-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T1oIa7LwvlKqCC+bUN0evIIzapkJewpfc5Cuo9FfBHoheJhenc4+gTmQzXCDLfyC An1s2jRLa+T19sDzMFrvTw== 0000950117-96-001186.txt : 19961002 0000950117-96-001186.hdr.sgml : 19961002 ACCESSION NUMBER: 0000950117-96-001186 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19961001 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEUCADIA NATIONAL CORP CENTRAL INDEX KEY: 0000096223 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 132615557 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-12071 FILM NUMBER: 96638020 BUSINESS ADDRESS: STREET 1: 315 PARK AVE S CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 2124601900 FORMER COMPANY: FORMER CONFORMED NAME: TALCOTT NATIONAL CORP DATE OF NAME CHANGE: 19800603 S-3/A 1 LEUCADIA S-3, AM #1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 1, 1996 REGISTRATION NO. 333-12071 ________________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ LEUCADIA NATIONAL CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) NEW YORK 13-2615557 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
315 PARK AVENUE SOUTH NEW YORK, N.Y. 10010-3607 (212) 460-1900 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) JOSEPH A. ORLANDO VICE PRESIDENT AND CHIEF FINANCIAL OFFICER LEUCADIA NATIONAL CORPORATION 315 PARK AVENUE SOUTH NEW YORK, N.Y. 10010-3607 (212) 460-1900 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ COPIES TO: STEPHEN E. JACOBS, ESQ. GERALD S. TANENBAUM, ESQ. WEIL, GOTSHAL & MANGES LLP CAHILL GORDON & REINDEL 767 FIFTH AVENUE 80 PINE STREET NEW YORK, NEW YORK 10153 NEW YORK, NEW YORK 10005 (212) 310-8000 (212) 701-3000
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. ------------------------ If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]_______ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]_______ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ________________________________________________________________________________ SUBJECT TO COMPLETION, DATED OCTOBER 1, 1996 PROSPECTUS $135,000,000 LEUCADIA NATIONAL CORPORATION % SENIOR SUBORDINATED NOTES DUE 2006 (Interest payable and ) ------------------------ The Notes will bear interest from the date of their original issue, at the rate per annum set forth above, payable semiannually on each and , commencing , 1997. The Notes will mature on , 2006 and are not redeemable by the Company prior to maturity. Upon a Change of Control (as defined), each Noteholder will have the right, subject to certain conditions and restrictions, to require the Company to repurchase the Notes at 101% of the principal amount thereof, plus accrued interest. The Notes will be subordinated to all Senior Indebtedness (as defined) of the Company. At June 30, 1996, the Company's Senior Indebtedness was $150,000,000 and the indebtedness of the Company's consolidated subsidiaries, to which the Notes are effectively subordinated, was $21,939,000, exclusive of customer banking deposits ('Deposits'). The Notes will rank pari passu with the Company's 8 1/4% Senior Subordinated Notes due 2005, of which, at June 30, 1996, $100,000,000 aggregate principal amount was outstanding, and any 10 3/8% Senior Subordinated Notes due 2002 (the '10 3/8% Notes') that remain outstanding after the Tender Offer (as defined), of which, at June 30, 1996, $125,000,000 aggregate principal amount was outstanding. The Company has commenced a cash tender offer (the 'Tender Offer') for all of the $125,000,000 outstanding aggregate principal amount of the 10 3/8% Notes at a price of $1,072.50 per $1,000 principal amount, plus accrued interest thereon to, but not including, the payment date for the 10 3/8% Notes pursuant to the Tender Offer. This offering is contingent upon not less than 80% of the outstanding principal amount of 10 3/8% Notes being validly tendered and not withdrawn pursuant to the Tender Offer. The net proceeds of this offering will be used to purchase 10 3/8% Notes tendered pursuant to the Tender Offer. See 'Use of Proceeds.' The Company may reduce the aggregate principal amount of Notes actually offered hereunder if less than all of the outstanding 10 3/8% Notes are tendered in the Tender Offer. ------------------------ Application to list the Notes on the New York Stock Exchange under the symbol 'LUK/06' has been approved. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------
PRICE TO UNDERWRITING PROCEEDS TO PUBLIC(1) DISCOUNT(2) COMPANY(3) ------------- ----------- ------------ Per Note.............................................................. % % % Total................................................................. $ $ $
- ------------ (1) Plus accrued interest, if any, from the date of original issue of the Notes. (2) The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See 'Underwriting.' (3) Before deducting expenses payable by the Company estimated at $ . ------------------------ The Notes are offered by the Underwriters, subject to prior sale, when, as and if issued to and accepted by them, and subject to approval of certain legal matters by counsel for the Underwriters. It is expected that delivery of the Notes will be made against payment therefor in New York, New York on or about , 1996. ------------------------ JEFFERIES & COMPANY, INC. CS FIRST BOSTON , 1996 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the 'Commission'). The reports, proxy statements and other information filed by the Company with the Commission can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material also can be obtained from the Public Reference Section of the Commission, Washington, D.C. 20549 at prescribed rates. The Commission maintains a site on the World Wide Web that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission at http://www.sec.gov. In addition, material filed by the Company can be inspected at the offices of the New York Stock Exchange, Inc. (the 'NYSE'), 20 Broad Street, New York, New York 10005 and the Pacific Stock Exchange, Incorporated, 301 Pine Street, San Francisco, California 94104, on which the Company's common shares, par value $1.00 per share (the 'Common Shares'), are listed. The Company has filed with the Commission a Registration Statement on Form S-3 (together with any amendments thereto, the 'Registration Statement') under the Securities Act of 1933, as amended (the 'Securities Act'), with respect to the securities offered hereby. This Prospectus does not contain all the information set forth in the Registration Statement. Such additional information may be obtained from the Commission's principal office in Washington, D.C. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents which have been filed by the Company (File No. 1-5721) with the Commission are incorporated by reference in this Prospectus: (a) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the 'Annual Report'); (b) the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1996; and (c) the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1996 (the 'Second Quarter 10-Q'). All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Notes contemplated hereby 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 which also is incorporated or deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom a copy of this Prospectus has been delivered, on the written or oral request of such person, a copy of any and all of the documents referred to above which 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: Leucadia National Corporation, 315 Park Avenue South, New York, N.Y. 10010 (telephone number (212) 460-1900), Attention: Corporate Secretary. ------------------------ IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES OFFERED HEREBY AND THE COMPANY'S OUTSTANDING 8 1/4% SENIOR SUBORDINATED NOTES DUE 2005, 10 3/8% SENIOR SUBORDINATED NOTES DUE 2002 AND 7 3/4% SENIOR NOTES DUE 2013 AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. FOR NORTH CAROLINA RESIDENTS: THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. 2 PROSPECTUS SUMMARY This summary is qualified in its entirety by the detailed information appearing elsewhere or incorporated by reference in this Prospectus. As used herein, the term 'Company' means Leucadia National Corporation and its subsidiaries, except as the context otherwise may require. THE OFFERING Issue........................................ $135,000,000 principal amount of % Senior Subordi- nated Notes due 2006 (the 'Notes'). Maturity..................................... , 2006. Interest Rate................................ % per annum. Interest Payment Dates....................... and , commencing , 1997. Optional Redemption.......................... The Notes are not redeemable at the option of the Company prior to maturity. Mandatory Redemption......................... The Notes are not subject to sinking fund payments. Certain Covenants............................ The indenture under which the Notes will be issued (the 'Indenture') will contain covenants which, among other things, place restrictions on the ability of the Company and its subsidiaries to incur additional indebtedness, to make certain investments, to redeem or repurchase shares of capital stock of the Company and to enter into certain transactions with affiliates, on the ability of the Company's insurance subsidiaries to invest in non-investment grade investments and on the ability of the Company to pay dividends and to consummate certain mergers. In addition, if the Company's Consolidated Tangible Net Worth (as defined) is below a certain level at the end of two consecutive fiscal quarters, the Company will be required, under certain circumstances, to offer to repurchase a portion of the Notes at 100% of their principal amount, plus accrued but unpaid interest to the repurchase date. In the event of a Change of Control (as defined) of the Company, each holder of a Note (a 'Noteholder') will have the right, subject to certain exceptions, to require the Company to repurchase all or any portion of such Noteholder's Notes at 101% of the principal amount thereof, plus accrued but unpaid interest to the date of such repurchase. Ranking...................................... The Notes will be subordinated to all existing and future Senior Indebtedness. At June 30, 1996, the Company's Senior Indebtedness was $150,000,000 and the indebtedness of the Company's consolidated subsidiaries, to which the Notes are effectively subordinated, was $21,939,000, exclusive of Deposits. The Notes will rank pari passu with the Company's 8 1/4% Senior Subordinated Notes due 2005 (the '8 1/4% Notes'), of which, at June 30, 1996, $100,000,000 aggregate principal amount was outstanding, and any 10 3/8% Notes that remain outstanding after completion of the Tender Offer, of which, at June 30, 1996, $125,000,000 was outstanding. The Notes will rank senior to the Company's 5 1/4% Convertible Subordinated Debentures due 2003 (the '5 1/4% Debentures'), of which $100,000,000 aggregate principal amount was outstanding at June 30, 1996. The Company may not incur any indebtedness senior to the Notes which is not Senior Indebtedness.
3 Listing...................................... Application to list the Notes on the NYSE under the symbol 'LUK/06' has been approved. Use of Proceeds.............................. The net proceeds to the Company from the sale of the Notes are estimated to be $ . Such net proceeds will be used to purchase 10 3/8% Notes tendered pursuant to the Tender Offer. If less than all of the outstanding 10 3/8% Notes are purchased pursuant to the Tender Offer, the Company may reduce the aggregate principal amount of Notes actually offered hereunder. To the extent the net proceeds of the offering exceed the amount necessary to purchase the 10 3/8% Notes tendered pursuant to the Tender Offer, such excess net proceeds will be used for general corporate purposes, which may include the purchase of 10 3/8% Notes in the open market or in privately negotiated transactions or the redemption of the 10 3/8% Notes (which are first redeemable on June 15, 1997 at a price of 104.5% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption) or for working capital, acquisitions or investment opportunities. See 'Use of Proceeds.'
4 THE COMPANY GENERAL The Company is a diversified financial services holding company principally engaged in personal and commercial lines of property and casualty insurance, life and health insurance, banking and lending and manufacturing. The Company concentrates on return on investment and cash flow to build long-term shareholder value, rather than emphasizing volume or market share. Additionally, the Company continuously evaluates the retention and disposition of its existing operations and investigates possible acquisitions of new businesses in order to maximize shareholder value. Shareholders' equity has grown to $1,102,402,000 at June 30, 1996 from a deficit of $7,657,000 at December 31, 1978 (prior to the acquisition of a controlling interest in the Company by the Company's Chairman and President), and book value per common share has grown to $18.28 at June 30, 1996 from negative $.11 at December 31, 1978. The Company's Chairman and President and their families currently beneficially own in the aggregate approximately 35% of the Company's outstanding Common Shares. The Company's principal operations are its insurance businesses, where it is a specialty markets provider of property and casualty and life insurance products to niche markets. The Company's principal personal lines insurance products are automobile insurance, homeowners insurance, graded benefit life insurance marketed primarily to the age 50-and-over population and variable annuity products. The Company's principal commercial lines are property and casualty products provided for multi-family residential real estate, retail establishments and taxicabs and other livery vehicles in the New York metropolitan area. For the year ended December 31, 1995, the Company's insurance segments contributed 78% of total revenues and, at December 31, 1995, constituted 77% of consolidated assets. The property and casualty insurance industry, which is highly regulated and competitive, has historically been cyclical in nature, with periods of less intense price competition and high underwriting standards generating significant profits, followed by periods of increased price competition and lower underwriting standards resulting in reduced profitability or loss. The current cycle of intense price competition has continued for a longer period than in the past, suggesting that the significant infusion of capital into the industry in recent years, coupled with larger investment returns has been, and may continue to be, a depressing influence on policy rates. As indicated in the Selected Financial Data included herein, the statutory combined ratios for the Company's property and casualty business have been better than the industry averages for each of the past five years. This has been due, in part, to the low expense ratios of the Company's insurance subsidiaries. The Company's insurance subsidiaries have a diversified investment portfolio of securities, substantially all of which are issued or guaranteed by the U.S. Treasury or by U.S. governmental agencies or are rated 'investment grade' by Moody's Investors Service Inc. ('Moody's') and/or Standard & Poor's Corporation ('S&P'). Investments in mortgage loans, real estate and non-investment grade securities represented 2.5% of the insurance subsidiaries' portfolio at December 31, 1995. The Company's banking and lending operations principally consist of making instalment loans to niche markets primarily funded by Deposits insured by the Federal Deposit Insurance Company. One of the Company's principal lending activities is providing automobile loans to individuals with poor credit histories. The Company's manufacturing operations primarily manufacture products for the 'do-it-yourself' home improvement market and for industrial markets. At December 31, 1995, the Company had minimum tax loss carryforwards of approximately $141,600,000. The amount and availability of the tax loss carryforwards are subject to certain qualifications, limitations and uncertainties as more fully discussed in Note 14 of Notes to Consolidated Financial Statements contained in the Annual Report. 5 RECENT DEVELOPMENTS The Company has commenced the Tender Offer to purchase for cash all of the outstanding $125,000,000 aggregate principal amount of the 10 3/8% Notes at a price of $1,072.50 per $1,000 principal amount, plus accrued interest thereon to, but not including the payment date therefor. The Tender Offer is conditioned upon, among other conditions, the consummation of this offering and the valid tender (without withdrawal) of not less than 80% of the outstanding principal amount of the 10 3/8% Notes, and will be funded by the application of the net proceeds from this offering, which is intended to replace the indebtedness represented by the 10 3/8% Notes with indebtedness bearing interest at a lower rate and maturing at a later date. USE OF PROCEEDS The net proceeds to the Company from the sale of the Notes are estimated to be $ . Such net proceeds will be used to purchase 10 3/8% Notes tendered pursuant to the Tender Offer, of which $125,000,000 aggregate principal amount is outstanding. If less than all of the outstanding 10 3/8% Notes are purchased pursuant to the Tender Offer, the Company may reduce the aggregate principal amount of Notes actually offered hereunder. To the extent the net proceeds of the offering exceed the amount necessary to purchase the 10 3/8% Notes tendered pursuant to the Tender Offer, such excess net proceeds will be used for general corporate purposes, which may include the purchase of 10 3/8% Notes in the open market or in privately negotiated transactions or the redemption of the 10 3/8% Notes (which are first redeemable on June 15, 1997 at a price of 104.5% of their principal amount, plus accrued and unpaid interest, if any, to the date of redemption) or for working capital, acquisitions or investment opportunities. The stated maturity of the 10 3/8% Notes is June 15, 2002. Except as otherwise publicly disclosed, the Company has no material arrangement, commitment or understanding with respect to any acquisition or investment opportunity. Pending such uses, the proceeds will be invested in short-term investment grade obligations. 6 CAPITALIZATION The following table sets forth the (unaudited) consolidated capitalization of the Company at June 30, 1996, and as adjusted to give effect to the sale of the Notes and the use of the net proceeds therefrom to purchase all outstanding 10 3/8% Notes pursuant to the Tender Offer.
AS ACTUAL ADJUSTED ---------- ---------- (IN THOUSANDS) Long-term debt (a): Revolving bank credit agreement borrowings....................................... $ -- $ -- Term loans with banks, due in 1999............................................... 50,000 50,000 7 3/4% Senior Notes due 2013, less debt discount of $856......................... 99,144 99,144 Industrial revenue bonds......................................................... 5,600 5,600 Other senior debt................................................................ 16,339 16,339 % Senior Subordinated Notes due 2006.......................................... -- 135,000 8 1/4% Senior Subordinated Notes due 2005........................................ 100,000 100,000 10 3/8% Senior Subordinated Notes due 2002, less debt discount of $559............................................................... 124,441 -- 5 1/4% Convertible Subordinated Debentures due 2003.............................. 100,000 100,000 ---------- ---------- Total long-term debt, including current maturities.......................... 495,524 506,083 ---------- ---------- Shareholders' Equity (b): Common shares, par value $1 per share, authorized 150,000,000 shares; 60,316,825 shares issued and outstanding, after deducting shares held in treasury.......... 60,317 60,317 Additional paid-in capital....................................................... 160,506 160,506 Net unrealized (loss) on investments............................................. (8,522) (8,522) Retained earnings................................................................ 890,101 881,582(c) ---------- ---------- Total shareholders' equity.................................................. 1,102,402 1,093,883 ---------- ---------- Total.................................................................. $1,597,926 $1,599,966 ---------- ---------- ---------- ----------
- ------------ (a) Excludes Deposits of approximately $211,020,000. For information with respect to interest rates, maturities, priorities and restrictions related to outstanding long-term debt and the Notes, see Note 10 of Notes to Consolidated Financial Statements contained in the Annual Report and 'Description of Notes,' respectively. (b) For information with respect to stock options and contingent obligations, see Notes 11 and 17 of Notes to Consolidated Financial Statements contained in the Annual Report. (c) Reflects a $8,519,000 extraordinary loss, net of taxes, related to the early extinguishment of the 10 3/8% Notes pursuant to the Tender Offer. 7 SELECTED FINANCIAL DATA The selected financial data set forth below has been derived from and should be read in conjunction with the audited financial statements and other financial information contained in the Annual Report and with the unaudited financial statements contained in the Second Quarter 10-Q, which are incorporated by reference in this Prospectus.
