exemptions are PTCE 96-23 (for certain transactions determined by in-house asset
managers), PTCE 95-60 (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 professional 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 (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. See
"Notice to Investors" herein.
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 the 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.
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LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Trust
Securities and the creation of the Trust will be passed upon on by Richards,
Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel to the
Trust and Transamerica. The validity under New York law of the Subordinated Debt
Securities and the Guarantee will be passed upon for Transamerica by Orrick,
Herrington & Sutcliffe LLP, San Francisco, California. Certain United States
federal income tax matters will be passed upon for Transamerica and the Trust by
Orrick, Herrington & Sutcliffe LLP.
EXPERTS
The consolidated financial statements of Transamerica incorporated by
reference in Transamerica's Annual Report on Form 10-K for the year ended
December 31, 1997, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon incorporated by reference therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
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