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, --------------------- ---------------------------------------------------------------------- 1996 1995 1995 1994 1993 1992 1991 -------- -------- ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATIOS) SELECTED INCOME STATEMENT DATA:(a) Revenues................. $763,139 $737,445 $1,558,314 $1,384,385 $1,408,058 $1,573,015 $1,086,748 Net securities gains (losses)............... 11,575 (228) 20,027 (12,004) 51,923 51,778 50,391 Interest expense(b)...... 27,282 24,405 52,871 44,003 39,465 38,507 36,925 Insurance losses, policy benefits and amortization of deferred acquisition costs.................. 486,284 452,428 942,803 819,010 789,752 896,673 558,127 Income before income taxes and cumulative effects of changes in accounting principles............. 40,422 47,703 132,182 100,318 176,868 143,553 95,030 Income before cumulative effects of changes in accounting principles(c).......... 28,774 33,732 107,503 70,836 116,259 130,607 94,830 Cumulative effects of changes in accounting principles............. -- -- -- -- 129,195 -- -- Net income............... 28,774 33,732 107,503 70,836 245,454 130,607 94,830 Ratio of earnings to fixed charges:(d) Excluding interest on Deposits............. 2.89x 3.20x 3.84x 3.49x 5.80x 5.24x 4.54x Including interest on Deposits............. 2.50x 2.75x 3.26x 3.08x 4.86x 4.14x 3.27x Per share: Primary earnings per common and dilutive common equivalent share: Income before cumulative effects of changes in accounting principles........... $.48 $.58 $1.81 $1.22 $1.98 $2.67 $2.00 Cumulative effects of changes in accounting principles........... -- -- -- -- 2.21 -- -- Net income........... $.48 $.58 $1.81 $1.22 $4.19 $2.67 $2.00 Fully diluted earnings per common share: Income before cumulative effects of changes in accounting principles........... $.48 $.57 $1.77 $1.21 $1.94 $2.66 $1.98 Cumulative effects of changes in accounting principles........... -- -- -- -- 2.10 -- -- Net income........... $.48 $.57 $1.77 $1.21 $4.04 $2.66 $1.98 Number of shares used in calculation: Primary................ 60,569 58,587 59,271 58,202 58,539 48,870 47,409 Fully Diluted.......... 60,569 62,140 62,807 61,715 61,486 49,032 47,835
- ------------ Footnotes on following page. 8
AT JUNE 30, AT DECEMBER 31, ----------- ------------------------------------------------------------------ 1996 1995 1994 1993 1992 1991 ----------- ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) SELECTED BALANCE SHEET DATA:(a) Cash and investments..... $3,055,323 $3,146,639 $2,764,890 $2,989,384 $3,371,624 $3,627,542 Total assets............. 5,150,133 5,107,874 4,674,046 4,689,272 4,330,580 4,590,096 Debt, including current maturities............. 495,524 520,862 425,848 401,335 225,588 220,728 Customer banking deposits............... 211,020 203,061 179,888 173,365 186,339 194,862 Common shareholders' equity................. 1,102,402 1,111,491 881,815 907,856 618,161 365,495 Book value per Common Share.................. $18.28 $18.47 $15.72 $16.27 $11.06 $7.95
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, --------------- --------------------------------------------- 1996 1995 1995 1994 1993 1992 1991 ----- ----- ----- ----- ----- ----- ----- SELECTED INFORMATION ON PROPERTY AND CASUALTY INSURANCE OPERATIONS (Unaudited):(a)(e)(f) GAAP Combined Ratio...... 104.5% 102.2% 103.5% 99.1% 96.9% 101.7% 102.1% SAP Combined Ratio....... 100.5% 99.4% 101.2% 98.8% 93.7% 102.8% 103.3% Industry SAP Combined Ratio(g)............... N/A 106.3% 106.4% 108.4% 106.9% 115.7% 108.8% Premium to Surplus Ratio(h)............... N/A N/A 1.8x 1.9x 1.6x 2.0x 2.2x
- ------------ (a) Data includes acquired companies from date of acquisition. (b) Includes interest on customer banking deposits of $12,034,000, $8,304,000, $9,001,000, $11,954,000 and $15,138,000 for the years ended December 31, 1995, 1994, 1993, 1992 and 1991, respectively, and $6,322,000 and $5,680,000 for the six month periods ended June 30, 1996 and 1995, respectively. (c) The provision for income taxes for the years ended December 31, 1995, 1994 and 1993 and for the six month periods ended June 30, 1996 and 1995 were calculated under Statement of Financial Accounting Standards No. 109, 'Accounting for Income Taxes,' which does not reflect the benefit from utilization of tax loss carryforwards. The provision for income taxes for the years ended December 31, 1992 and 1991 have been reduced for the benefit from utilization of tax loss carryforwards. (d) For purposes of computing these ratios, earnings represent consolidated pre-tax income before cumulative effects of changes in accounting principles and equity in undistributed earnings or loss of less than 50% owned companies, plus 'fixed charges.' Fixed charges excluding interest on Deposits include interest expense (other than on Deposits), the portion of net rental expense representative of the interest factor and amortization of debt expense. Fixed charges including interest on Deposits include all interest expense, the portion of net rental expense representative of the interest factor and amortization of debt expense. (e) Combined Ratios and the Premium to Surplus Ratios include both Colonial Penn Group, Inc. and its subsidiaries for the relevant periods since August 16, 1991 and Empire Insurance Company. (f) The Combined Ratio is the sum of the Loss Ratio and the Underwriting Expense Ratio determined in accordance with generally accepted accounting principles or statutory accounting principles ('SAP'), as the case may be. The Loss Ratio is the ratio of incurred losses and loss adjustment expenses to net premiums earned. The Expense Ratio is the ratio of underwriting expenses (policy acquisition costs, commissions and a portion of administrative, general and other expenses attributable to underwriting operations) to net premiums written, if determined in accordance with SAP, or to net premiums earned, if determined in accordance with generally accepted accounting principles. A Combined Ratio under 100% indicates an underwriting profit and a Combined Ratio above 100% indicates an underwriting loss. The Combined Ratio does not include the effect of investment income. Certain accident and health insurance business, which is included in the statutory results of operations of the property and casualty insurance segment and is reflected in the SAP Combined Ratio, is reported in the life insurance segment for financial reporting purposes and therefore is not included in the GAAP Combined Ratios reflected herein. For the six month periods ended June 30, 1996 and 1995, the difference between the GAAP Combined Ratio and the SAP Combined Ratio principally reflects adjustments to SAP reinsurance reserves and, in 1996, the accounting for certain expenses which are treated differently under SAP and generally accepted accounting principles. For 1995, a change in the statutory accounting treatment for retrospectively rated reinsurance agreements was the principal reason for the difference between the GAAP Combined Ratio and the SAP Combined Ratio. For 1993, the difference in the treatment of costs for generally accepted accounting principles and SAP purposes was a principal reason for the difference between the GAAP Combined Ratio and the SAP Combined Ratio. For 1992, the results of certain accident and health insurance business had a non-recurring income item which reduced the SAP Combined Ratio. In addition, in 1992, certain income credits were recognized only for generally accepted accounting principles purposes. (g) Source: Best's Aggregate & Averages, Property/Casualty, 1996 edition, with respect to annual information for 1991 through 1995, and Best Week P/C Supplement, September 18, 1995 Release 12, with respect to interim information for 1995. Industry Combined Ratios may not be fully comparable as a result of, among other things, differences in geographical concentration and in the mix of property and casualty insurance products. (h) The Premium to Surplus Ratio was calculated by dividing statutory property and casualty insurance premiums written by statutory capital at the end of the year. 9 DESCRIPTION OF NOTES The Notes are to be issued under an Indenture to be dated as of , 1996, between the Company and Fleet National Bank, as Trustee (the 'Trustee'). The statements herein relating to the Notes and the Indenture are summaries and make use of defined terms in the Indenture, which are incorporated herein by reference, and are qualified in their entirety by express reference to the Indenture, a copy of which is filed as an exhibit to the Registration Statement of which this Prospectus is a part. GENERAL The Notes will bear interest from the date of original issue at the rate shown on the cover page of this Prospectus, payable on and in each year to the Noteholders of record at the close of business on the and immediately preceding such interest payment date, commencing , 1997. The Notes will be due on , 2006, will be issued only in denominations of $1,000 and integral multiples of $1,000, and will be general unsecured obligations of the Company. The Indenture authorizes an aggregate principal amount of $135,000,000 of the Notes. OPTIONAL REDEMPTION The Notes are not redeemable at the option of the Company prior to maturity. SINKING FUND The Notes are not subject to sinking fund payments. SUBORDINATION OF NOTES The payment of all Obligations with respect to the Notes will be subordinated in right of payment, as set forth in the Indenture, to the prior payment in full of all Senior Indebtedness (as defined in the Indenture) of the Company whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed. Upon (a) the maturity of Senior Indebtedness by lapse of time, acceleration or otherwise or (b) any distribution of the assets of the Company upon any dissolution, winding up, liquidation or reorganization of the Company, the holders of Senior Indebtedness will be entitled to receive payment in full before the Noteholders are entitled to receive any payment. In addition, the Indenture will provide that no payments in respect of any Obligations with respect to the Notes may be made if (i) any payment default on any Senior Indebtedness shall have occurred or (ii) any other default under any Senior Indebtedness shall have occurred which would permit the holders thereof to accelerate such Indebtedness and the Company shall have received notice of such default, unless, in the case of clauses (i) or (ii), such default shall have been cured or waived; provided, that (a) payments on the Notes may resume in the case of any default described in clause (ii) on the date which is 179 days after the giving of such notice (provided there is not then a default under clause (i)) and (b) in no event shall such payment blockage be applicable for more than 179 days in each 360-day period. If in any of the situations referred to in clause (i) or (ii) above a payment is made to the Trustee or to Noteholders before all Senior Indebtedness has been paid in full or provision has been made for such payment, the payment to the Trustee or Noteholders must be paid over to the holders of the Senior Indebtedness. The Indenture defines 'Senior Indebtedness' to mean all Obligations of the Company with respect to the following, whether outstanding at the date of original execution of the Indenture or thereafter incurred, created or assumed: (a) indebtedness of the Company for money borrowed, including, without limitation, indebtedness of the Company for money borrowed which is evidenced by notes, debentures, bonds or other securities issued under the provisions of an indenture or other instrument, and also including indebtedness represented by Purchase Money Obligations (as defined), but only to the extent such indebtedness is enforceable by a money judgment; (b) guarantees or assumptions by the Company of indebtedness of others of any of the kinds described in the preceding clause (a); and (c) renewals, extensions and refundings of, and indebtedness of a successor corporation issued in exchange for or in 10 replacement of, indebtedness, guarantees and assumptions of the kinds described in the preceding clauses (a) or (b), unless, in the case of any particular indebtedness, obligation, guarantee, assumption, renewal, extension or refunding, the instrument creating or evidencing the same expressly provides that such indebtedness, obligation, guarantee, assumption, renewal, extension or refunding is not superior in right of payment to the Notes; provided, that Senior Indebtedness shall not be deemed to include (i) any indebtedness of the Company to any Subsidiary, (ii) any liability for taxes, (iii) any amounts payable or other liabilities to trade creditors arising in the ordinary course of business, (iv) any indebtedness which is subordinate or junior by its terms to any other indebtedness of the Company, (v) the 8 1/4% Notes, (vi) the 10 3/8% Notes or (vii) the 5 1/4% Debentures. At June 30, 1996, the amount of outstanding Senior Indebtedness of the Company was $150,000,000 and the amount of indebtedness of Subsidiaries of the Company, to which the Notes are effectively subordinated, was $21,939,000, exclusive of $211,020,000 of Deposits. The Indenture will provide that no indebtedness of the Company shall be senior in right of payment to the Notes unless such indebtedness is pari passu in right of payment with the Company's other Senior Indebtedness. 'Obligations' means any principal, interest, penalties, fees, indemnities and other obligations and liabilities payable under the documentation governing the applicable Indebtedness. By reason of such subordination, in the event of insolvency, general creditors of the Company may recover less, ratably, than holders of Senior Indebtedness and may recover more, ratably, than Noteholders or holders of other subordinated indebtedness of the Company. The Notes will rank senior in right of payment to the 5 1/4% Debentures and pari passu with the 8 1/4% Notes and any 10 3/8% Notes that remain outstanding. CERTAIN COVENANTS The Indenture will contain the following covenants: Restriction on Incurrence of Indebtedness by the Company and on Incurrence of Indebtedness and Issuance of Preferred Stock by Its Subsidiaries. The Company shall not, and shall not permit any Subsidiary to, create, incur, assume or guarantee the payment of any Indebtedness, and shall not permit any of its Subsidiaries to issue any Preferred Stock, if, at the time of such event and after giving effect thereto on a pro forma basis, the Company's ratio of Consolidated Debt to Consolidated Tangible Net Worth, as of the most recent date for which consolidated financial statements are available and adjusted for the incurrence of all Indebtedness and the issuance of all Preferred Stock by Subsidiaries (other than Permitted Indebtedness) since that date, would be greater than 1.75 to 1. This restriction shall not preclude the incurrence of Permitted Indebtedness. 'Consolidated Debt' means, on any date, the sum of (i) total Indebtedness of the Company and its Subsidiaries, at such date, determined in accordance with generally accepted accounting principles as in effect on December 31, 1995 ('GAAP') on a consolidated basis, and (ii) the aggregate liquidation preference of all Preferred Stock of Subsidiaries of the Company, at such date, other than Preferred Stock to the extent held by the Company and its Subsidiaries; provided, that Consolidated Debt shall not include Permitted Indebtedness. 'Indebtedness' of any Person means (i) any liability of such Person (a) for borrowed money, (b) evidenced by a note, debenture or similar instrument (including a Purchase Money Obligation or deferred payment obligation) given in connection with the acquisition of any property or assets (other than inventory or similar property acquired in the ordinary course of business), including securities, (c) for the payment of a Capitalized Lease Obligation of such Person or (d) with respect to the reimbursement of any letter of credit, banker's acceptance or similar credit transaction (other than trade letters of credit issued in the ordinary course of business; provided, that the failure to make prompt reimbursement of any trade letter of credit shall be deemed to be the incurrence of Indebtedness); and (ii) any guarantee by such Person of any liability of others described in clause (i) above or any obligation of such Person with respect to any liability of others described in clause (i) above. Indebtedness shall not include Deposits. 'Permitted Indebtedness' means (i) any Indebtedness of the Company and its Subsidiaries outstanding on the date of the Indenture, or any refinancing or replacement thereof; provided, that the 11 aggregate amount of such Indebtedness is not increased, (ii) Acquired Indebtedness, (iii) Preferred Stock of Subsidiaries held by the Company or its Subsidiaries (it being understood that the sale of such Preferred Stock by the Company or such Subsidiary to any Person other than the Company or a Subsidiary of the Company or such Subsidiary no longer being a Subsidiary shall be deemed the issuance of Preferred Stock for purposes of the above test) and (iv) intercompany Indebtedness. 'Acquired Indebtedness' means Indebtedness or Preferred Stock of a Person either (i) existing at the time such Person becomes a Subsidiary, (ii) assumed in connection with the acquisition of assets of such Person or (iii) any refinancing or replacement by such Person of such Indebtedness or Preferred Stock; provided, that the aggregate amount of such Indebtedness or Preferred Stock then outstanding is not increased. Acquired Indebtedness shall not include (x) any such Indebtedness created or Preferred Stock issued in anticipation of such Person becoming a Subsidiary (other than a refinancing or replacement of Indebtedness or Preferred Stock of such Person, which original Indebtedness or Preferred Stock was not incurred or issued in anticipation of such Person becoming a Subsidiary), or (y) any Indebtedness or Preferred Stock that is recourse to the Company or any Subsidiary or any of their respective assets, other than to such Person and its Subsidiaries and their respective assets. Restriction on Investments by Insurance Subsidiaries. The Indenture will provide that the Company shall not permit any Subsidiary which is an insurance company to make, directly or indirectly, any Investment other than in Investment Grade Securities if, after giving effect thereto at the time of such Investment, less than 80% of the aggregate Investments of such insurance company would consist of Investment Grade Securities, valuing Investments for purposes of this restriction at original cost. The foregoing restriction shall not (i) apply to Investments in the Company or any Subsidiary of the Company, (ii) prevent the Company or its Subsidiaries from acquiring the Capital Stock of, or all or substantially all of the assets of, an insurance company or (iii) apply to securities issued in a restructuring or exchange offer or similar transaction offered generally to all holders of another security then held by such Subsidiary. 'Investment Grade Securities' means (i) securities having any of the following ratings: at least BBB- or the equivalent thereof by S&P or at least Baa3 or the equivalent thereof by Moody's or at least BBB- or the equivalent thereof by Duff & Phelps Inc. ('Duff & Phelps') or (ii) cash or Cash Equivalents. 'Cash Equivalents' shall mean (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof, (ii) U.S. dollar denominated time deposits, certificates of deposit, eurodollar time deposits, eurodollar certificates of deposit and bankers acceptances of any domestic commercial bank of recognized standing having capital and surplus in excess of $500 million, (iii) commercial paper having a rating from S&P of at least A-2 or the equivalent thereof or from Moody's of at least P-2 or the equivalent thereof or from Duff & Phelps of at least D-2 or the equivalent thereof and maturing within nine months from the date of acquisition, and (iv) tax-exempt commercial paper of United States municipal, state or local governments rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's or at least D-2 or the equivalent thereof by Duff & Phelps and maturing within nine months from the date of acquisition. Restricted Payments and Restricted Investments. The Company shall not, and shall not permit any Subsidiary to, make, directly or indirectly, any Restricted Payment or Restricted Investment if, immediately after giving effect to such Restricted Payment or Restricted Investment, as the case may be: (a) a Default or Event of Default under the Indenture shall have occurred and be continuing, (b) the Company's Consolidated Tangible Net Worth would be less than $250 million, (c) the Company would not be permitted to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the covenant contained under 'Restriction on Incurrence of Indebtedness by the Company and on Incurrence of Indebtedness and Issuance of Preferred Stock by its Subsidiaries' above or (d) the sum of (x) the aggregate amount expended for all Restricted Payments subsequent to March 31, 1992 and (y) the aggregate amount of Restricted Investments made subsequent to March 31, 1992 and then outstanding reduced by any write down of any such Restricted Investment to the extent that such write down otherwise reduced Consolidated Net Income (the amount so expended for a Restricted Payment or a Restricted Investment, if other than in cash, to be determined by the Board of Directors of the Company, whose determination shall be conclusive and evidenced by a Board 12 Resolution) would exceed the sum of (1) $35 million, (2) 50% of the aggregate Consolidated Net Income of the Company (or minus 100% of the aggregate Consolidated Net Loss of the Company) accrued on a cumulative basis subsequent to March 31, 1992, and (3) the aggregate net proceeds, including the fair value of property other than cash (as determined by the Board of Directors of the Company, whose determination shall be conclusive and evidenced by a Board Resolution), received by the Company in respect of the issue or sale subsequent to March 31, 1992 of (i) any shares of Capital Stock of the Company, or (ii) any Indebtedness of the Company to the extent converted into or exchanged for Capital Stock of the Company subsequent to March 31, 1992. The foregoing restrictions shall not prevent (x) the payment of any dividend or distribution within 60 days after the date of declaration thereof, if at such date of declaration such payment complied with the foregoing provisions, or (y) the retirement of any shares of the Company's Capital Stock by exchange for, or upon conversion of, or out of the proceeds of the substantially concurrent sale (other than to a Subsidiary) of, other shares of the Capital Stock of the Company, and neither such retirement, exchange or conversion nor the proceeds of any such sale shall be included in any computation made above. At June 30, 1996, the amount available for Restricted Payments and Restricted Investments was approximately 38% of the Company's total shareholders' equity at that date. On the first day on which the aggregate Restricted Payments and Restricted Investments exceed by $100 million (calculated on the date of payment or investment) the amount of Restricted Payments and Restricted Investments that could otherwise be made pursuant to this paragraph if gains on sales of segments, businesses or major lines of business, net of losses on such sales (whether sold as assets or stock), had been excluded from the definition of 'Consolidated Net Income,' then each Noteholder shall have the right, at such Noteholder's option, to require the Company to purchase all or any portion (in integral multiples of $1,000) of such Noteholder's Notes at 101% of the principal amount thereof, plus accrued interest; provided, that the Company will not be obligated to purchase any of such Notes unless Noteholders holding at least 10% of the Notes outstanding at the date of such Restricted Payment or Restricted Investment (other than Notes held by the Company and its Affiliates) shall have tendered their Notes for repurchase. The mechanics, timing and other terms of the offer will be substantially the same as those with respect to a 'Change of Control,' as described below. 'Consolidated Net Income' and 'Consolidated Net Loss' mean, for any period, the net income or loss, as the case may be, of the Company and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP (provided, that, for periods ended prior to January 1, 1995, Consolidated Net Income shall mean the reported income before cumulative effects of changes in accounting principles of the Company and its Subsidiaries); provided, that there shall be excluded therefrom (to the extent otherwise included therein) (i) the net income (or net loss) of any Person that is not the Company or a Subsidiary of the Company, except net income of such Person may be included to the extent of the amount of dividends or other distributions actually paid or made to the Company or any of its Subsidiaries by such other Person during such period, (ii) except to the extent includible pursuant to the foregoing clause (i), the net income (or net loss) of any other Person accrued prior to the date it becomes a Subsidiary of the Company or is merged into or consolidated with the Company or any of its Subsidiaries or such other Person's assets are acquired by the Company or any of its Subsidiaries, (iii) all extraordinary gains, to the extent they exceed extraordinary losses, in each case, determined in accordance with GAAP and (iv) all gains or losses resulting from the effect of any accounting change. 'Consolidated Tangible Net Worth' with respect to the Company means, as of any date, the total shareholders' equity of the Company determined in accordance with GAAP less (a) (to the extent not otherwise deducted from total shareholders' equity at such date) the amount of Restricted Investments of the Company and its Subsidiaries outstanding on such date and (b) any and all goodwill and other intangible assets reflected on the consolidated balance sheet of the Company as of such date. Deferred policy acquisition costs ('DPAC') and that portion of the value of insurance in force resulting from an acquisition and equivalent to the amount of DPAC of the acquired entity outstanding immediately prior to such acquisition shall not be deemed goodwill or other intangible assets for purposes of determining Consolidated Tangible Net Worth. 'Restricted Investment' means, with respect to the Company or any Subsidiary of the Company, an Investment by such Person in an Affiliate of the Company (other than (x) in the Company or a 13 Subsidiary of the Company or (y) in a Person that is an Affiliate of the Company solely because of (i) the ownership of securities of such Person by the Company or its Subsidiaries, (ii) contractual arrangements between the Company and its Subsidiaries and such Person or (iii) a combination of (i) and (ii)). 'Restricted Payment' means (i) the declaration or making of any dividend or of any other payment or distribution on or with respect to the Company's Capital Stock (other than dividends, payments or distributions payable solely in shares of the Company's Capital Stock), (ii) any payment on account of the purchase, redemption, retirement or other acquisition for value of the Company's Capital Stock; provided, that so long as there shall not be a Default or Event of Default under the Indenture any payment to the estate of Ian M. Cumming or Joseph S. Steinberg (or any trustee or other legal representative on behalf of the legatees or heirs of such Persons) on account of the repurchase or redemption of Voting Stock owned by such estates (or trustees or legal representatives), solely from the net proceeds of any life insurance maintained by the Company on either of such Persons, shall not be a Restricted Payment and (iii) the declaration or making of any dividend or any other payment or distribution with respect to the Capital Stock of any Subsidiary of the Company and any payment on account of the purchase, redemption, retirement or other acquisition for value of the Capital Stock of any Subsidiary of the Company but, with respect to this clause (iii), only to the extent such dividend, payment or distribution is received by an Affiliate of the Company (other than (x) the Company or a Subsidiary of the Company or (y) a Person that is an Affiliate of the Company solely because of (A) the ownership of securities of such Person by the Company or its Subsidiaries, (B) contractual arrangements between the Company and its Subsidiaries and such Person or (C) a combination of (A) and (B)). Maintenance of Consolidated Tangible Net Worth. The Company is required to furnish the Trustee with an Officers' Certificate within 55 days after the end of any fiscal quarter (100 days after the end of any fiscal year) notifying the Trustee that the Company's Consolidated Tangible Net Worth has declined below the Minimum Tangible Net Worth at the end of any fiscal quarter in which the Company's Consolidated Tangible Net Worth has so declined. If, on the last day of each of any two consecutive fiscal quarters (the last day of the second fiscal quarter being referred to herein as a 'Deficiency Date'), the Company's Consolidated Tangible Net Worth is less than the Minimum Tangible Net Worth, then the Company is required, no later than 65 days after each such Deficiency Date (110 days if such Deficiency Date is the last day of the Company's fiscal year), to make an offer to all Noteholders to purchase (an 'Offer') 10% of the aggregate principal amount of the Notes originally issued (the 'Offer Amount') at a purchase price of 100% of the principal amount of the Notes, plus accrued interest to the date of purchase. The Offer is required to remain open for a period of 20 business days following its commencement (unless required to remain open for a longer period by applicable law) and the Company is required to purchase the Offer Amount of the Notes on a designated date no later than five business days after the termination of the Offer or, if less than the Offer Amount has been tendered, all Notes then tendered; provided, however, that the Company will not be obligated to purchase any of such Notes unless Noteholders holding at least 10% of the Offer Amount of Notes shall have tendered and not subsequently withdrawn their Notes for repurchase. If the aggregate principal amount of Notes tendered to the Company exceeds the Offer Amount, the Company is required to purchase the Notes tendered to it pro rata among the Notes tendered (with such adjustments as may be appropriate so that only Notes in denominations of $1,000 and integral multiples thereof shall be purchased). The Company will comply with all applicable Federal and state securities laws in connection with each Offer. In no event will the failure of the Company's Consolidated Tangible Net Worth to equal or exceed the Minimum Tangible Net Worth at the end of any fiscal quarter be counted toward the making of more than one Offer. The Company may reduce the principal amount of Notes to be purchased pursuant to the Offer by subtracting 100% of the principal amount of Notes acquired by the Company subsequent to the Deficiency Date through purchase or exchange and surrendered for cancellation. The Company, however, may not credit Notes that have been previously used as a credit against any obligation to repurchase Notes pursuant to this provision, pursuant to a Change of Control offer or pursuant to the repurchase obligation described under 'Restricted Payments and Restricted Investments.' 'Minimum Tangible Net Worth' means $250 million. 14 Limitation on Payment Restrictions Affecting Subsidiaries. The Company shall not, and shall not permit any Subsidiary to, directly or indirectly, create or otherwise cause to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (a) pay dividends or make any other distributions on its Capital Stock or any other interest or participation in, or measured by, its profits, owned by the Company or any Subsidiary, or pay any Indebtedness owed to the Company or any Subsidiary, (b) make loans or advances to the Company or any Subsidiary or (c) transfer any of its properties or assets to the Company, except for such encumbrances or restrictions existing under or by reasons of (i) applicable law, (ii) the Indenture, (iii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Company or any Subsidiary, (iv) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than such Person and its Subsidiaries, or the property or assets of such Person and its Subsidiaries, so acquired, (v) Indebtedness existing on the date of the Indenture and any refinancing of such existing Indebtedness so long as the terms and conditions of any such refinancing agreements are no less favorable to the Company than those contained in the agreements governing the Indebtedness being refinanced or (vi) other Indebtedness; provided, that the Board of Directors of the Company shall have concluded, in good faith, that the terms thereof do not have a materially adverse effect on the Company, on a stand-alone basis, or the Company's ability, on a stand-alone basis, to meet its obligations. Limitation on Issuance of Other Subordinated Debt. The Company shall not issue, assume, guarantee, incur or otherwise become liable, directly or indirectly, for any Indebtedness subordinate or junior in ranking in any respect to any Senior Indebtedness but senior in right of payment to the Notes. REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE OF CONTROL In the event of any Change of Control, each Noteholder shall have the right, at such Noteholder's option, to require the Company to purchase all or any portion (in integral multiples of $1,000) of such Noteholder's Notes on the date (the 'Change of Control Payment Date') which is 20 business days after the date the Change of Control Notice (as defined below) is mailed (or such later date as is required by applicable law) at 101% of the principal amount thereof, plus accrued interest to the Change of Control Payment Date; provided, that the Company will not be obligated to purchase any of such Notes unless Noteholders holding at least 10% of the Notes outstanding at the Change of Control Payment Date (other than Notes held by the Company and its Affiliates) shall have tendered their Notes for repurchase. In addition, in the event of any Change of Control, the Company will not, and will not permit any of its Subsidiaries to, purchase or redeem any Indebtedness ranking junior to the Notes pursuant to any analogous provisions prior to the Change of Control Payment Date. The Company is obligated to send to all Noteholders, within five business days after the occurrence of each Change of Control, a notice of the occurrence of such Change of Control (the 'Change of Control Notice'), specifying a date by which a Noteholder must notify the Company of such Noteholder's intention to exercise the repurchase right and describing the procedure that such Noteholder must follow to exercise such right. The Company is required to deliver a copy of such notice to the Trustee and to cause a copy of such notice to be published in a daily newspaper of national circulation. To exercise the repurchase right, the Noteholder must deliver, on or before the fifth calendar day prior to the Change of Control Payment Date, written notice (which shall be irrevocable, except as provided below) to the Company (or an agent designated by the Company for such purpose) of the Noteholder's exercise of such right, together with (i) the Note or Notes with respect to which the right is being exercised, duly endorsed for transfer with the form entitled 'Option of Holder to Elect Purchase' on the reverse of the Note completed, and (ii) if the Change of Control Payment Date falls between any record date for the payment of interest on the Notes and the next succeeding interest payment date, an amount equal to the interest which the Noteholder is entitled to receive on such interest payment date. The Company will comply with all applicable Federal and state securities laws in connection with each Change of Control Notice. A 'Change of Control' shall be deemed to occur if (i) the Company has any other Indebtedness outstanding (other than Indebtedness under a bank credit agreement or similar bank financing) which provides for a Change of Control (as defined in the instrument governing such Indebtedness) if Ian M. 15 Cumming, Chairman of the Board of the Company, or Joseph S. Steinberg, President of the Company, ceases to beneficially own, in the aggregate, a certain percentage of the outstanding Common Shares, which percentage ownership requirement is in excess of 10%, and a Change of Control (as defined in the instrument governing such Indebtedness) occurs under such Indebtedness or (ii) at any time when the Company does not have any other Indebtedness outstanding of the type referred to in clause (i), Ian M. Cumming or Joseph S. Steinberg, individually or in the aggregate, sells, transfers or otherwise disposes of (a 'Disposition'), after the date of the Indenture, Common Shares so that, after giving effect thereto, the sole beneficial ownership of outstanding Common Shares by Mr. Cumming and/or Mr. Steinberg would, in the aggregate, fall below 10% of the then outstanding Common Shares; provided, that no Change of Control shall be deemed to have occurred under clause (ii) if the Notes are rated by Moody's or S&P as Investment Grade both at the time of such Disposition and for a period of 90 days from the date of such Disposition (it being understood that, with respect to the foregoing proviso, a Change of Control shall be deemed to occur on the first date during such 90-day period when the Notes are rated below Investment Grade by both Moody's and S&P). The term 'Common Shares' shall include any securities issued as dividends or distributions on the Common Shares. For purposes hereof, 'sole beneficial ownership' of Common Shares shall be deemed to include (i) all Common Shares received after June 15, 1992 from Mr. Cumming or Mr. Steinberg by any member of their respective immediate families or by any trust for the benefit of either of them or any member of their respective immediate families (a 'Recipient'), which Common Shares remain held by a Recipient during the lifetime of Mr. Cumming or Mr. Steinberg (unless sold, transferred or disposed of by such Recipient during the lifetime of Mr. Cumming or Mr. Steinberg, as the case may be, in which case such Disposition by such Recipient shall constitute a Disposition by Mr. Cumming or Mr. Steinberg, as the case may be) and (ii) after the death of Mr. Cumming and/or Mr. Steinberg, all Common Shares owned as of the date of death by the decedent, and any Recipient of the decedent, regardless of whether such Recipient continues to own such Common Shares after the date of death. In determining the number of outstanding Common Shares then held by Messrs. Cumming and Steinberg and the total number of outstanding Common Shares, there shall be excluded Common Shares issued by the Company after December 31, 1991, or the conversion into or exchange for, after December 31, 1991, Common Shares or securities convertible into or exchangeable for Common Shares. As calculated pursuant to this provision, Messrs. Cumming and Steinberg beneficially owned, in the aggregate, approximately 45.8% of the Common Shares as of June 30, 1996. As of the date hereof, the Company's most restrictive outstanding Indebtedness that contains a change of control provision requires that Mr. Cumming and/or Mr. Steinberg continue to have sole beneficial ownership of outstanding Common Shares equal to at least 32% of the then outstanding Common Shares; provided that, under such Indebtedness, Messrs. Cumming and/or Steinberg may sell, transfer or otherwise dispose of additional Common Shares if, after giving effect thereto, they would, in the aggregate, then have sole beneficial ownership of Common Shares equal to at least 23% of the then outstanding Common Shares, but only if, after giving effect to any such Disposition, the aggregate market value of the Common Shares then so owned by Mr. Cumming and/or Mr. Steinberg on the date of such Disposition would be at least $200 million; provided, further, that, under such Indebtedness, upon the death of either Mr. Cumming or Mr. Steinberg, the aggregate market value of the Common Shares then so owned by the survivor on the date of such Disposition would be at least $100 million. There can be no assurance that the Company will have sufficient funds or the financing to satisfy its obligations to repurchase the Notes and other Indebtedness that may come due upon a Change of Control. In such case, the Company's failure to purchase tendered Notes would constitute an Event of Default under the Indenture. The Noteholders holding a majority in principal amount of Notes then outstanding may waive compliance by the Company of its obligation to repurchase Notes upon a Change of Control. The Company may not waive such provisions. See 'Modification of the Indenture.' The term 'Investment Grade' is defined as BBB- or higher by S&P or Baa3 or higher by Moody's or the equivalent of such ratings by Moody's or S&P. 16 TRANSACTIONS WITH AFFILIATES The Company shall not, and shall not permit any Subsidiary to, directly or indirectly, enter into any transaction or series of related transactions with any Affiliate (other than (a) with the Company or a Wholly Owned Subsidiary or (b) the making of a Restricted Payment or Restricted Investment otherwise permitted by the covenant described under 'Restricted Payments and Restricted Investments' above), including, without limitation, any loan, advance or investment or any purchase, sale, lease or exchange of property or the rendering of any service, unless such transaction or series of transactions is in good faith and at arm's-length and on terms which are at least as favorable as those available in a comparable transaction from an unrelated Person. Any such transaction that involves in excess of $10 million shall be approved by a majority of the Independent Directors on the Board of Directors of the Company; or, in the event that at the time of any such transaction or series of related transactions there are no Independent Directors serving on the Board of Directors of the Company, such transaction or series of related transactions shall be approved by a nationally recognized expert with experience in appraising the terms and conditions of the type of transaction for which approval is required. SUCCESSOR CORPORATION The Company may not consolidate with, merge into or transfer all or substantially all of its assets (i.e., 90% or more) to another corporation unless (a) the successor corporation shall be existing under the laws of the United States, any state thereof or the District of Columbia, (b) there shall not be any Default or Event of Default under the Indenture, (c) such successor corporation assumes all of the Obligations of the Company under the Notes and the Indenture, (d) after giving effect to such transaction, such successor corporation shall have a Consolidated Net Worth equal to or greater than the Company and (e) after giving effect to such transaction, the Company or such successor corporation is permitted to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) as provided in the Indenture. Thereafter all such obligations of the Company will terminate. REPORTS TO NOTEHOLDERS The Company will mail copies of its annual reports and quarterly reports mailed to its shareholders to Noteholders. If the Company is not required to furnish annual or quarterly reports to its shareholders, the Company will, upon request, mail to each Noteholder, at such Noteholder's address as appearing on the Note register, audited annual financial statements and unaudited condensed quarterly financial statements. Such financial statements shall be accompanied by management's discussion and analysis of the results of operations and financial condition of the Company for the period reported upon in substantially the form required under the rules and regulations of the Commission in effect from time to time. THE TRUSTEE Fleet National Bank will be the Trustee under the Indenture. The Noteholders holding a majority in principal amount of all outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee. The Indenture will provide that, in case an Event of Default thereunder shall occur and be continuing, the Trustee will be required to use the degree of care of a prudent person in the conduct of his own affairs in the exercise of its power. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any of the Noteholders, unless they shall have offered to the Trustee security and indemnity satisfactory to it. EVENTS OF DEFAULT AND NOTICE THEREOF The term 'Event of Default' when used in the Indenture shall mean any one of the following: (i) failure to pay (whether or not prohibited by the subordination provisions) interest for 30 days or principal; (ii) failure to perform any covenants not described in clause (i) for 30 days after receipt of 17 notice; (iii) the occurrence of any event of default under an instrument evidencing or securing other indebtedness of the Company or any Material Subsidiary for borrowed money in excess of $15 million resulting in the acceleration of such indebtedness, which acceleration is not rescinded or annulled pursuant to the terms of such instrument; and (iv) certain events of bankruptcy, insolvency or reorganization relating to the Company or any Material Subsidiary. The term 'Material Subsidiary' means (i) any Subsidiary of the Company which at December 31, 1995 was a 'significant subsidiary' under Regulation S-X promulgated by the Commission or any successor to such Subsidiary and (ii) any other Subsidiary of the Company; provided that the Company's investments in and advances to such Subsidiary at the date of determination thereof, without giving effect to any write-downs in such investments or advances taken within the prior 12 months, represent 20% or more of the Company's Consolidated Tangible Net Worth as of such time; provided, however, that this clause (ii) shall not include any Subsidiary if, at the time that it became a Subsidiary, the Company contemplated commencing a voluntary case or proceeding under the Bankruptcy Law with respect to such Subsidiary. The Indenture will provide that the Trustee shall, within 90 days after the occurrence of a default, provide to the Noteholders notice of all uncured defaults known to it (the term default to include the events specified above without grace or notice); provided, that, except in the case of default in the payment of principal of or interest on any of the Notes, the Trustee shall be protected in withholding such notice if and so long as a committee of its Trust Officers in good faith determines that the withholding of such notice is in the interests of the Noteholders. In case an Event of Default shall have occurred and be continuing, the Trustee or the Noteholders holding at least 25% in aggregate principal amount of the Notes then outstanding, by notice in writing to the Company and to the Trustee, may declare to be due and payable immediately the outstanding principal amount and accrued interest, premiums, penalties and other amounts in respect of the Notes and the Indenture. Such declaration may be annulled and past defaults (except, unless theretofore cured, a default in payment of principal of or interest on the Notes) may be waived by the holders of a majority in principal amount of the Notes, upon the conditions provided in the Indenture. The Indenture will include a covenant that the Company will file annually with the Trustee a statement regarding compliance by the Company with the terms thereof and specifying any defaults of which the signers may have knowledge. MODIFICATION OF THE INDENTURE Under the Indenture, the rights and obligations of the Company and the rights of Noteholders may be modified by the Company and the Trustee only with the consent of the Noteholders holding a majority in principal amount of the Notes then outstanding; but no extension of the maturity of any Notes, or reduction in the interest rate or extension of the time of payment of principal of or interest on, or any change in the subordination of the Notes that is adverse to the Noteholders, or any other modification in the terms of payment of the principal of or interest on the Notes or reduction of the percentage required for modification will be effective against any Noteholder without such Noteholder's consent. The Noteholders holding a majority in principal amount of Notes then outstanding may waive compliance by the Company with certain covenants, including those described under 'Certain Covenants -- Maintenance of Consolidated Tangible Net Worth' and 'Repurchase at Option of Holders Upon a Change of Control.' SATISFACTION AND DISCHARGE OF INDENTURE The Indenture will be discharged and cancelled upon payment of all the Notes or upon deposit with the Trustee, within not more than one year prior to the maturity of the Notes, of funds sufficient for such payment. 18 UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement between Jefferies & Company, Inc. and CS First Boston Corporation (collectively, the 'Underwriters') and the Company, such Underwriters have severally agreed to purchase from the Company $ and $ aggregate principal amount of the Notes, respectively. The Underwriting Agreement provides that the obligations of the Underwriters thereunder are subject to certain conditions precedent and that the Underwriters will be obligated to purchase all of the Notes if they purchase any of the Notes. The Underwriters propose to offer the Notes directly to the public at the public offering price set forth on the cover page of this Prospectus and to certain dealers at such price less a concession not in excess of % of the principal amount of the Notes. The Underwriters may allow, and such dealers may reallow, a concession not in excess of % of the principal amount of the Notes to certain other dealers. After the initial public offering, the offering price, concession and discount may be changed. The Company has agreed to indemnify the Underwriters against certain liabilities including liabilities under the Securities Act or to contribute to payments the Underwriters may be required to make in respect thereof. Each of Jefferies & Company, Inc. and CS First Boston Corporation has previously performed investment banking and other financial advisory services for the Company for which they have received customary compensation. Jefferies & Company, Inc. is also acting as Dealer Manager of the Tender Offer, for which it will receive compensation in connection therewith. LEGAL MATTERS The validity of the securities offered hereby and certain legal matters will be passed upon by Weil, Gotshal & Manges LLP, New York, New York, General Counsel to the Company (members of which own approximately 165,000 Common Shares). Certain legal matters will be passed upon for the Underwriters by Cahill Gordon & Reindel (a partnership including a professional corporation), New York, New York. EXPERTS The consolidated balance sheets as of December 31, 1995 and 1994 and the consolidated statements of income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 1995, incorporated by reference in this Prospectus, have been incorporated herein in reliance on the report of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. 19 NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. ------------------ TABLE OF CONTENTS
PAGE ----- Available Information............................. 2 Incorporation of Certain Documents by Reference... 2 Prospectus Summary................................ 3 The Company....................................... 5 Use of Proceeds................................... 6 Capitalization.................................... 7 Selected Financial Data........................... 8 Description of Notes.............................. 10 Underwriting...................................... 19 Legal Matters..................................... 19 Experts........................................... 19
$135,000,000 LEUCADIA NATIONAL CORPORATION % SENIOR SUBORDINATED NOTES DUE 2006 PROSPECTUS JEFFERIES & COMPANY, INC. CS FIRST BOSTON , 1996 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses payable by the Registrant in connection with the securities being registered are as follows: SEC Registration Fee.............................................................. $ 46,552 Accounting Fees and Expenses...................................................... 100,000 Printing and Photocopying......................................................... 40,000 Legal Fees and Expenses........................................................... 150,000 Blue Sky Fees and Expenses........................................................ 25,000 Fees of Trustees.................................................................. 8,000 Miscellaneous Expenses............................................................ 10,448 -------- Total Expenses............................................................... $380,000 -------- --------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Sections 722 through 725 of the New York Business Corporation Law (the 'Business Corporation Law') provide that a corporation may indemnify, with certain limitations and exceptions, a director or officer as follows: (1) in a derivative action, against his reasonable expenses, including attorneys' fees but excluding certain settlement costs, actually and necessarily incurred by him in connection with the defense thereof, or an appeal therein, if such director or officer acted, in good faith, for a purpose which he reasonably believed to be in (or in the case of service for another corporation, not opposed to) the best interests of the corporation; and (2) in a civil or criminal non-derivative action or proceeding including a derivative action by another corporation, partnership or other enterprise in which any director or officer of the indemnifying corporation served in any capacity at the indemnifying corporation's request, against judgments, fines, settlement payments and reasonable expenses, including attorneys' fees, incurred as a result thereof, or any appeal therein, if such director or officer acted in good faith, for a purpose which he reasonably believed to be in (or, in the case of service for any other corporation, not opposed to) the best interests of the corporation and, in criminal actions and proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful. Such indemnification is a matter of right where the director or officer has been successful on the merits or otherwise, and otherwise may be granted upon corporate authorization or court award as provided in the statute. Section 721 of the Business Corporation Law provides that indemnification arrangements can be established for directors and officers, by contract, by-law, charter provision, action of shareholders or board of directors, on terms other than those specifically provided by Article 7 of the Business Corporation Law, provided that no indemnification may be made to or on behalf of any director or officer if a judgment or other final adjudication adverse to the director or officer establishes that his acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled. Article V of the Company's By-Laws provides for the indemnification, to the full extent authorized by law, of any person made or threatened to be made a party in any civil or criminal action or proceeding by reason of the fact that he, his testator or intestate is or was a director or officer of the Company. Section 726 of the Business Corporation Law provides that a corporation may obtain insurance to indemnify itself and its directors and officers. The Company maintains an insurance policy providing both directors and officers liability coverage and corporate reimbursement coverage. Article Sixth of the Company's Certificate of Incorporation contains a charter provision eliminating or limiting director liability for monetary damages arising from breaches of fiduciary duty, subject only to certain limitations imposed by statute. II-1 ITEM 16. EXHIBITS.
EXHIBIT NUMBER DESCRIPTION - ------ ----------------------------------------------------------------------------------------------------------- 1 -- Form of Underwriting Agreement. 4.1 -- Form of Indenture, dated as of , 1996, between the Company and Fleet National Bank, as Trustee, in respect of the Company's % Senior Subordinated Notes due 2006. 4.2 -- Form of Senior Subordinated Note (included in the form of Indenture filed as Exhibit 4.1 to this Registration Statement). 5 -- Opinion of Weil, Gotshal & Manges LLP. 12 -- Statement of Computation of Ratio of Earnings to Fixed Charges.** 23.1 -- Consent of Coopers & Lybrand L.L.P.** 23.2 -- Consent of Weil, Gotshal & Manges LLP (included in the opinion filed as Exhibit 5 to this Registration Statement). 24 -- Power of Attorney.** 25 -- Statement of Eligibility and Qualification of Fleet National Bank, as Trustee on Form T-1 with respect to the % Senior Subordinated Notes due 2006. 99 -- Schedule P of the 1995 Annual Statement to Insurance Departments of the Colonial Penn Insurance Company and Affiliated Property/Casualty Insurers and the Empire Insurance Company, Principal Insurer (filed as Exhibit 28 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995).*
- ------------ * Incorporated by reference. ** Previously filed. ITEM 17. UNDERTAKINGS. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions in Item 15 above, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. II-2 (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act (the 'Act') in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City and State of New York, on this first day of October, 1996. LEUCADIA NATIONAL CORPORATION By: /s/ JOSEPH A. ORLANDO ................................... JOSEPH A. ORLANDO VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on the date set forth above.
SIGNATURE TITLE DATE - ------------------------------------------ -------------------------------------------- ------------------- * Chairman of the Board October 1, 1996 ......................................... (Principal Executive Officer) (IAN M. CUMMING) * President and Director October 1, 1996 ......................................... (Principal Executive Officer) (JOSEPH S. STEINBERG) /S/ JOSEPH A. ORLANDO Vice President and Chief Financial Officer October 1, 1996 ......................................... (Principal Financial Officer) (JOSEPH A. ORLANDO) * Vice President and Comptroller October 1, 1996 ......................................... (Principal Accounting Officer) (BARBARA L. LOWENTHAL) * Director October 1, 1996 ......................................... (PAUL M. DOUGAN) * Director October 1, 1996 ......................................... (LAWRENCE D. GLAUBINGER) * Director October 1, 1996 ......................................... (JAMES E. JORDAN) * Director October 1, 1996 ......................................... (JESSE CLYDE NICHOLS, III) *By: /s/ JOSEPH A. ORLANDO ......................................... JOSEPH A. ORLANDO (ATTORNEY-IN-FACT)
II-4 EXHIBIT INDEX
EXEMPTION EXHIBITS INDICATION - -------- --------- 1 -- Form of Underwriting Agreement............................................................. 4.1 -- Form of Indenture, dated as of , 1996, between the Company and Fleet National Bank, as Trustee, in respect of the Company's % Senior Subordinated Notes due 2006........................................................................................ 4.2 -- Form of Senior Subordinated Notes (included in the form of Indenture filed as Exhibit 4.1 to this Registration Statement)............................................................. 5 -- Opinion of Weil, Gotshal & Manges LLP...................................................... 12 -- Statement of Computation of Ratio of Earnings to Fixed Charges.**.......................... 23.1 -- Consent of Coopers & Lybrand L.L.P.**...................................................... 23.2 -- Consent of Weil, Gotshal & Manges LLP (included in the opinion filed as Exhibit 5 to this Registration Statement)..................................................................... 24 -- Power of Attorney.**....................................................................... 25 -- Statement of Eligibility and Qualification of Fleet National Bank, as Trustee on Form T-1 with respect to the % Senior Subordinated Notes due 2006................................. 99 -- Schedule P of the 1995 Annual Statement to Insurance Departments of the Colonial Penn Insurance Company and Affiliated Property/Casualty Insurers and the Empire Insurance Company, Principal Insurer (filed as Exhibit 28 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995).*..............................................
- ------------ * Incorporated by reference. ** Previously filed. EX-1 2 EXHIBIT 1 Leucadia National Corporation (a New York corporation) $135,000,000 [ ]% Senior Subordinated Notes due 2006 UNDERWRITING AGREEMENT October [ ], 1996 Jefferies & Company, Inc. 11100 Santa Monica Boulevard Los Angeles, California 90025 CS First Boston Corporation Park Avenue Plaza 55 East 52nd Street New York, New York 10055 Dear Sirs: Leucadia National Corporation, a New York corporation (the "Company"), hereby confirms its agreement with each of you (the "Underwriters") with respect to the sale by the Company and the purchase by the Underwriters, acting severally and not jointly, of $135,000,000 aggregate principal amount of the Company's [ ]% Senior Subordinated Notes due 2006 (the "Securities") as set forth in Schedule A hereto. The Securities are to be issued pursuant to an indenture (the "Indenture") between the Company and [ ], as Trustee (the "Trustee"). You have advised us that you desire to purchase the Securities and that you propose to make a public offering of the Securities as soon as you deem advisable after the Registration Statement referred to below becomes effective, the Pricing Agreement (as defined below) has been executed and delivered and the Indenture has been qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). -2- Prior to the purchase and public offering of the Securities by the Underwriters, the Company and the Underwriters shall enter into an agreement substantially in the form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may take the form of an exchange of any standard form of written telecommunication between the Company and the Underwriters and shall specify such applicable information as is indicated in Exhibit A hereto. The offering of the Securities will be governed by this Agreement, as supplemented by the Pricing Agreement. From and after the date of execution and delivery of the Pricing Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement. The terms which follow, when used in this Agreement, shall have the meanings indicated. "Preliminary Prospectus" shall mean any preliminary prospectus referred to in Section 1(a)(i) below and any preliminary prospectus included in the Registration Statement on the date that the Registration Statement becomes effective (the "Effective Date") that omits Rule 430A Information (as defined below). "Registration Statement" shall mean the registration statement referred to in Section 1(a)(i) below, including exhibits, as amended at the Representation Date (as defined below) (or, if not effective at the Representation Date, in the form in which it shall become effective) and, in the event any post-effective amendment thereto becomes effective prior to the Closing Date (as defined in Section 2 hereof), shall also mean such registration statement as so amended. Such term shall include Rule 430A Information deemed to be included therein at the Effective Date as provided by Rule 430A (as defined below). The prospectus constituting a part of the Registration Statement (including the Rule 430A Information) as from time to time amended or supplemented, is hereinafter referred to as the "Prospectus", except that if any revised prospectus shall be provided to the Underwriters by the Company which differs from the prospectus on file at the Securities and Exchange Commission (the "Commission") at the Effective Date (whether or not such revised prospectus is required to be filed by the Company pursuant to Rule 424 of the Act Regulations), the term "Prospectus" shall refer to each such revised prospectus from and after the time it is first provided to the Underwriters for such use. "Rule 158," "Rule 424" and "Rule 430A" refer to such rules under the Securities Act of 1933, as amended (the "Act"; the rules and regulations under the Act, the "Act Regulations"). "Rule 430A Information" means information with respect to the Securities and the offering thereof permitted to be omitted from the -3- Registration Statement when it becomes effective pursuant to Rule 430A. Any reference herein to the Registration Statement, a Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3, which have been filed under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder (collectively, the "Exchange Act") as of the Effective Date, and any reference herein to the terms "amend," "amendment" or "supplement" with respect to the Registration Statement, a Preliminary Prospectus or Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission deemed to be incorporated by reference therein (all such incorporated documents being herein called the "Incorporated Documents"). SECTION 1. Representations and Warranties. (a) The Company represents and warrants to the Underwriters as of the date hereof and as of the date of execution of the Pricing Agreement (such date being referred to as the "Representation Date") and as of the Closing Date (as defined in Section 2 below), as follows: (i) The Company meets the requirements for use of Form S-3 under the Act and has filed with the Commission a registration statement (Registration No. 333-[ ]) on such Form, including a related preliminary prospectus, for the registration under the Act of the offering and sale of the Securities. The Company may have filed one or more amendments thereto, including the related preliminary prospectus, each of which has previously been furnished to the Underwriters. The Company will file with the Commission either (A) prior to effectiveness of such registration statement, a further amendment to such registration statement (including the form of final prospectus) or (B) after effectiveness of such registration statement, a final prospectus in accordance with Rules 430A and 424(b) of the Act Regulations. The Company has included in such registration statement, as amended at the Effective Date, all information (other than Rule 430A Information in the case of clause (B)) required by the Act and the Act Regulations to be included in the Prospectus with respect to the Securities and the offering thereof. As filed, such amendment and form of final prospectus, or such final prospectus, shall contain all Rule 430A Information, together with all other such required information, with respect to -4- the Securities and the offering thereof and, except to the extent the Underwriters shall agree in writing to a modification, shall be in all substantive respects in the form furnished to the Underwriters prior to the date hereof. (ii) On the Effective Date and on the Representation Date and the Closing Date, the Registration Statement did and will, and when the Prospectus is first filed (if required) in accordance with Rule 424(b) and on the Representation Date and the Closing Date, the Prospectus (together with any supplements thereto) will comply in all material respects with the applicable requirements of the Act and the Act Regulations; on the Effective Date and the Closing Date, the Registration Statement did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; and, on the Effective Date, the Representation Date and the Closing Date, and on the date of any filing pursuant to Rule 424(b), the Prospectus (together with any supplements thereto) did not and will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that the Company makes no representations or warranties to an Underwriter as to the information contained in or omitted from the Registration Statement or the Prospectus (or any supplement thereto) in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such Underwriter with respect to such Underwriter for use in connection with the preparation of the Registration Statement or the Prospectus (or any supplement thereto). (iii) In reliance in part upon representations of Coopers & Lybrand L.L.P., the accountants who have certified or shall certify the financial statements filed or to be filed with the Commission as part of the Registration Statement and the Prospectus (including the Incorporated Documents) are independent accountants as required by the Act. (iv) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of New York, with all requisite -5- corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction where the nature of its activities requires such qualification except where the failure of the Company to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect (as defined below). (v) Each of the Company's subsidiaries listed in Exhibit 21 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995 and such other subsidiaries created after such date that would be required to be so listed if in existence at such date (collectively, the "Subsidiaries") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with all requisite corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction where the nature of its activities requires such qualification except where the failure of such Subsidiary to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect. (vi) All the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are fully paid and non-assessable, and, except as otherwise set forth in the Registration Statement and the Prospectus, all outstanding shares of capital stock of such Subsidiaries are owned by the Company, either directly or through wholly-owned Subsidiaries, free and clear of any security interests, claims, liens or encumbrances. (vii) The Company and each of its Subsidiaries have all requisite power and authority, and all necessary material authorizations, approvals, orders, licenses, certificates and permits of and from regulatory or governmental officials, bodies and tribunals, to own or lease their respective properties and to conduct their respective businesses as now being conducted and as described in the Prospectus, and neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to -6- the revocation or modification of any such authorizations, approvals, orders, licenses, certificates or permits which, singly or in the aggregate, if the failure to be so licensed or approved or if the subject of an unfavorable decision, ruling or finding, would have a materially adverse effect on the condition (financial or otherwise), earnings or business of the Company and its Subsidiaries, considered as one enterprise, whether or not occurring in the ordinary course of business (a "Material Adverse Effect"); and the Company and its Subsidiaries are in compliance with all applicable laws, rules, regulations and orders and consents, the violation of which would have a Material Adverse Effect. (viii) The Incorporated Documents, when they became effective or were or are filed with the Commission, as the case may be, complied or will comply, as the case may be, in all material respects with the applicable requirements of the Act, the Act Regulations and the Exchange Act, as applicable. (ix) Since the respective dates as of which information is provided in the Prospectus, except as otherwise specifically stated therein, there has been no material adverse change or development with respect to the condition (financial or otherwise), earnings or business of the Company and its Subsidiaries, considered as one enterprise, whether or not arising in the ordinary course of business (a "Material Adverse Change"). (x) The authorized, issued and outstanding capital stock of the Company is as set forth in the Prospectus or the Incorporated Documents, without giving effect to any exercise of outstanding options subsequent to the date of the Prospectus and prior to the filing of any subsequent Incorporated Document; all of the Company's issued and outstanding common shares, $1.00 par value per share (the "Common Shares"), have been duly authorized and validly issued and are fully paid and non-assessable. (xi) Neither the Company nor any of its Subsidiaries is in violation of its respective charter or by-laws or similar organizational documents or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement -7- or instrument (including, without limitation, any Senior Indebtedness of the Company (as defined in the Indenture)) to which the Company or any of its Subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any of its Subsidiaries is subject, the effect of which violation or default in performance or observance would be a Material Adverse Effect. (xii) The Indenture has been duly authorized by the Company and, upon execution and delivery by the Company (assuming the due authorization, execution and delivery by the Trustee), will constitute a valid and binding agreement of the Company, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law), including principles of commercial reasonableness, good faith and fair dealing. (xiii) The Securities, when executed by the Company and authenticated by the Trustee in accordance with the terms of the Indenture (assuming the due authorization, execution and delivery of the Indenture by the Trustee), and delivered to and paid for by you in accordance with the terms of this Agreement and the Pricing Agreement, will constitute valid and binding obligations of the Company entitled to the benefits of the Indenture. (xiv) The Securities and the Indenture conform to the respective descriptions thereof in the Registration Statement and Prospectus. (xv) The Company is not (a) an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or (b) a bank holding company under the Bank Holding Company Act. (xvi) There are no contracts or documents binding upon or affecting the Company or any of its Subsidiaries that are required to be filed as exhibits to the Registration Statement or to any of the documents incorporated by reference therein by the Act, the Act Regulations or the Exchange Act that have not been so filed. -8- (xvii) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated hereby, except such as have been obtained under the Act and the Trust Indenture Act and such as may be required under the blue sky or insurance laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Underwriters and such other approvals as have been obtained. (xviii) Neither the issue and sale of the Securities, nor the consummation of any other of the transactions herein contemplated, nor the fulfillment of the terms hereof, will conflict with, result in a breach of, or constitute a default under the terms of, any indenture or other agreement or instrument to which the Company or any of its Subsidiaries is a party or bound or any order, regulation, consent or memorandum of understanding applicable to the Company or any of its Subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of its Subsidiaries (where such conflict, breach or default would, singly or in the aggregate, have a Material Adverse Effect) or the charter or by-laws of the Company. (b) Any certificate signed by any officer of the Company and delivered to the Underwriters or to counsel for the Underwriters pursuant to the terms of this Agreement shall be deemed a representation and warranty by the Company to each Underwriter as to the matters covered thereby. SECTION 2. Sale and Delivery to the Underwriters; Closing. (a)The Company agrees to sell to each Underwriter, severally and not jointly, and, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, each Underwriter agrees to purchase from the Company, at the purchase price set forth in the Pricing Agreement, the aggregate principal amount of Securities set forth in Schedule A hereto opposite the name of such Underwriter. The Company will have no obligation to sell to the Underwriters any of the Securities hereunder unless the Underwriters purchase all of the Securities hereunder. If the Company has elected not to rely upon Rule 430A, the initial public offering price of the Securities and the purchase price of the Securities to be paid by the -9- Underwriters and certain other principal terms of the Securities have each been determined and set forth in the Pricing Agreement, dated the date hereof, and an amendment to the Registration Statement and the Prospectus containing such information will be filed before the Registration Statement becomes effective. If the Company has elected to rely upon Rule 430A, the initial public offering price of the Securities, the purchase price for the Securities to be paid by the Underwriters and certain other principal terms of the Securities shall be agreed upon and set forth in the Pricing Agreement. In the event that such price and terms have not been agreed upon and the Pricing Agreement has not been executed and delivered by all parties thereto by the close of business on the fourth business day following the date of this Agreement, this Agreement shall terminate forthwith, without liability of any party to any other party, except as set forth in Section 4 hereof. (b) Payment of the purchase price for, and delivery of, the Securities to be purchased by the Underwriters shall be made at the offices of Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005, or at such other place as shall be agreed upon by the Underwriters and the Company, at 10:00 A.M. on the third business day following the date the Registration Statement becomes effective (or, if the Company has elected to rely upon Rule 430A, the third business day after the date of execution of the Pricing Agreement), or such other time not later than ten business days after such date as shall be agreed upon by the Underwriters and the Company (such time and date of payment and delivery being herein called "Closing Date"). Payment shall be made to the Company by wire transfer of immediately available funds against delivery to the Underwriters of the Securities to be purchased by them. The Securities shall be in such denominations and registered in such names as the Underwriters may request in writing at least two business days before the Closing Date. The Securities will be made available for examination and packaging by the Underwriters not later than 1:00 P.M. on the last business day prior to the Closing Date at the offices of the Trustee in New York City. SECTION 3. Covenants of the Company. The Company covenants with each of the Underwriters as follows: -10- (a) The Company will use its best efforts to cause the Registration Statement, if not effective at the date of this Agreement, and any amendment thereof, to become effective, as promptly as possible after the filing thereof. The Company will not file any amendment to the Registration Statement or amendment or supplement to the Prospectus (including any document required to be filed under the Exchange Act that upon filing is deemed to be incorporated by reference therein) to which the Underwriters shall reasonably object in writing after a reasonable opportunity to review such amendment or supplement. The Company shall furnish to the Underwriters copies of any document that upon filing is deemed to be incorporated by reference in the Registration Statement or Prospectus. Subject to the foregoing sentences in this clause (a), if the Registration Statement has become or becomes effective pursuant to Rule 430A, or filing of the Prospectus or supplement to the Prospectus is otherwise required under Rule 424(b), the Company will cause the Prospectus, properly completed, or such supplement thereto to be filed with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time period prescribed and will provide evidence satisfactory to the Underwriters of such timely filing. The Company will promptly advise the Underwriters (A) when the Registration Statement, if not effective at the date of this Agreement, and any amendment thereto, shall have become effective, (B) when the Prospectus, and any supplement thereto, shall have been filed (if required) with the Commission pursuant to Rule 424(b), (C) when any amendment to the Registration Statement shall have been filed or become effective, (D) of any request by the Commission for any amendment of the Registration Statement or supplement to the Prospectus or for any additional information, (E) of the receipt by the Company of any notification of, or if the Company otherwise has knowledge of, the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose and (F) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company will use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. -11- (b) If, at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or if it shall be necessary to amend the Registration Statement or amend or supplement the Prospectus to comply with the Act or the Act Regulations, the Company promptly will prepare and file with the Commission, subject to the second sentence of Section 3(a), an amendment or supplement which will correct such statement or omission or effect such compliance. (c) As soon as practicable, the Company will make generally available to its securityholders and to the Underwriters an earning statement or statements of the Company and its Subsidiaries covering the twelve-month period ending December 31, 1997 which will satisfy the provisions of Section 11(a) of the Act and Rule 158. (d) The Company will furnish to the Underwriters and counsel for the Underwriters, without charge, three signed copies of the Registration Statement (including exhibits thereto and all documents incorporated by reference therein) and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Act, as many copies of each Preliminary Prospectus and the Prospectus and all amendments and supplements thereto as the Underwriters may reasonably request. (e) The Company will cooperate with the Underwriters and their counsel in connection with endeavoring to obtain the qualification or registration, or exemption from qualification, of the Securities for offer and sale under the applicable securities and insurance laws of such states and other jurisdictions of the United States as the Underwriters may designate; provided, that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to taxation or general service of process in any jurisdiction where it is not now so subject; and will maintain such qualifications in effect for a period of not less than one year from the Effective Date. -12- SECTION 4. Payment of Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the printing and filing of the Registration Statement and the Form T-1 as originally filed and of each amendment thereto, (ii) the printing and/or copying of this Agreement, the Pricing Agreement and the Indenture, (iii) the preparation, issuance and delivery of the Securities to the Underwriters, including capital duties, stamp duties and transfer taxes, if any, payable upon issuance of any of the Securities, the sale of the Securities to the Underwriters and the fees and expenses of the Trustee, (iv) the fees and disbursements of the Company's counsel and accountants, (v) the qualification of the Securities under state securities and insurance laws in accordance with the provisions of Section 3(e), including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of any Blue Sky Survey, (vi) the printing and delivery to the Underwriters of copies of the Registration Statement as originally filed and of each amendment thereto, of the Preliminary Prospectus, and of the Prospectus and any amendments or supplements thereto, (vii) the printing and/or copying and delivery to the Underwriters of copies of the Blue Sky Survey, (viii) the fee of any filing for review of the offering with the National Association of Securities Dealers, Inc., (ix) the fees and expenses incurred in connection with the rating of the Securities by rating agencies and (x) the fees and expenses incurred in connection with the listing of the Securities on the New York Stock Exchange. If this Agreement is terminated by the Underwriters in accordance with the provisions of Section 5 or Sections 8(a)(i) or 8(a)(ii), the Company shall reimburse the Underwriters for all of their reasonable out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters. SECTION 5. Conditions of the Underwriters' Obligations. The obligations of the Underwriters to purchase the Securities hereunder are subject to the continued accuracy in all material respects of the representations and warranties of the Company herein contained, to the accuracy of the statements of the Company made in any certificate pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder, and to the following further conditions: -13- (a) The Registration Statement shall have become effective not later than 5:30 P.M. on the date hereof, or at such later time and date as may be approved by the Underwriters and by the Company and shall remain effective at the Closing Date. No stop order suspending the effectiveness of the Registration Statement shall have been issued under the Act or proceedings therefor initiated or threatened by the Commission. If the Company has elected to rely upon Rule 430A, the price of the Securities and any price-related information previously omitted from the effective Registration Statement pursuant to Rule 430A shall have been transmitted to the Commission for filing pursuant to Rule 424(b) within the prescribed time period, and prior to the Closing Date, the Company shall have provided evidence satisfactory to the Underwriters of such timely filing, or a post-effective amendment providing such information shall have been promptly filed and declared effective in accordance with the requirement of Rule 430A. (b) The Company shall have furnished to the Underwriters the opinion of Weil, Gotshal & Manges, counsel for the Company, dated the Closing Date, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of New York, with all requisite corporate power and authority to own its properties and conduct its business as described in the Prospectus, and, to the best knowledge of such counsel, is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction where the nature of its business requires such qualification except where the failure of the Company to be so qualified would not, singly or in the aggregate, have a materially adverse effect on the condition (financial or otherwise), earnings or business of the Company and the Subsidiaries (as defined below), considered as a whole (solely for purposes of this Section 5(b), a "Material Adverse Effect"); (ii) Each of Leucadia, Inc. and LNC Investments, Inc. and any other corporations of which the Company owns more than 50% of the outstanding capital stock, directly or indirectly, and which contributed 10% or -14- more of the Company's consolidated revenues for the year ended December 31, 1995 or which represented 10% or more of the Company's consolidated total assets at December 31, 1995, which information may be based upon a certificate of an officer of the Company (collectively, solely for purposes of this Section 5(b), the "Subsidiaries") (other than Charter National Life Insurance Company ("Charter"), Empire Insurance Company ("Empire") and Colonial Penn Group, Inc. ("CPG") and its subsidiaries (collectively, the "Insurance Subsidiaries") and other than Phlcorp, Inc. ("Phlcorp")) has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is organized, with all requisite corporate power and authority to own its properties and conduct its business as described in the Prospectus, and, to the best knowledge of such counsel, is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction where the nature of its activities requires such qualification, except where the failure of such Subsidiary to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect; (iii) To the knowledge of such counsel, all the outstanding shares of capital stock of each Subsidiary (other than the Insurance Subsidiaries and Phlcorp) have been duly authorized and validly issued and are fully paid and non-assessable, and, except as otherwise set forth in the Registration Statement and the Prospectus, to such counsel's knowledge, all outstanding shares of capital stock of such Subsidiaries (other than the Insurance Subsidiaries and Phlcorp) are owned by the Company, either directly or through wholly-owned Subsidiaries, free and clear of any security interests, claims, liens or encumbrances; (iv) Such counsel does not know of any pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company or any of the Subsidiaries required to be disclosed in the Prospectus, which is not adequately disclosed in the Prospectus, or any franchise, contract or other document that is material to the Company and its Subsidiaries, -15- considered as a whole, and required to be described in the Registration Statement or the Prospectus, or to be filed as an exhibit, which is not described or filed as required; (v) (a) The Registration Statement has become effective under the Act; (b) any required filing of the Prospectus, and any supplements thereto, pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b); and (c) to the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or threatened; (vi) The Company meets the requirements for the use of Form S-3 under the Act; (vii) (a) Each of the Registration Statement and the Prospectus (other than the financial statements (including the notes thereto) and schedules and other financial and statistical data contained or incorporated by reference therein, as to which such counsel need express no opinion) comply as to form in all material respects with the applicable requirements of the Act and the rules thereunder; and (b) the Incorporated Documents (other than the financial statements (including the notes thereto) and schedules and other financial and statistical data contained or incorporated by reference therein, as to which such counsel need express no opinion), when filed, or as amended or supplemented, complied as to form in all material respects with the requirements of the Exchange Act; (viii) Each of this Agreement and the Pricing Agreement has been duly authorized, executed and delivered by the Company; (ix) No consent, approval, authorization or order of any New York, Delaware corporate or Federal governmental agency or body or, to our knowledge, any court, is required for the consummation of the transactions contemplated hereby, except such as have been obtained under the Act and the Trust Indenture Act and such as may be required under the blue sky or -16- insurance laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Underwriters (as to which such counsel need express no opinion); (x) Neither the issue and sale of the Securities, nor the consummation of any other of the transactions herein contemplated, nor the fulfillment of the terms hereof, will conflict with, result in a breach of, or constitute a default under, the terms of any indenture or other agreement or instrument known to such counsel to which the Company or any of the Subsidiaries is bound or any order, regulation, consent or memorandum of understanding of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of the Subsidiaries of which such counsel is aware and known by such counsel to be applicable to the Company or any of the Subsidiaries (where such conflict, breach or default would, singly or in the aggregate, have a Material Adverse Effect) or the charter or by-laws of the Company; (xi) The Securities have been duly authorized by the Company for issuance; the Securities, when executed by the Company and authenticated by the Trustee in accordance with the Indenture (assuming the due authorization, execution and delivery of the Indenture by the Trustee) and delivered to and paid for by the Underwriters in accordance with the terms of this Agreement and the Pricing Agreement, will constitute valid and legally binding obligations of the Company entitled to the benefits of the Indenture, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); (xii) The Company's outstanding Common Shares have been duly authorized and validly issued and are fully paid and non-assessable; and the shareholders of the Company have no preemptive rights with respect to the Common Shares; -17- (xiii) The Indenture has been duly and validly authorized by the Company and has been duly qualified under the Trust Indenture Act and, when duly executed and delivered by the Company (assuming the due authorization, execution and delivery by the Trustee), will constitute a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); (xiv) The Securities, when issued, and the Indenture conform in all material respects to the description thereof contained in the Prospectus; (xv) The Company is not (a) an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or (b) a bank holding company under the Bank Holding Company Act. In addition, such counsel shall also state that such counsel have participated in conferences with representatives of the Underwriters, officers and other representatives of the Company and its subsidiaries and representatives of the independent certified public accountants of the Company, at which conferences the contents of the Registration Statement and the Prospectus and related matters were discussed and, although such counsel have not independently verified and are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement and the Prospectus (except as set forth in clause (xiv) of this Section 5(b)), on the basis of the foregoing (relying as to materiality to a large extent upon the opinions of officers and other representatives of the Company), no facts have come to the attention of such counsel which lead such counsel to believe that the Registration Statement at the time it became effective or at the Representation Date contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus, at the Representation Date (unless the term "Prospectus" refers to a prospectus which has been provided to the -18- Underwriters by the Company for use in connection with the offering of the Securities which differs from the Prospectus on file at the Commission at the Representation Date, in which case at the time it is first provided to the Underwriters for such use) or at the Closing Date, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading; provided, that such counsel need not express any view with respect to (i) the Form T-1 and (ii) the financial statements (including the notes thereto), supporting schedules or any other financial and statistical data set forth or referred to or incorporated by reference in the Registration Statement or the Prospectus. In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than New York or the federal law of the United States, to the extent they deem proper and specified in such opinion, upon the opinions of other counsel and (B) as to matters of fact, to the extent they deem proper, on representations or certificates of responsible officers of the Company and certificates of public officials. References to the Prospectus in this Section 5(b) include any supplements thereto at or prior to the Closing Date. (c) The General Counsel or Compliance Officer, as the case may be, of each of Charter, Empire and CPG and its subsidiaries shall have furnished to the Underwriters their opinions or certificates, as the case may be, dated the Closing Date, to the effect that: (i) The applicable Insurance Subsidiary has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with all requisite corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction where the nature of its activities requires such qualification, except where the failure of such Insurance Subsidiary to be so qualified would not, singly or in the aggregate, have a materially adverse effect on the condition (financial or otherwise), earnings or business of such -19- Insurance Subsidiary (solely for purposes of this Section 5(c), a "Material Adverse Effect"); (ii) To the knowledge of such counsel or officer, as the case may be, all the outstanding shares of capital stock of such Insurance Subsidiary has been duly authorized and validly issued and are fully paid and non-assessable, and, except as otherwise set forth in the Registration Statement and the Prospectus, all outstanding shares of capital stock of such Insurance Subsidiary are owned by the Company, either directly or through wholly owned Subsidiaries, free and clear of any security interests, claims, liens or encumbrances; (iii) To the knowledge of such counsel or officer, as the case may be, each of the applicable Insurance Subsidiaries has all necessary federal, state or local governmental licenses, authorizations, consents, approvals and have made all necessary filings required under any federal, state or local law, regulation or rule in order to conduct its respective business, except where the failure to be so licensed, have such authorizations, consents or approvals or to have made such filings would not, singly or in the aggregate, have a Material Adverse Effect; and to the knowledge of such counsel or officer, as the case may be, such Insurance Subsidiary is not in violation of, or in default under, any such license, authorization, consent or approval or any federal, state or local law, regulation or rule or any decree, order or judgment applicable to such Insurance Subsidiary, except where such violation or default would not, singly or in the aggregate, have a Material Adverse Effect; and (iv) Each applicable Insurance Subsidiary which is an insurer or an insurance holding company is duly licensed or admitted as an insurer or an insurance holding company in each jurisdiction where it is required to be so licensed to conduct its respective businesses as described in the Prospectus, and each has all other necessary authorizations, approvals, orders, certificates and permits of and from all insurance authorities, commissions or other insurance or other applicable regulatory authorities to conduct their respective businesses as described in the Prospectus, except where the failure to be so licensed or admitted or to have such authorizations, approvals, -20- orders, certificates and permits would not, singly or in the aggregate, have a Material Adverse Effect. (d) The Company shall have furnished to the Underwriters the opinion of Dilworth, Paxson, Kalish & Kauffman, counsel for Phlcorp, dated the Closing Date, to the effect that: (i) Phlcorp has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with all requisite corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction where the nature of its activities requires such qualification, except where the failure of Phlcorp to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect; and (ii) To the knowledge of such counsel, all the outstanding shares of capital stock of Phlcorp have been duly authorized and validly issued and are fully paid and non-assessable, and, except as otherwise set forth in the Registration Statement and the Prospectus, all outstanding shares of capital stock of Phlcorp are owned by the Company, free and clear of any security interests, claims, liens or encumbrances. (e) The favorable opinion, dated as of the Closing Date, of Cahill Gordon & Reindel, counsel for the Underwriters, with respect to the matters set forth in clauses (v) (clauses (a) and (c) only), (vii) (clause (a) only), (viii), (xi), (xiii) and (xiv) of Section 5(b). In addition, such counsel shall also state that such counsel have participated in conferences with representatives of the Underwriters, officers and other representatives of the Company and its subsidiaries, counsel for the Company and representatives of the independent public accountants for the Company, at which the contents of the Registration Statement and the Prospectus and related matters were discussed and, although such counsel are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus, on the basis of the foregoing (relying as to -21- materiality to a large extent upon the opinions of officers and other representatives of the Company), no facts have come to the attention of such counsel which lead such counsel to believe that the Registration Statement, at the time it became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus (unless the term "Prospectus" refers to a prospectus which has been provided to the Underwriters by the Company for use in connection with the offering of the Securities which differs from the Prospectus on file at the Commission at the Representation Date, in which case at the time it is first provided to the Underwriters for such use) at the Representation Date, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that such counsel need express no comment with respect to (i) the Form T-1 and (ii) the financial statements (including the notes thereto), supporting schedules or any other financial or statistical data set forth or referred to or incorporated by reference in the Registration Statement or the Prospectus. (f) The following conditions contained in clauses (i), (ii) and (iii) of this Section 5(f) shall have been satisfied on and as of the Closing Date and the Company shall have furnished to the Underwriters a certificate of the Company, signed by the Chairman of the Board or the President and the principal financial or accounting officer of the Company, dated the Closing Date, to the effect that the signers of such certificate have carefully examined the Registration Statement, the Prospectus, any supplement to the Prospectus, the Incorporated Documents and this Agreement and that, to the best of their knowledge: (i) the representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date and the Company has complied with all the agreements and satisfied all the conditions under this Agreement on its part to be performed or satisfied at or prior to the Closing Date; (ii) no stop order suspending the effectiveness of the Registration Statement has been issued and no -22- proceedings for that purpose have been instituted or threatened; and (iii) since the date of the most recent financial statements included in the Prospectus (exclusive of any supplement thereto), there has been no Material Adverse Change. (g) At the time of execution of this Agreement and at the Closing Date, Coopers & Lybrand shall have furnished to the Underwriters a letter or letters, dated respectively as of the Representation Date and as of the Closing Date, in form and substance reasonably satisfactory to the Underwriters, containing statements and information of the type customarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial and statistical information pertaining to the Company and its subsidiaries contained in the Registration Statement, the Prospectus and the Incorporated Documents and any document or instrument deemed to be incorporated by reference in the Registration Statement and Prospectus. (h) At the Closing Date, counsel for the Underwriters shall have been furnished with such information, certificates and documents as they may reasonably require for the purpose of enabling them to pass upon the issuance and sale of the Securities as contemplated herein and related proceedings, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained, or otherwise in connection with the offering contemplated hereby; and all opinions and certificates mentioned above or elsewhere in this Agreement shall be reasonably satisfactory in form and substance to the Underwriters and counsel for the Underwriters. If any condition specified in this Section 5 shall not have been fulfilled in all material respects when and as required to be fulfilled, this Agreement may be terminated by the Underwriters by notice to the Company, and such termination shall be without liability of any party to any other party except as provided in Section 4. SECTION 6. Indemnification and Contribution. (a) The Company agrees to indemnify, defend and hold harmless each Underwriter and its respective officers, employees and directors and any person who controls any Underwriter within -23- the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and against any loss, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, any such Underwriter or any such officer, employee, director or controlling person may incur under the Act, the Exchange Act or otherwise, as such expenses are incurred, insofar as such loss, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof) or in a Prospectus (the term Prospectus for the purpose of this Section 6 being deemed to include any Preliminary Prospectus, the Prospectus and the Prospectus as amended or supplemented), or arises out of or is based upon any omission or alleged omission to state a material fact required to be stated in either such Registration Statement or the Prospectus or necessary to make the statements made therein not misleading, except insofar as any such loss, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact made in conformity with information furnished in writing by such Underwriter to the Company expressly for use with reference to such Underwriter in such Registration Statement or such Prospectus or arises out of or is based upon any omission or alleged omission to state a material fact in connection with such information required to be stated in either such Registration Statement or Prospectus or necessary to make such information not misleading; provided, that the indemnity agreement contained in this Section 6(a) with respect to any untrue statement or omission in any Preliminary Prospectus or amended Preliminary Prospectus shall not inure to the benefit of any Underwriter (or to the benefit of any person controlling such Underwriter) from whom the person asserting any such loss, expense, liability or claim purchased the Securities which is the subject thereof, if the Prospectus corrected any such alleged untrue statement or omission and if such Underwriter failed to send or give a copy of the Prospectus, excluding any documents incorporated by reference, to such person at or prior to the written confirmation of the sale of Securities to such person. If any action is brought against an Underwriter or its respective officers, employees, directors or person who controls any Underwriter (as described above) in respect of which indemnity may be sought against the Company pursuant to the foregoing paragraph, such Underwriter shall promptly notify -24- the Company in writing of the institution of such action and the Company shall assume the defense of such action, including the employment of counsel and payment of reasonable expenses. Such Underwriter or such officer, employee, director or person who controls any Underwriter (as described above) shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Underwriter or of such persons unless the employment of such counsel shall have been authorized in writing by the Company in connection with the defense of such action or the Company shall not have employed counsel to have charge of the defense of such action or such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to the Company (in which case the Company shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses shall be borne by the Company; provided, that the Company shall only be responsible for the fees and expenses of one counsel for each Underwriter hereunder. Anything in this paragraph to the contrary notwithstanding, the Company shall not be liable for any settlement of any such claim or action effected without its written consent, which consent shall not be unreasonably withheld. (b) Each Underwriter severally agrees to indemnify, defend and hold harmless the Company, each of its directors, officers and employees and any person who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act from and against any loss, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, the Company or any such person may incur under the Act or otherwise, insofar as such loss, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in and in conformity with information furnished in writing by or on behalf of such Underwriter to the Company expressly for use with reference to such Underwriter in the Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof by the Company) or in a Prospectus, or arises out of or is based upon any omission or alleged omission to state a material fact in connection with such information required to be stated either in such Registration Statement or Prospectus or necessary to make such information not misleading. -25- If any action is brought against the Company or any such person in respect of which indemnity may be sought against any Underwriter pursuant to the foregoing paragraph, the Company or such person shall promptly notify such Underwriter in writing of the institution of such action and such Underwriter shall assume the defense of such action, including the employment of counsel and payment of reasonable expenses. The Company or such person shall have the right to employ its or his own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of the Company or such person unless the employment of such counsel shall have been authorized in writing by such Underwriter in connection with the defense of such action or such Underwriter shall not have employed counsel to have charge of the defense of such action or such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to such Underwriter (in which case such Underwriter shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses shall be borne by such Underwriter and paid as incurred. Anything in this paragraph to the contrary notwithstanding, no Underwriter shall be liable for any settlement of any such claim or action effected without the written consent of such Underwriter, which consent shall not be unreasonably withheld. (c) If the indemnification provided for in this Section 6 is unavailable to an indemnified party under subsection (a) or (b) of this Section 6 in respect of any losses, damages, expenses, liabilities or claims referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, expenses, liabilities or claims (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of the Underwriters on the other in connection with the statements or omissions which resulted in such losses, expenses, liabilities or claims, as well as any other relevant equitable considerations. The relative benefits received by the Company on the -26- one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters. The relative fault of the Company on the one hand and of the Underwriters on the other shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or omission or alleged omission relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, expenses, liabilities and claims referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any claim or action. (d) The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 6(c) above. Notwithstanding the provisions of this Section 6, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by such Underwriter and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue statement or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 6 are several in proportion to their respective underwriting commitments and not joint. (e) The indemnity and contribution agreements contained in this Section 6 and the covenants, warranties and representations of the Company contained in this Agreement shall remain in full force and effect irrespective of any investigation made by or on behalf of any Underwriter, or any of its officers, employees, directors or person who controls any Underwriter within the meaning of Section 15 of the Act or Section -27- 20 of the Exchange Act, or by or on behalf of the Company, its directors, officers, employees or any person who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and shall survive any termination of this Agreement or the issuance and delivery of the Securities. The Company and each Underwriter agree promptly to notify the others of the commencement of any litigation or proceeding against it and, in the case of the Company, against any of the Company's officers and directors in connection with the issuance and sale of the Securities, or in connection with the Registration Statement or Prospectus. SECTION 7. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties, and agreements contained in this Agreement and the Pricing Agreement, or contained in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or any of its respective officers, employees, directors or person who controls any Underwriter, or by or on behalf of the Company, and shall survive delivery of the Securities to and payment for the Securities by the Underwriters. SECTION 8. Termination of Agreement. (a) The Underwriters may terminate this Agreement, by notice to the Company (i) if there shall occur any default or breach by the Company hereunder or the failure to satisfy any of the conditions contained in Section 5 hereof, (ii) if there has been, since the date of this Agreement or since the respective dates as of which information is provided in the Registration Statement and prior to the Closing Date, any Material Adverse Change or any downgrading of any of the Company's securities or the placement of any such securities on a so-called "credit watch" or similar list by any major credit rating agency, or (iii) if, since the date of this Agreement and prior to the Closing Date, (A) there has occurred any material adverse change in the financial markets of the United States or any outbreak of hostilities or other calamity or crisis, the effect of which on the financial securities markets of the United States is such as to make it, in the judgment of the Underwriters, impracticable to market the Securities or to enforce contracts for the sale of the Securities, or (B) trading in any of the securities of the Company has been suspended by the Commission, or trading generally on the New York Stock Exchange has been suspended (other than by limitation on hours or number of days of -28- trading), or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by the New York Stock Exchange or by order of the Commission or any other governmental authority or (C) a banking moratorium has been declared by either Federal or New York authorities. (b) If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4. SECTION 9. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to the Underwriters, c/o Jefferies & Company, Inc., 11100 Santa Monica Boulevard, Los Angeles, California 90025, attention of Jerry Gluck; notices to the Company shall be directed to it at 315 Park Avenue South, New York, New York 10010, attention of the Secretary of the Company, with a copy to Weil, Gotshal & Manges at 767 Fifth Avenue, New York, New York 10153, attention of Stephen E. Jacobs, Esq. Section 10. Parties. This Agreement and the Pricing Agreement shall each inure to the benefit of and be binding upon the Underwriters and the Company and their respective successors and legal representatives. Nothing expressed or mentioned in this Agreement or the Pricing Agreement is intended or shall be construed to provide any person, firm or corporation, other than the Underwriters and the Company and their respective successors and legal representatives and the controlling persons and officers, employees and directors referred to in Sections 6 and 7 and their respective heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or the Pricing Agreement or any provision herein or therein contained. This Agreement and the Pricing Agreement and all conditions and provisions hereof and thereof are intended to be for the sole and exclusive benefit of the Underwriters and the Company and their respective successors and legal representatives, and said controlling persons and officers and directors and their respective heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. -29- SECTION 11. Governing Law and Time. This Agreement and the Pricing Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in said State. Specified times of day refer to New York City time. -30- If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Underwriters and the Company in accordance with its terms. Very truly yours, LEUCADIA NATIONAL CORPORATION By: _____________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: JEFFERIES & COMPANY, INC. By: __________________________ Name: Title: CS FIRST BOSTON CORPORATION By: __________________________ Name: Title: SCHEDULE A
Aggregate Principal Amount of Securities Name of Underwriter to be Purchased - ------------------- -------------------- Jefferies & Company, Inc. .....................................$[ ] CS First Boston Corporation.....................................[ ] ------------ Total $135,000,000
EXHIBIT A Leucadia National Corporation (a New York corporation) $135,000,000 [ ]% Senior Subordinated Notes due 2006 PRICING AGREEMENT October [ ], 1996 Jefferies & Company, Inc. 11100 Santa Monica Boulevard Los Angeles, California 90025 CS First Boston Corporation Park Avenue Plaza 55 East 52nd Street New York, New York 10055 Dear Sirs: Reference is made to the Underwriting Agreement dated October [ ], 1996 (the "Underwriting Agreement") between Leucadia National Corporation, a New York corporation (the "Company"), and you, relating to the purchase by you from the Company, subject to the terms and conditions set forth herein and therein, of $135,000,000 aggregate principal amount of the Company's [ ]% Senior Subordinated Notes due 2006 (the "Securities"). This Agreement is the Pricing Agreement referred to in the Underwriting Agreement and capitalized terms used herein without definition shall have the meanings assigned to them in the Underwriting Agreement. Pursuant to Section 2 of the Underwriting Agreement, the Company agrees with you as follows: 1. The initial public offering price of the Securities, determined as provided in said Section 2, shall be [ ]% of the principal amount thereof, plus accrued interest, if any, from October [ ], 1996. 2. The purchase price of the Securities to be paid by the Underwriters shall be [ ]% of the principal amount -2- thereof, plus accrued interest, if any, from October [ ], 1996. 3. The interest rate to be borne by the Securities shall be [ ]% per annum. 4. The Securities will mature on October [ ], 2006. The Company represents and warrants to the Underwriters that the representations and warranties of the Company set forth in Section 1 of the Underwriting Agreement are accurate as though expressly made at and as of the date hereof. -3- If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts and together with the Underwriting Agreement, will be a binding agreement between you and the Company in accordance with its terms and the terms of the Underwriting Agreement. Very truly yours, LEUCADIA NATIONAL CORPORATION By: ____________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: JEFFERIES & COMPANY, INC. By: __________________________ Name: Title: CS FIRST BOSTON CORPORATION By: __________________________ Name: Title: EX-4 3 EXHIBIT 4.1 ================================================================================ LEUCADIA NATIONAL CORPORATION and [ ], Trustee -------------------- INDENTURE Dated as of October [ ], 1996 -------------------- $135,000,000 [ ]% Senior Subordinated Notes due 2006 ================================================================================ CROSS-REFERENCE TABLE
TIA Section Indenture Section - ----------- ----------------- 310(a)(1)..................................................... 6.10 (a)(2)..................................................... 6.10 (a)(3)..................................................... N.A. (a)(4)..................................................... N.A. (a)(5)..................................................... 6.08 (b)........................................................ 6.08; 6.10 (c)........................................................ N.A. 311(a)........................................................ 6.11 (b)........................................................ 6.11 (c)........................................................ N.A. 312(a)........................................................ 2.05 (b)........................................................ 10.03 (c)........................................................ 10.03 313(a)........................................................ 6.06 (b)(1)..................................................... N.A. (b)(2)..................................................... 6.06 (c)........................................................ 6.06; 10.02 (d)........................................................ 6.06 314(a)........................................................ 3.02; 3.03; 10.02 (b)........................................................ N.A. (c)(1)..................................................... 10.04 (c)(2)..................................................... 10.04 (c)(3)..................................................... N.A. (d)........................................................ N.A. (e)........................................................ 10.05 (f)........................................................ N.A. 315(a)........................................................ 6.01(b) (b)........................................................ 6.05; 10.02 (c)........................................................ 6.01(a) (d)........................................................ 6.01(c) (e)........................................................ 5.11 316(a)(last sentence)......................................... 10.06 (a)(1)(A).................................................. 5.05 (a)(1)(B).................................................. 5.02; 5.04; 8.02 (a)(2)..................................................... N.A. (b)........................................................ 5.07 317(a)(1)..................................................... 5.08 (a)(2)..................................................... 5.09 (b)........................................................ 2.04 318(a)........................................................ 10.01
- -------------------------- N.A. means Not Applicable. NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture. TABLE OF CONTENTS
ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE Page ---- Section 1.01. Definitions.................................................... 1 Section 1.02. Other Definitions.............................................. 10 Section 1.03. Incorporation by Reference of Trust Indenture Act................................................ 10 Section 1.04. Rules of Construction.......................................... 11 ARTICLE TWO THE SECURITIES Section 2.01. Form and Dating................................................ 12 Section 2.02. Execution and Authentication................................... 12 Section 2.03. Registrar and Paying Agent..................................... 13 Section 2.04. Paying Agent To Hold Money in Trust............................ 13 Section 2.05. Securityholder Lists........................................... 14 Section 2.06. Transfer and Exchange.......................................... 14 Section 2.07. Replacement Securities......................................... 14 Section 2.08. Outstanding Securities......................................... 15 Section 2.09. Temporary Securities........................................... 15 Section 2.10. Cancellation................................................... 15 Section 2.11. Defaulted Interest............................................. 16 ARTICLE THREE COVENANTS Section 3.01. Payment of Securities.......................................... 16 Section 3.02. SEC Reports.................................................... 16 Section 3.03. Compliance Certificate......................................... 17 Section 3.04. Maintenance of Office or Agency................................ 18 Section 3.05. Corporate Existence............................................ 18 Section 3.06. Waiver of Stay, Extension or Usury Laws........................ 19 Section 3.07. Transactions with Affiliates................................... 19 Section 3.08. Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries.......................... 20 Section 3.09. Limitation on Restricted Payments and Restricted Investments....................................... 20 Section 3.10. Maintenance of Consolidated Tangible Net Worth........................................................ 21
-i-
Page ---- Section 3.11. Change of Control.............................................. 25 Section 3.12. Limitation on Incurrence of Additional Indebtedness by the Company and on Incurrence of Additional Indebtedness and Issuance of Preferred Stock by Its Subsidiaries................................................. 28 Section 3.13. Limitation on Issuance of Other Subordinated Debt............................................ 28 Section 3.14. Restriction on Investments by Insurance Subsidiaries................................................. 28 Section 3.15. Limitation on Certain Payments or Investments.................................................. 29 ARTICLE FOUR SUCCESSOR CORPORATION Section 4.01. When Company May Merge, etc.................................... 30 Section 4.02. Successor Corporation Substituted.............................. 31 ARTICLE FIVE DEFAULTS AND REMEDIES Section 5.01. Events of Default.............................................. 32 Section 5.02. Acceleration................................................... 33 Section 5.03. Other Remedies................................................. 34 Section 5.04. Waiver of Past Defaults........................................ 34 Section 5.05. Control by Majority............................................ 35 Section 5.06. Limitation on Remedies......................................... 35 Section 5.07. Rights of Holders To Receive Payment........................... 36 Section 5.08. Collection Suit by Trustee..................................... 36 Section 5.09. Trustee May File Proofs of Claim............................... 36 Section 5.10. Priorities..................................................... 36 Section 5.11. Undertaking for Costs.......................................... 37 ARTICLE SIX TRUSTEE Section 6.01. Duties of Trustee.............................................. 37 Section 6.02. Rights of Trustee.............................................. 39 Section 6.03. Individual Rights of Trustee................................... 39 Section 6.04. Trustee's Disclaimer........................................... 40 Section 6.05. Notice of Defaults............................................. 40 Section 6.06. Reports by Trustee to Holders.................................. 40
-ii-
Page ---- Section 6.07. Compensation and Indemnity..................................... 40 Section 6.08. Replacement of Trustee......................................... 42 Section 6.09. Successor Trustee by Merger, etc............................... 43 Section 6.10. Eligibility; Disqualification.................................. 43 Section 6.11. Preferential Collection of Claims Against Company...................................................... 43 ARTICLE SEVEN DISCHARGE OF INDENTURE Section 7.01. Termination of Company's Obligations........................... 43 Section 7.02. Application of Trust Money..................................... 44 Section 7.03. Repayment to Company........................................... 44 Section 7.04. Reinstatement.................................................. 45 ARTICLE EIGHT AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 8.01. Without Consent of Holders..................................... 45 Section 8.02. With Consent of Holders........................................ 46 Section 8.03. Compliance with Trust Indenture Act............................ 47 Section 8.04. Revocation and Effect of Consents.............................. 47 Section 8.05. Notation on or Exchange of Securities.......................... 48 Section 8.06. Trustee Protected.............................................. 48 ARTICLE NINE SUBORDINATION Section 9.01. Securities Subordinated to Senior Indebtedness................................................. 48 Section 9.02. Company Not To Make Payments with Respect to Securities in Certain Circumstances....................... 49 Section 9.03. Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation or Reorganization of Company................................................... 50 Section 9.04. Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness................................................. 51 Section 9.05. Obligation of the Company Unconditional........................ 52
-iii-
Page ---- Section 9.06. Trustee Entitled To Assume Payments Not Prohibited in Absence of Notice.............................. 53 Section 9.07. Application by Trustee of Monies Deposited with It............................................ 53 Section 9.08. Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior Indebtedness....................................... 54 Section 9.09. Securityholders Authorize Trustee To........................... Effectuate Subordination of Securities....................... 54 Section 9.10. Right of Trustee To Hold Senior Indebtedness................................................. 55 Section 9.11. Article Nine Not To Prevent Events of Default...................................................... 55 Section 9.12. Ranking; Designation........................................... 55 ARTICLE TEN MISCELLANEOUS Section 10.01. Trust Indenture Act Controls................................... 55 Section 10.02. Notices........................................................ 56 Section 10.03. Communication by Holders with Other Holders...................................................... 57 Section 10.04. Certificate and Opinion as to Conditions Precedent.................................................... 57 Section 10.05. Statements Required in Certificate or Opinion...................................................... 57 Section 10.06. When Treasury Securities Disregarded........................... 58 Section 10.07. Rules by Trustee and Agents.................................... 58 Section 10.08. Legal Holidays................................................. 58 Section 10.09. Governing Law.................................................. 58 Section 10.10. No Adverse Interpretation of Other Agreements................................................... 58 Section 10.11. No Recourse Against Others..................................... 58 Section 10.12. Successors..................................................... 59 Section 10.13. Duplicate Originals............................................ 59 Section 10.14. Separability................................................... 59 SIGNATURES.............. .............................................................. 60 EXHIBIT A - FORM OF SECURITY........................................................... A-1
- -------------------- NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of this Indenture. -iv- INDENTURE dated as of October [ ], 1996 between Leucadia National Corporation, a New York corporation (the "Company"), and [ ], as trustee (the "Trustee"). Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the holders of the Company's [ ]% Senior Subordinated Notes due October [ ], 2006 (the "Securities"): ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions. "Acquired Indebtedness" means Indebtedness or Preferred Stock of a Person either (i) existing at the time such Person becomes a Subsidiary, (ii) assumed in connection with the acquisition of assets of such Person or (iii) any refinancing or replacement by such Person of such Indebtedness or Preferred Stock; provided, that the aggregate amount of such Indebtedness or Preferred Stock then outstanding is not increased. Acquired Indebtedness shall not include (x) any such Indebtedness created or Preferred Stock issued in anticipation of such Person becoming a Subsidiary (other than a refinancing or replacement of Indebtedness or Preferred Stock of such Person, which original Indebtedness or Preferred Stock was not incurred or issued in anticipation of such Person becoming a Subsidiary) or (y) any Indebtedness or Preferred Stock that is recourse to the Company or any Subsidiary or any of their respective assets, other than to such Person and its Subsidiaries and their respective assets. "Affiliate" of the Company means (i) any Related Person and (ii) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" means any Registrar, Paying Agent or co-registrar. -2- "Board of Directors" means the Board of Directors of the Company or any committee thereof. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "business day" means any day on which the New York Stock Exchange is open for trading and which is not a Legal Holiday. "Capitalized Lease" means any lease which is, in accordance with GAAP, capitalized on the balance sheet of the lessee. "Capitalized Lease Obligations" means the discounted present value of the rental obligations of any Person under any lease of any property (whether real, personal or mixed) which, in accordance with GAAP, is required to be capitalized on the balance sheet of such Person. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of capital stock, including each class of common stock and preferred stock of such Person. "Cash Equivalents" shall mean (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof, (ii) U.S. dollar denominated time deposits, certificates of deposit, eurodollar time deposits, eurodollar certificates of deposit, and bankers acceptances of any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000, (iii) commercial paper having a rating from Standard & Poor's Corporation ("S&P") of at least A-2 or the equivalent thereof or from Moody's Investors Service, Inc. ("Moody's") of at least P-2 or the equivalent thereof or from Duff & Phelps Inc. ("Duff & Phelps") of at least D-2 or the equivalent thereof and maturing within nine months from the date of acquisition, and (iv) tax-exempt commercial paper of United States municipal, state or local governments rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's or at least D-2 or the equivalent thereof by Duff & Phelps and maturing within nine months from the date of acquisition. -3- "Certain Payment or Investment" shall be deemed to occur on the first day on which the aggregate Restricted Payments and Restricted Investments exceed by $100,000,000 (calculated on the date of payment or investment) the amount of Restricted Payments and Restricted Investments that could otherwise be made pursuant to Section 3.09 if gains on sales of segments, businesses or major lines of business, net of losses on such sales (whether sold as assets or stock), had been excluded from the definition of "Consolidated Net Income". "Common Shares" means the Common Shares, par value $1.00 per share, of the Company. "Company" means Leucadia National Corporation, a New York corporation, until a successor replaces such Person in accordance with the terms of this Indenture, and thereafter means such successor. "Consolidated Debt" means, on any date, the sum of (i) total Indebtedness of the Company and its Subsidiaries, at such date, determined in accordance with GAAP on a consolidated basis, and (ii) the aggregate liquidation preference of all Preferred Stock of Subsidiaries of the Company, at such date, other than Preferred Stock to the extent held by the Company and its Subsidiaries; provided, that Consolidated Debt shall not include Permitted Indebtedness. "Consolidated Net Income" and "Consolidated Net Loss" mean, for any period, the net income or loss, as the case may be, of the Company and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP (provided, that, for periods ended prior to January 1, 1995, Consolidated Net Income shall mean the reported income before cumulative effects of changes in accounting principles of the Company and its Subsidiaries); provided, that there shall be excluded therefrom (to the extent otherwise included therein) (i) the net income (or net loss) of any Person that is not the Company or a Subsidiary of the Company, except net income of such Person may be included to the extent of the amount of dividends or other distributions actually paid or made to the Company or any of its Subsidiaries by such other Person during such period, (ii) except to the extent includible pursuant to the foregoing clause (i), the net income (or net loss) of any other Person accrued prior to the date it becomes a Subsidiary of the Company or is merged into or consolidated with the Company or any of its Subsidiaries or such other Person's assets are acquired by the Company or any of its Subsidiaries, -4- (iii) all extraordinary gains, to the extent they exceed extraordinary losses, in each case, determined in accordance with GAAP and (iv) all gains or losses resulting from the effect of any accounting change. "Consolidated Net Worth" means, as of any date, the sum of the Capital Stock and additional paid-in capital plus retained earnings (or minus accumulated deficit) of the Company as of such date determined on a consolidated basis in accordance with GAAP. "Consolidated Tangible Net Worth" with respect to the Company means, as of any date, the total shareholders' equity of the Company determined in accordance with GAAP less (a) (to the extent not otherwise deducted from total shareholders' equity at such date) the amount of Restricted Investments of the Company and its Subsidiaries outstanding on such date and (b) any and all goodwill and other intangible assets reflected on the consolidated balance sheet of the Company as of such date. Deferred policy acquisition costs ("DPAC") and that portion of the value of insurance in force resulting from an acquisition and equivalent to the amount of DPAC of the acquired entity outstanding immediately prior to such acquisition shall not be deemed goodwill or other intangible assets for purposes of determining Consolidated Tangible Net Worth. "Default" means any event which is, or after notice or passage of time would be, an Event of Default. "8 1/4% Notes" means the Company's 8 1/4% Senior Subordinated Notes due 2005. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder. "5 1/4% Debentures" mean the Company's 5 1/4% Convertible Subordinated Debentures due 2003. "GAAP" or "generally accepted accounting principles" means United States generally accepted accounting principles as in effect on December 31, 1995, without giving effect to the Company's adoption after such date of any change in its application of GAAP. "Holder" or "Securityholder" means a Person in whose name a Security is registered on the Registrar's books. -5- "Indebtedness" of any Person means (i) any liability of such Person (a) for borrowed money, (b) evidenced by a note, debenture or similar instrument (including a Purchase Money Obligation or deferred payment obligation) given in connection with the acquisition of any property or assets (other than inventory or similar property acquired in the ordinary course of business), including securities, (c) for the payment of a Capitalized Lease Obligation of such Person or (d) with respect to the reimbursement of any letter of credit, banker's acceptance or similar credit transaction (other than trade letters of credit issued in the ordinary course of business; provided, that the failure to make prompt reimbursement of any trade letter of credit shall be deemed to be the incurrence of Indebtedness); and (ii) any guarantee by such Person of any liability of others described in clause (i) above or any obligation of such Person with respect to any liability of others described in clause (i) above. Indebtedness shall not include deposits at the Company's banking and lending Subsidiaries. "Indenture" means this Indenture as amended or supplemented from time to time. "Independent Director" means any director of the Company who is neither (i) an executive officer or an employee of the Company or of any of its Subsidiaries or Affiliates or (ii) a Related Person. "Investment" means any direct or indirect advance, loan (other than advances or loans to customers in the ordinary course of business, which are recorded at the time made as accounts receivable on the balance sheet of the Person making such advance or loan) or other extension of credit or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, bonds, notes, debentures, evidences of Indebtedness or other securities issued by, any other Person. "Investment Grade" is defined as BBB- or higher by S&P or Baa3 or higher by Moody's or the equivalent of such ratings by Moody's or S&P. "Investment Grade Securities" means (i) securities having any of the following ratings: at least BBB- or the equivalent thereof by S&P or at least Baa3 or the equivalent thereof by Moody's or at least BBB- or the equivalent thereof by Duff & Phelps or (ii) cash or Cash Equivalents. -6- "Material Subsidiary" means (i) any Subsidiary of the Company which at December 31, 1995 was a "significant subsidiary" under Regulation S-X promulgated by the SEC or any successor to such Subsidiary and (ii) any other Subsidiary of the Company; provided, that the Company's investments in and advances to such Subsidiary at the date of determination thereof, without giving effect to any write downs in such investments or advances taken within the prior 12 months, represent 20% or more of the Company's Consolidated Tangible Net Worth as of such time; provided, however, that this clause (ii) shall not include any Subsidiary if, at the time that it became a Subsidiary, the Company contemplated commencing a voluntary case or proceeding under the Bankruptcy Law with respect to such Subsidiary. "Minimum Tangible Net Worth" means $250,000,000. "Obligations" means any principal, interest, penalties, fees, indemnities and other obligations and liabilities payable under the documentation governing the applicable Indebtedness. "Officer" means the Chairman of the Board, the President, any Vice President, the Chief Financial Officer or the Treasurer of the Company. "Officers' Certificate" means a certificate signed by two Officers or by an Officer and the Secretary, Assistant Secretary or Assistant Treasurer of the Company. "Opinion of Counsel" means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "Permitted Indebtedness" means (i) any Indebtedness of the Company and its Subsidiaries outstanding on the date of this Indenture or any refinancing or replacement thereof; provided, that the aggregate amount of such Indebtedness is not increased, (ii) Acquired Indebtedness, (iii) Preferred Stock of Subsidiaries held by the Company or its Subsidiaries (it being understood that the sale of such Preferred Stock by the Company or such Subsidiary to any Person other than the Company or a Subsidiary of the Company or such Subsidiary no longer being a Subsidiary shall be deemed the issuance of Preferred Stock for purposes of Section 3.12) and (iv) intercompany Indebtedness. -7- "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Preferred Stock" of an entity means the Capital Stock of that entity which is preferred as to the payment of dividends or the distribution of assets on any voluntary or involuntary liquidation, over the shares of any other class or series of Capital Stock of said entity. "principal" of a debt security means the principal amount of the security plus the premium, if any, on the security. "Purchase Money Obligations" means indebtedness evidenced by a note, debenture, bond or other security or investment (whether or not secured by any lien or other security interest) issued to or assumed in favor of a vendor as all or part of the purchase price of property acquired by the Company or any Subsidiary; provided, however, that such term shall not include any account payable or any other indebtedness incurred, created or assumed in the ordinary course of business in connection with the obtaining of material, products or services. "Related Person" means any Person who directly or indirectly holds 10% or more of any class of Capital Stock of the Company as determined pursuant to Rule 13d-3 under the Exchange Act. "Restricted Investment" means, with respect to the Company or any Subsidiary of the Company, an Investment by such Person in an Affiliate of the Company (other than (x) in the Company or a Subsidiary of the Company or (y) in a Person that is an Affiliate of the Company solely because of (i) the ownership of securities of such Person by the Company or its Subsidiaries, (ii) contractual arrangements between the Company and its Subsidiaries and such Person or (iii) a combination of (i) and (ii)). "Restricted Payment" means (i) the declaration or making of any dividend or of any other payment or distribution on or with respect to the Company's Capital Stock (other than dividends, payments or distributions payable solely in shares of the Company's Capital Stock), (ii) any payment on account of the purchase, redemption, retirement or other acquisition for value of the Company's Capital Stock; provided, that so long as -8- there shall not be a Default or Event of Default under this Indenture, any payment to the estate of Ian M. Cumming or Joseph S. Steinberg (or any trustee or other legal representative on behalf of the legatees or heirs of such Persons) on account of the repurchase or redemption of Voting Stock owned by such estates (or trustees or legal representatives), solely from the net proceeds of any life insurance maintained by the Company on either of such Persons, shall not be a Restricted Payment and (iii) the declaration or making of any dividend or any other payment or distribution with respect to the Capital Stock of any Subsidiary of the Company and any payment on account of the purchase, redemption, retirement or other acquisition for value of the Capital Stock of any Subsidiary of the Company but, with respect to this clause (iii), only to the extent such dividend, payment or distribution is received by an Affiliate of the Company (other than (x) the Company or a Subsidiary of the Company or (y) a Person that is an Affiliate of the Company solely because of (A) the ownership of securities of such Person by the Company or its Subsidiaries, (B) contractual arrangements between the Company and its Subsidiaries and such Person or (C) a combination of (A) and (B)). "SEC" means the Securities and Exchange Commission. "Securities" means the securities, as amended or supplemented from time to time, that are issued and outstanding under this Indenture. "Senior Indebtedness" means all Obligations of the Company with respect to the following, whether outstanding at the date of original execution of this Indenture or thereafter incurred, created or assumed: (a) indebtedness of the Company for money borrowed, including, without limitation, indebtedness of the Company for money borrowed which is evidenced by notes, debentures, bonds or other securities issued under the provisions of an indenture or other instrument, and also including indebtedness represented by Purchase Money Obligations, but only to the extent such indebtedness is enforceable by a money judgment; (b) guarantees or assumptions by the Company of indebtedness of others of any of the kinds described in the preceding clause (a); and (c) renewals, extensions and refundings of, and indebtedness of a successor corporation issued in exchange for or in replacement of, indebtedness, guarantees and assumptions of the kinds described in the preceding clauses (a) or (b), unless, in the case of any particular indebtedness, obligation, guarantee, assumption, renewal, extension or refunding, the instrument creating or evidencing -9- the same expressly provides that such indebtedness, obligation, guarantee, assumption, renewal, extension or refunding is not superior in right of payment to the Securities; provided, that Senior Indebtedness shall not be deemed to include (i) any indebtedness of the Company to any Subsidiary, (ii) any liability for taxes, (iii) any amounts payable or other liabilities to trade creditors arising in the ordinary course of business, (iv) any indebtedness which is subordinate or junior by its terms to any other Indebtedness of the Company, (v) the 10 3/8% Notes, (vi) the 8 1/4% Notes or (vii) the 5 1/4% Debentures. "Subsidiary" means a corporation or business trust a majority of whose Voting Stock is owned by the Company or a Subsidiary. "10 3/8% Notes" means the Company's 10 3/8% Senior Subordinated Notes due 2002. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on the date of this Indenture. "Trustee" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor. "Trust Officer" means any officer or assistant officer within the corporate trust department of the Trustee assigned by the Trustee to administer its corporate trust matters. "United States" means the United States of America. "U.S. Legal Tender" means such coin or currency of the United States as at the time of payment shall be legal tender for the payment of public and private debts. "Voting Stock" with respect to any Person, means Capital Stock of such Person having general voting power under ordinary circumstances to elect directors to the board of directors of such Person, but shall not include any Capital Stock that has or would have such voting power solely by reason of the happening of any contingency. -10- "Wholly-Owned Subsidiary" means any Subsidiary in which the Company or a Subsidiary owns all of the Capital Stock, other than directors qualifying shares. SECTION 1.02. Other Definitions.
Defined Term in Section ---- ---------- "Bankruptcy Law"................................................ 5.01 "Certain Payment or Investment Notice"............................................ 3.15 "Certain Payment or Investment Payment Date"................................................. 3.15 "Change of Control"............................................. 3.11 "Change of Control Notice"...................................... 3.11 "Change of Control Payment Date"................................ 3.11 "Custodian"..................................................... 5.01 "Deficiency Date"............................................... 3.10 "Disposition"................................................... 3.11 "Event of Default".............................................. 5.01 "Legal Holiday"................................................. 10.08 "Offer"......................................................... 3.10 "Offer Amount".................................................. 3.10 "Offer Payment Date"............................................ 3.10 "Paying Agent".................................................. 2.03 "Recipient"..................................................... 3.11 "Registrar"..................................................... 2.03 "U.S. Government Obligations"................................... 7.01
SECTION 1.03. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms, if used in this Indenture, have the following meanings: "Commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a securityholder. "indenture to be qualified" means this Indenture. -11- "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company. All other TIA terms used in this indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them therein. SECTION 1.04. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles; (3) "or" is not exclusive; (4) words in the singular include the plural, and words in the plural include the singular; (5) any gender used in this Indenture shall be deemed to include the neuter, masculine or feminine genders; (6) provisions apply to successive events and transactions; and (7) "herein", "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other Subdivision. -12- ARTICLE TWO THE SECURITIES SECTION 2.01. Form and Dating. The Securities and the certificate of authentication shall be substantially in the form of Exhibit A. The provisions of Exhibit A are part of this Indenture. The Securities may have notations, legends and endorsements required by law, stock exchange rule or usage. The Company shall approve the form of the Securities and any notation, legend or endorsement on them. Each Security shall be dated the date of its authentication. SECTION 2.02. Execution and Authentication. One Officer and the Secretary or an Assistant Secretary of the Company shall sign the Securities for the Company by facsimile signature. The Company's seal shall be reproduced on the Securities. If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall be valid nevertheless. A Security shall not be valid until the Trustee or an authenticating agent manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee or an authenticating agent shall authenticate Securities for original issue in the aggregate principal amount of $135,000,000, upon a written order of the Company signed by two Officers or by an Officer and the Secretary or an Assistant Secretary of the Company. The aggregate principal amount of Securities outstanding at any time may not exceed $135,000,000, except as provided in Section 2.07. The Trustee may appoint an authenticating agent to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so except on original issuance. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or its Affiliates. -13- The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for payment (the "Paying Agent"). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. Such agency agreement shall provide for reasonable compensation for such services. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any such Agent and shall furnish the Trustee with an executed counterpart of any such agency agreement. If the Company fails to maintain or act as Registrar or Paying Agent, the Trustee shall act as such and shall be duly compensated therefor. The Registrar or a co-registrar and a Paying Agent shall be maintained by the Company in the Borough of Manhattan, The City of New York. The Company initially designates the Trustee as the Registrar and Paying Agent. SECTION 2.04. Paying Agent To Hold Money in Trust. On or prior to each due date of the principal and interest on any Security, the Company shall deposit with the Paying Agent immediately available funds sufficient to pay such principal and interest becoming due. The Company shall require each Paying Agent other than the Trustee to hold in trust for the benefit of Securityholders or the Trustee all money held by such Paying Agent for the payment of principal or interest on the Securities, and shall notify the Trustee of any Default by the Company in making any such payment. While any such Default continues, the Trustee may require the Paying Agent to pay all money held by it to the Trustee. Except as provided in the immediately preceding sentence, the Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon doing so, such Paying Agent (other than the Company -14- or a Subsidiary) shall have no further liability for the money. If the Company acts as Paying Agent, it shall segregate and hold as separate trust funds all money held by it as Paying Agent. SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company shall furnish or cause to be furnished to the Trustee on or before each semiannual interest payment date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders, and the Company shall otherwise comply with TIA ss. 312(a). SECTION 2.06. Transfer and Exchange. When a Security is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register the transfer as requested if the requirements of the Registrar are met. When Securities are presented to the Registrar or a co-registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the requirements of the Registrar are met. The Company shall cooperate with the Registrar in meeting its requirements. To permit transfers, registration and exchanges, the Trustee shall authenticate Securities at the Registrar's request. The Company may charge a reasonable fee for any transfer, registration or exchange and may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto, but not for any exchange pursuant to Sections 2.09 or 8.05. SECTION 2.07. Replacement Securities. If a mutilated Security is surrendered to the Trustee or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the requirements of the Trustee are met. An indemnity bond may be required by the Trustee or the Company that is sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee or any Agent from any loss which any -15- of them may suffer if a Security is replaced. The Company may charge for its expenses in replacing a Security. SECTION 2.08. Outstanding Securities. Securities outstanding at any time are all Securities authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding. Subject to Section 10.06, a Security does not cease to be outstanding because the Company or one of its Subsidiaries or Affiliates holds the Security. If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If any Paying Agent (other than the Company or a Subsidiary) holds on the maturity date money received by the Paying Agent pursuant to this Indenture and sufficient to pay the principal and interest on Securities payable on that date, then on and after that date such Securities cease to be outstanding and interest on them ceases to accrue. SECTION 2.09. Temporary Securities. Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate the temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities in exchange for temporary Securities surrendered to it. SECTION 2.10. Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange or payment. The Trustee and no one else shall cancel all Securities surrendered for registration, transfer, exchange, payment or cancellation and shall destroy cancelled Securities unless the Company directs their return to the Company. The Company may not issue new Securities to -16- replace Securities that it has paid or delivered to the Trustee for cancellation. SECTION 2.11. Defaulted Interest. If the Company defaults in a payment of interest on the Securities, it shall pay the defaulted interest plus any interest payable on the defaulted interest to the persons who are Securityholders on a subsequent special record date. The Company shall fix the record date and payment date. At least 10 days before the record date, the Company shall mail to each Securityholder a notice that states the record date, the payment date, and the amount of defaulted interest to be paid. The Company may pay defaulted interest in any other lawful manner. ARTICLE THREE COVENANTS SECTION 3.01. Payment of Securities. The Company shall pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities. An installment of principal or interest shall be considered paid on the date it is due if the Trustee or Paying Agent holds such installment in immediately available funds at 9:00 A.M. on the date such installment is due. The Company shall pay interest on overdue principal at the rate borne by the Securities; it shall pay interest on overdue installments of interest at the same rate to the extent lawful. SECTION 3.02. SEC Reports. (a) The Company shall file with the Trustee within 15 days after it files them with the SEC copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If the Company is not subject to the requirements of such Section 13 or 15(d) of the Exchange Act, the Company shall continue to file with the Trustee on the same timely basis such reports, information and other documents as -17- it would file if it were subject to the requirements of Section 13 or 15(d) of the Exchange Act. The Company also shall comply with the other provisions of TIA ss. 314(a). (b) So long as any of the Securities remain outstanding, the Company shall cause each annual, quarterly and other financial report mailed or otherwise furnished by it generally to stockholders to be filed with the Trustee and mailed to the Holders at their addresses appearing in the register of Securities maintained by the Registrar, in each case at the time of such mailing or furnishing to stockholders. If the Company is not required to furnish annual or quarterly reports to its stockholders pursuant to the Exchange Act, the Company shall cause its financial statements, including any notes thereto and, with respect to annual reports, an auditors' report by an accounting firm of established national reputation and a "Management's Discussion and Analysis of Financial Condition and Results of Operations," comparable to that which would have been required to appear in annual or quarterly reports filed under Section 13 or 15(d) of the Exchange Act, to be so filed with the Trustee within 120 days after the end of each of the Company's fiscal years and within 60 days after the end of each of the first three quarters of each such fiscal year and, after the date such reports are so required to be filed with the Trustee, to be furnished to any Holder upon such Holder's request. (c) The Company shall provide the Trustee with a sufficient number of copies of all reports and other documents and information that the Trustee may be required to deliver to Securityholders under this Section 3.02. SECTION 3.03. Compliance Certificate. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (which as of the date of this Indenture is December 31) an Officers' Certificate stating whether or not the signers know of any Default or Event of Default. If they do know of such a Default or Event of Default, the certificate shall describe the Default or Event of Default and efforts to remedy the same. The Company shall notify the Trustee within 10 days following the occurrence thereof of any acceleration which is an Event of Default within the meaning of Section 5.01(4). -18- SECTION 3.04. Maintenance of Office or Agency. The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be surrendered for registration of transfer or exchange or for presentation for payment and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 10.02. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. SECTION 3.05. Corporate Existence. Subject to Article Four, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership or other existence of each Material Subsidiary in accordance with the respective organizational documents of each Material Subsidiary and the rights (charter and statutory) and material franchises of the Company and the Material Subsidiaries; provided, that the Company shall not be required to preserve any such right or franchise, or the corporate existence of any Material Subsidiary, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not, and will not be, adverse in any material respect to the Holders. -19- SECTION 3.06. Waiver of Stay, Extension or Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law, which would prohibit or forgive the Company from paying all or any portion of the principal of and/or interest on the Securities as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 3.07. Transactions with Affiliates. The Company shall not, and shall not permit any Subsidiary to, directly or indirectly, enter into any transaction or series of related transactions with any Affiliate (other than (a) with the Company or a Wholly-Owned Subsidiary or (b) the making of a Restricted Payment or Restricted Investment otherwise permitted by Section 3.09), including, without limitation, any loan, advance or investment or any purchase, sale, lease or exchange of property or the rendering of any service, unless such transaction or series of transactions is in good faith and at arm's-length and on terms which are at least as favorable as those available in a comparable transaction from an unrelated Person. Any such transaction that involves in excess of $10,000,000 shall be approved by a majority of the Independent Directors on the Board of Directors of the Company; or, in the event that at the time of any such transaction or series of related transactions there are no Independent Directors serving on the Board of Directors of the Company, such transaction or series of related transactions shall be approved by a nationally recognized expert with experience in appraising the terms and conditions of the type of transaction for which approval is required. -20- SECTION 3.08. Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries. The Company shall not, and shall not permit any Subsidiary to, directly or indirectly, create or otherwise cause to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (a) pay dividends or make any other distributions on its Capital Stock or any other interest or participation in, or measured by, its profits, owned by the Company or any Subsidiary, or pay any Indebtedness owed to the Company or any Subsidiary, (b) make loans or advances to the Company or any Subsidiary or (c) transfer any of its properties or assets to the Company, except for such encumbrances or restrictions existing under or by reasons of (i) applicable law, (ii) this Indenture, (iii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Company or any Subsidiary, (iv) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than such Person and its Subsidiaries, or the property or assets of such Person and its Subsidiaries, so acquired, (v) Indebtedness existing on the date of this Indenture and any refinancing of such existing Indebtedness so long as the terms and conditions of any such refinancing agreements are no less favorable to the Company than those contained in the agreements governing the Indebtedness being refinanced or (vi) other Indebtedness; provided, that the Board of Directors of the Company shall have concluded, in good faith, that the terms thereof do not have a materially adverse effect on the Company, on a stand-alone basis, or the Company's ability, on a stand-alone basis, to meet its obligations. SECTION 3.09. Limitation on Restricted Payments and Restricted Investments. The Company shall not, and shall not permit any Subsidiary to, make, directly or indirectly, any Restricted Payment or Restricted Investment if, immediately after giving effect to such Restricted Payment or Restricted Investment, as the case may be: (a) a Default or Event of Default shall have occurred and be continuing, (b) the Company's Consolidated Tangible Net Worth would be less than $250,000,000, (c) the Company would not be permitted to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to Section 3.12(a) hereof or (d) the sum of (x) the aggregate amount expended for all Restricted Payments subsequent to March 31, 1992 and (y) the aggregate amount of Restricted -21- Investments made subsequent to March 31, 1992 and then outstanding reduced by any write down of any such Restricted Investment to the extent that such write down otherwise reduced Consolidated Net Income (the amount so expended for a Restricted Payment or a Restricted Investment, if other than in cash, to be determined by the Board of Directors of the Company, whose determination shall be conclusive and evidenced by a Board Resolution) would exceed the sum of (1) $35,000,000, (2) 50% of the aggregate Consolidated Net Income of the Company (or minus 100% of the aggregate Consolidated Net Loss of the Company) accrued on a cumulative basis subsequent to March 31, 1992, and (3) the aggregate net proceeds, including the fair value of property other than cash (as determined by the Board of Directors of the Company, whose determination shall be conclusive and evidenced by a Board Resolution), received by the Company in respect of the issue or sale subsequent to March 31, 1992 of (i) any shares of Capital Stock of the Company, or (ii) any Indebtedness of the Company to the extent converted into or exchanged for Capital Stock of the Company subsequent to March 31, 1992. This Section 3.09 shall not prevent (x) the payment of any dividend or distribution within 60 days after the date of declaration thereof, if at such date of declaration such payment complied with the foregoing provisions, or (y) the retirement of any shares of the Company's Capital Stock by exchange for, or upon conversion of, or out of the proceeds of the substantially concurrent sale (other than to a Subsidiary) of, other shares of the Capital Stock of the Company, and neither such retirement, exchange or conversion nor the proceeds of any such sale shall be included in any computation made under this Section 3.09. SECTION 3.10. Maintenance of Consolidated Tangible Net Worth. (a) If, on the last day of each of any two consecutive fiscal quarters of the Company (the last day of the second such fiscal quarter being referred to as the "Deficiency Date"), the Company's Consolidated Tangible Net Worth is less than the Minimum Tangible Net Worth, then the Company shall, no later than 65 days after each such Deficiency Date (110 days if such Deficiency Date is the last day of the Company's fiscal year), make an offer to all Holders to purchase (an "Offer") 10% of the aggregate principal amount of Securities originally issued (the "Offer Amount") at a purchase price of 100% of the principal amount of such Securities, plus accrued interest to the date of purchase. The Offer shall remain open for a period of 20 business days following its commencement (unless required to remain open for a longer period by applicable law) and the -22- Company shall purchase for cash the Offer Amount of Securities on a designated date (the "Offer Payment Date") no later than five business days after the termination of the Offer or, if less than the Offer Amount has been tendered, all Securities then tendered; provided, however, that the Company shall not be obligated to purchase any of such Securities unless Holders of at least 10% of the Offer Amount of Securities shall have tendered and not subsequently withdrawn their Securities for repurchase. If the aggregate principal amount of Securities tendered to the Company exceeds the Offer Amount, the Company shall purchase the Securities tendered to it pro rata among such Securities tendered (with such adjustments as may be appropriate so that only Securities in denominations of $1,000 and integral multiples thereof shall be purchased). The Company shall comply with all applicable Federal and state securities laws in connection with each Offer. In no event shall the failure of the Company's Consolidated Tangible Net Worth to equal or exceed the Minimum Tangible Net Worth at the end of any fiscal quarter be counted toward the making of more than one Offer. (b) The Company may reduce the principal amount of Securities to be purchased pursuant to the Offer by subtracting 100% of the principal amount of Securities acquired by the Company subsequent to the Deficiency Date through purchase (otherwise than pursuant to this Section 3.10 or Section 3.11 or 3.15 hereof) or exchange, and surrendered for cancellation. The Company, however, may not credit Securities that have been previously used as a credit against any obligation to repurchase Securities pursuant to this Section 3.10. The Company shall notify the Trustee prior to the making of any Offer whether the Company elects to reduce the principal amount of Securities to be purchased pursuant to an Offer as provided above and set forth the amount of the credit and the basis provided above for such credit (including identification of any previously cancelled Securities not theretofore made the basis for the credit), and shall deliver such Securities with such notice. (c) The Company shall furnish the Trustee with an Officers' Certificate (upon which the Trustee may conclusively rely) notifying the Trustee that Consolidated Tangible Net Worth has declined below the Minimum Tangible Net Worth at the end of any fiscal quarter in which Consolidated Tangible Net Worth has so declined, if such quarter is one of the first three quarters of any fiscal year of the Company, within 55 days after the end of such quarter and, if such quarter is the fourth quarter of any fiscal year of the Company, within 100 -23- days after the end of such fiscal year; provided, that the Trustee shall receive such Officers' Certificate at least 15 days prior to any Offer pursuant to Section 3.10(a) and any Notice of Offer pursuant to Section 3.10(d). The Trustee shall notify the Holders within 10 days after it receives each such notice. Failure to give such notice shall not affect the obligations of the Company pursuant to this Section 3.10. (d) Notice of an Offer shall be prepared and sent, by first class mail, by the Company to all Holders not less than 30 days nor more than 60 days before the Offer Payment Date at their last registered address. The notice shall be accompanied by a copy of the information regarding the Company required to be contained in a Quarterly Report filed pursuant to the Exchange Act on Form 10-Q (x) for the Company's first fiscal quarter if the Deficiency Date is the last day of the Company's second fiscal quarter, (y) for the Company's second fiscal quarter if the Deficiency Date is the last day of the Company's third fiscal quarter or (z) for the Company's third fiscal quarter if the Deficiency Date is the last day of the Company's last fiscal quarter. If the Deficiency Date is the last day of the Company's first fiscal quarter, a copy of the information required to be contained in an Annual Report to Shareholders pursuant to Rule 14a-3 under the Exchange Act for the fiscal year ending immediately prior to such Deficiency Date, if available, and in an Annual Report filed pursuant to the Exchange Act on Form 10-K for such fiscal year shall accompany the notice. If the Company is not subject to the requirements of Section 13 or 15(d) of the Exchange Act, the notice shall be accompanied by financial statements, including any notes thereto (and, in the case of a fiscal year end, an auditors' report of a firm of established national reputation reasonably satisfactory to the Trustee), comparable to that which the Company would have been required to include in such Quarterly Reports or Annual Report to Shareholders, as the case may be. The notice shall contain all instructions and materials necessary to enable such Holders to tender Securities pursuant to the Offer. The notice, which shall govern the terms of the Offer, shall state: (1) that the Offer is being made pursuant to this Section 3.10; (2) the Offer Amount, the purchase price (including the amount of accrued interest) and the Offer Payment Date; -24- (3) whether the Company has elected to reduce the principal amount of Securities to be purchased pursuant to an Offer, and has delivered to the Trustee for cancellation the Securities that are to be made the basis for such reduction and, if so, the amount of such Securities; (4) that any Security not tendered or accepted for payment will continue to accrue interest; (5) that any Security accepted for payment pursuant to the Offer becomes due and payable on the Offer Payment Date, and that, unless the Company defaults in making payment therefor (including, without limitation, if such default results because such payment is prohibited pursuant to Article Nine hereof), such Security shall cease to accrue interest after the Offer Payment Date; (6) that Holders electing to have a Security purchased pursuant to an Offer will be required to surrender the Security, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Security completed and, if the Offer Payment Date falls between any record date for the payment of interest on the Securities and the next succeeding interest payment date, an amount equal to the interest which the Holder is entitled to receive on such interest payment date to the Paying Agent at the address specified in the notice at least five days before the Offer Payment Date; (7) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than one business day prior to the Offer Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount and certificate numbers of the Securities the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have the Security purchased; (8) that if Securities in a principal amount in excess of the Offer Amount are tendered and not withdrawn pursuant to the Offer, the Company shall purchase Securities on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Securities in denominations of $1,000 or integral multiples of $1,000 shall be acquired); and -25- (9) that Holders whose Securities were purchased only in part will be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered. Before an Offer Payment Date, the Company shall (i) accept for payment Securities or portions thereof tendered pursuant to the Offer (on a pro rata basis if required pursuant to paragraph (8) above), (ii) deposit with the Paying Agent U.S. Legal Tender and Securities, if any, acquired in the manner described in clause (b), above, sufficient to pay the purchase price of all Securities or portions thereof so accepted or to be credited against the Offer Amount and (iii) deliver to the Trustee Securities so accepted together with an Officers' Certificate stating the Securities or portions thereof accepted for payment by the Company. The Paying Agent shall promptly mail or deliver to Holders of Securities so accepted payment in an amount equal to the purchase price, and the Company shall execute and the Trustee shall promptly authenticate and mail or deliver to such Holders a new Security equal in principal amount to any unpurchased portion of the Security surrendered. Any Securities not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company will publicly announce the results of the Offer as soon as practicable on or after the Offer Payment Date. For purposes of this Section 3.10, the Trustee shall act as the Paying Agent. SECTION 3.11. Change of Control. (a) In the event of any Change of Control, each Holder shall have the right, at such Holder's option, to require the Company to purchase all or any portion (in integral multiples of $1,000) of such Holder's Securities on the date (the "Change of Control Payment Date") which is 20 business days after the date the Change of Control Notice (as defined below) is mailed (or such later date as is required by applicable law) at 101% of the principal amount thereof, plus accrued interest to the Change of Control Payment Date; provided, that the Company shall not be obligated to purchase any of such Securities unless Holders of at least 10% of the Securities outstanding at the Change of Control Payment Date (other than Securities held by the Company and its Affiliates) shall have tendered their Securities for repurchase. In addition, in the event of any Change of Control, the Company will not, and will not permit any Subsidiaries to, purchase or redeem any Indebtedness ranking junior to the Securities pursuant to any -26- analogous provisions prior to the Change of Control Payment Date. (b) The Company, or at the request of the Company, the Trustee, shall send, by first-class mail, postage prepaid, to all Holders, within five business days after the occurrence of each Change of Control, a notice of the occurrence of such Change of Control (the "Change of Control Notice"), specifying a date by which a Holder must notify the Company of such Holder's intention to exercise the repurchase right and describing the procedure that such Holder must follow to exercise such right. The Company is required to deliver a copy of such notice to the Trustee and to cause a copy of such notice to be published in a daily newspaper of national circulation. Each Change of Control Notice shall state: (1) the Change of Control Payment Date; (2) the date by which the repurchase right must be exercised; (3) the price at which the repurchase is to be made, if the repurchase right is exercised; and (4) a description of the procedure which the Holder must follow to exercise a repurchase right. No failure of the Company to give the foregoing notice shall limit any Holder's right to exercise a repurchase right. The Company shall comply with all applicable Federal and state securities laws in connection with each Change of Control Notice. (c) To exercise the repurchase right, the Holder shall deliver, on or before the fifth calendar day prior to the Change of Control Payment Date, written notice (which shall be irrevocable) to the Company (or an agent designated by the Company for such purpose) of the Holder's exercise of such right, together with (i) the Security or Securities with respect to which the right is being exercised, duly endorsed for transfer, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Security completed, and (ii) if the Change of Control Payment Date falls between any record date for the payment of interest on the Securities and the next succeeding interest payment date, an amount equal to the interest which -27- the Holder is entitled to receive on such interest payment date. (d) A "Change of Control" shall be deemed to occur if (i) the Company has any other Indebtedness outstanding (other than Indebtedness under a bank credit agreement or similar bank financing) which provides for a Change of Control (as defined in the instrument governing such Indebtedness) if Ian M. Cumming or Joseph S. Steinberg ceases to beneficially own, in the aggregate, a certain percentage of the outstanding Common Shares, which percentage ownership requirement is in excess of 10%, and a Change of Control (as defined in the instrument governing such Indebtedness) occurs under such Indebtedness or (ii) at any time when the Company does not have any other Indebtedness outstanding of the type referred to in clause (i), Ian M. Cumming or Joseph S. Steinberg, individually or in the aggregate, sells, transfers or otherwise disposes of (a "Disposition"), after the date hereof, Common Shares so that, after giving effect thereto, the sole beneficial ownership of outstanding Common Shares by Mr. Cumming and/or Mr. Steinberg would, in the aggregate, fall below 10% of the then outstanding Common Shares; provided, that no Change of Control shall be deemed to have occurred under clause (ii) if the Securities are rated by Moody's or S&P as Investment Grade both at the time of such Disposition and for a period of 90 days from the date of such Disposition (it being understood that, with respect to the foregoing proviso, a Change of Control shall be deemed to occur on the first date during such 90-day period when the Securities are rated below Investment Grade by both Moody's and S&P). The term "Common Shares" shall include any securities issued as dividends or distributions on the Common Shares. For purposes hereof, "sole beneficial ownership" of Common Shares shall be deemed to include (i) all Common Shares received after June 15, 1992 from Mr. Cumming or Mr. Steinberg by any member of their respective immediate families or by any trust for the benefit of either of them or any member of their respective immediate families (a "Recipient"), which Common Shares remain held by a Recipient during the lifetime of Mr. Cumming or Mr. Steinberg (unless sold, transferred or disposed of by such Recipient during the lifetime of Mr. Cumming or Mr. Steinberg, as the case may be, in which case such Disposition by such Recipient shall constitute a Disposition by Mr. Cumming or Mr. Steinberg, as the case may be) and (ii) after the death of Mr. Cumming and/or Mr. Steinberg, all Common Shares owned as of the date of death by the decedent, and any Recipient of the decedent, regardless of whether such Recipient continues to own such Common Shares after the date of death. In determining the number of -28- outstanding Common Shares then held by Messrs. Cumming and Steinberg and the total number of outstanding Common Shares, there shall be excluded Common Shares issued by the Company after December 31, 1991, or the conversion into or exchange for, after December 31, 1991, Common Shares or securities convertible into or exchangeable for Common Shares. SECTION 3.12. Limitation on Incurrence of Additional Indebtedness by the Company and on Incurrence of Additional Indebtedness and Issuance of Preferred Stock by Its Subsidiaries. (a) The Company shall not, and shall not permit any Subsidiary to, create, incur, assume, or guarantee the payment of any Indebtedness, and shall not permit any of its Subsidiaries to issue any Preferred Stock, if, at the time of such event and after giving effect thereto on a pro forma basis, the Company's ratio of Consolidated Debt to Consolidated Tangible Net Worth, as of the most recent date for which consolidated financial statements are available and adjusted for the incurrence of all Indebtedness and the issuance of all Preferred Stock by Subsidiaries (other than Permitted Indebtedness) since that date, would be greater than 1.75 to 1. (b) Paragraph (a) of this Section 3.12 shall not preclude the incurrence of Permitted Indebtedness. SECTION 3.13. Limitation on Issuance of Other Subordinated Debt. The Company shall not issue, assume, guarantee, incur or otherwise become liable, directly or indirectly, for any Indebtedness subordinate or junior in ranking in any respect to any Senior Indebtedness but senior in right of payment to the Securities. SECTION 3.14. Restriction on Investments by Insurance Subsidiaries. The Company shall not permit any Subsidiary which is an insurance company to make, directly or indirectly, any Investment other than in Investment Grade Securities if, after giving effect thereto at the time of such Investment, less than 80% of the aggregate Investments of such insurance company would consist of Investment Grade Securities, valuing -29- Investments for purposes of this restriction at original cost. The foregoing restriction shall not (i) apply to Investments in the Company or any Subsidiary of the Company, (ii) prevent the Company or its Subsidiaries from acquiring the Capital Stock of, or all or substantially all of the assets of, an insurance company or (iii) apply to securities issued in a restructuring or exchange offer or similar transaction offered generally to all holders of another security then held by such Subsidiary. SECTION 3.15. Limitation on Certain Payments or Investments. (a) In the event of any Certain Payment or Investment, each Holder shall have the right, at such Holder's option, to require the Company to purchase all or any portion (in integral multiples of $1,000) of such Holder's Securities on the date (the "Certain Payment or Investment Payment Date") which is 20 business days after the date the Certain Payment or Investment Notice (as defined below) is mailed (or such later date as is required by applicable law) at 101% of the principal amount thereof, plus accrued interest to the Certain Payment or Investment Payment Date; provided, that the Company shall not be obligated to purchase any of such Securities unless Holders of at least 10% of the Securities outstanding at the Certain Payment or Investment Payment Date (other than Securities held by the Company and its Affiliates) shall have tendered their Securities for repurchase. In addition, in the event of any Certain Payment or Investment, the Company will not, and will not permit any Subsidiaries to, purchase or redeem any Indebtedness ranking junior to the Securities pursuant to any analogous provisions on or prior to the Certain Payment or Investment Payment Date. (b) The Company, or at the request of the Company, the Trustee, shall send, by first-class mail, postage prepaid, to all Holders, within five business days after the occurrence of each Certain Payment or Investment, a notice of the occurrence of such Certain Payment or Investment (the "Certain Payment or Investment Notice"), specifying a date by which a Holder must notify the Company of such Holder's intention to exercise the repurchase right and describing the procedure that such Holder must follow to exercise such right. The Company is required to deliver a copy of such notice to the Trustee and to cause a copy of such notice to be published in a daily newspaper of national circulation. -30- Each Certain Payment or Investment Notice shall state: (1) the Certain Payment or Investment Payment Date; (2) the date by which the repurchase right must be exercised; (3) the price at which the repurchase is to be made, if the repurchase right is exercised; and (4) a description of the procedure which the Holder must follow to exercise a repurchase right. No failure of the Company to give the foregoing notice shall limit any Holder's right to exercise a repurchase right. The Company shall comply with all applicable Federal and state securities laws in connection with each Certain Payment or Investment Notice. (c) To exercise the repurchase right, the Holder shall deliver, on or before the fifth calendar day prior to the Certain Payment or Investment Payment Date, written notice (which shall be irrevocable) to the Company (or an agent designated by the Company for such purpose) of the Holder's exercise of such right, together with (i) the Security or Securities with respect to which the right is being exercised, duly endorsed for transfer, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Security completed, and (ii) if the Certain Payment or Investment Payment Date falls between any record date for the payment of interest on the Securities and the next succeeding interest payment date, an amount equal to the interest which the Holder is entitled to receive on such interest payment date. ARTICLE FOUR SUCCESSOR CORPORATION SECTION 4.01. When Company May Merge, etc. The Company shall not consolidate or merge with or into, or sell, lease, convey or otherwise dispose of all or substantially all of its assets (it being understood that a sale of less than 90% of the Company's total assets shall not be deemed a sale of substantially all of the Company's assets), -31- in one transaction or a series of related transactions, to any Person unless: (1) the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, lease, conveyance or other disposition shall have been made, is a corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia; (2) the corporation formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, lease, conveyance or other disposition shall have been made, assumes by supplemental indenture in a form satisfactory to the Trustee all the obligations of the Company under the Securities and this Indenture; (3) immediately before and immediately after such transaction no Default or Event of Default exists; (4) the Company or any corporation formed by or surviving any such consolidation or merger, or to which such sale, lease, conveyance or other disposition shall have been made, would be permitted by the provisions of Section 3.12(a) to incur $1.00 of additional Indebtedness (other than Permitted Indebtedness); and (5) the Company or any corporation formed by or surviving any such consolidation or merger, or to which such sale, lease, conveyance or other disposition shall have been made, shall immediately thereafter have a Consolidated Net Worth (after purchase accounting adjustments) at least equal to the Consolidated Net Worth of the Company immediately preceding such transaction. The Company shall deliver to the Trustee prior to the consummation of the proposed transaction an Officers' Certificate to the foregoing effect and an Opinion of Counsel stating that the proposed transaction and such supplemental Indenture comply with this Indenture. SECTION 4.02. Successor Corporation Substituted. Upon any consolidation or merger, or any sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 4.01, the successor corporation formed by such consolidation or into -32- which the Company is merged or to which such sale, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein. ARTICLE FIVE DEFAULTS AND REMEDIES SECTION 5.01. Events of Default. An "Event of Default" occurs if: (1) the Company defaults in the payment of interest on any Security when the same becomes due and payable and such default continues for a period of 30 days (and whether or not such payment would be subject to Article Nine); (2) the Company defaults in the payment of the principal (including premium, if any) of any Security when the same becomes due and payable at maturity or otherwise (and whether or not such payment would be subject to Article Nine); (3) the Company fails to comply with any of its other agreements in the Securities or this Indenture and such default continues for the period and after the notice specified below; (4) the Company or any Material Subsidiary either (A) defaults in the payment when due of principal of, interest on, or other amounts payable in respect of, or (B) fails to perform or comply with any of its other agreements in respect of, any of its respective Indebtedness (other than the Securities) in the aggregate principal or like amount of $15,000,000 or more, and such Indebtedness shall be or shall have been declared to be due and payable immediately, and such acceleration shall not have been rescinded or annulled; (5) the Company or any Material Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case or proceeding, -33- (B) consents to the entry of an order for relief against it in an involuntary case or proceeding, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors, or (6) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief (with respect to the petition commencing such case) against the Company or any Material Subsidiary in an involuntary case or proceeding, (B) appoints a Custodian of the Company or any Material Subsidiary or for all or substantially all of its respective property, or (C) orders the liquidation of the Company or any Material Subsidiary, and the order or decree remains unstayed and in effect for 60 days. The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. A Default under clause (3) of this Section 5.01 is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the Securities notify the Company of the Default and the Company does not cure the Default within 30 days after receipt of the notice. The notice must specify the Default, demand that it be remedied and state that the notice is a "Notice of Default." SECTION 5.02. Acceleration. If an Event of Default (other than an Event of Default with respect to the Company specified in clause (5) or (6) of Section 5.01) occurs and is continuing, the Trustee by -34- notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding by notice to the Company and the Trustee, may declare the principal of, and the accrued interest on, all of the Securities then outstanding due and payable immediately. Upon such declaration such principal and interest shall be due and immediately payable. If an Event of Default with respect to the Company specified in clause (5) or (6) of Section 5.01 occurs, all unpaid principal of and accrued interest on the Securities then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. Notwithstanding anything to the contrary in the preceding two paragraphs, the Holders of a majority in principal amount of the Securities then outstanding by notice to the Trustee may rescind an acceleration and its consequences if all existing Events of Default have been cured or waived and if the rescission would not conflict with any judgment or decree. When a Default or Event of Default is cured or waived, it ceases to exist. SECTION 5.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 5.04. Waiver of Past Defaults. Subject to Sections 5.07 and 8.02, the Holders of a majority in principal amount of the Securities by notice to the Trustee may waive an existing Default or Event of Default and -35- its consequences, except a Default or Event of Default in payment of principal of, or interest on, any Security. SECTION 5.05. Control by Majority. The Holders of a majority in principal amount of the Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that is unduly prejudicial to the rights of another Securityholder, as such, or that would involve the Trustee in personal liability. SECTION 5.06. Limitation on Remedies. Except as provided in Section 5.07, a Securityholder may not pursue any remedy with respect to this Indenture or the Securities unless: (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in principal amount of the Securities make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) no direction inconsistent with the request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Securities. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over other Securityholders. -36- SECTION 5.07. Rights of Holders To Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Security as set forth in this Indenture to receive payment of principal of and interest on the Security, on or after the respective due dates expressed in the Security, or to bring 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. SECTION 5.08. Collection Suit by Trustee. If an Event of Default in payment of interest or principal specified in Section 5.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal and interest remaining unpaid and such further amounts as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation and expenses of the Trustee, its agents and counsel. SECTION 5.09. Trustee May File Proofs of Claim. (a) The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company, its creditors or its property. (b) Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding. SECTION 5.10. Priorities. If the Trustee collects any money pursuant to this Article Five, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 6.07; -37- Second: to Holders of Senior Indebtedness to the extent required by Article Nine; Third: to Securityholders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and Fourth: To the Company. The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section 5.10. SECTION 5.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 5.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 5.07, or a suit by Holders of more than 10% in principal amount of the then outstanding Securities. ARTICLE SIX TRUSTEE SECTION 6.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise its rights and powers and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: -38- (1) The Trustee need perform only those duties that are specifically set forth (or incorporated by reference) in this Indenture and no others. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph (c) does not limit the effect of paragraph (b) of this Section. (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 5.05, and the Trustee shall be entitled from time to time to request such a direction. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee shall be under no obligation and may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. -39- SECTION 6.02. Rights of Trustee. Subject to Section 6.01: (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee may rely on and shall be protected in acting or refraining from acting upon any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney, to the extent reasonably required by such inquiry or investigation. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. SECTION 6.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Subsidiaries or Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 6.10 and 6.11. -40- SECTION 6.04. Trustee's Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its certificate of authentication. SECTION 6.05. Notice of Defaults. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder pursuant to Section 10.02 a notice of the Default within 90 days after it occurs. Except in the case of a Default in any payment on any Security, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders. SECTION 6.06. Reports by Trustee to Holders. Within 60 days after each May 15, beginning with May 15, 1997, the Trustee shall mail to each Securityholder a brief report dated as of such May 15 that complies with TIA ss. 313(a), but only if such report is required in any year under TIA ss. 313(a). The Trustee also shall comply with TIA ss.ss. 313(b) and 313(c). A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange on which the Securities are listed. The Company shall notify the Trustee in writing if the Securities become listed on any national securities exchange or of any delisting thereof. SECTION 6.07. Compensation and Indemnity. The Company shall pay the Trustee from time to time reasonable compensation for its services (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust). The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses, disbursements and advances incurred by it. Such expenses shall include the reasonable compensation and expenses of the Trustee's agents and counsel. -41- The Trustee shall not be under any obligation to institute any suit, or take any remedial action under this Indenture, or to enter any appearance or in any way defend any suit in which it may be a defendant, or to take any steps in the execution of the trusts created hereby or thereby or in the enforcement of any rights and powers under this Indenture, until it shall be indemnified to its satisfaction against any and all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture, including compensation for services, costs, expenses, outlays, counsel fees and other disbursements, and against all liability not due to its negligence or willful misconduct. The Company shall indemnify the Trustee against any loss or liability incurred by it in connection with the acceptance and administration of the trust and its duties hereunder as Trustee, Registrar and/or Paying Agent, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity; however, unless the position of the Company is prejudiced by such failure, the failure of the Trustee to promptly notify the Company shall not limit its right to indemnification. The Company shall defend each such claim and the Trustee shall cooperate in the defense. The Trustee may retain separate counsel and the Company shall reimburse the Trustee for the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence or willful misconduct. To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to that of the Holders of the Securities on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Securities. When the Trustee incurs expenses or renders services after the occurrence of any Event of Default specified in Sections 5.01(5) or (6), the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy law. -42- SECTION 6.08. Replacement of Trustee. The Trustee may resign by so notifying the Company. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee in writing. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 6.10; (2) the Trustee is adjudged a bankrupt or an insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting as Trustee hereunder. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 6.07, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Securityholder. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 6.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a -43- successor Trustee. Any successor Trustee shall comply with TIA ss. 310(a)(5). SECTION 6.09. Successor Trustee by Merger, etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust assets to, another corporation, the successor corporation without any further act shall be the successor Trustee; provided such corporation or association shall be otherwise eligible and qualified under this Article. SECTION 6.10. Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1). The Trustee shall always have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall also comply with TIA ss. 310(b). SECTION 6.11. Preferential Collection of Claims Against Company. The Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. ARTICLE SEVEN DISCHARGE OF INDENTURE SECTION 7.01. Termination of Company's Obligations. The Company may terminate all of its obligations under the Securities and this Indenture if: (a) all Securities previously authenticated and delivered (other than destroyed, lost or stolen Securities which have been replaced or paid) have been delivered to the Trustee for cancellation and the Company has been paid all sums payable by it hereunder; or (b) (1) the Securities mature within one year, and -44- (2) the Company irrevocably deposits in trust with the Trustee immediately available funds or U.S. Government Obligations sufficient to pay principal and interest on the Securities to maturity. However, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 6.07 and 6.08 shall survive until the Securities are no longer outstanding. Thereafter the Company's obligations in Section 6.07 shall survive. Upon receipt, in the case of (a) or (b) above in this Section 7.01, by the Trustee of an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under the Securities and this Indenture except for those surviving obligations specified above. In order to have money available on a payment date to pay principal or interest on the Securities, the U.S. Government Obligations shall be payable as to principal or interest on or before such payment date in such amounts as will provide the necessary money. U.S. Government Obligations shall not be callable at the issuer's option. The term "U.S. Government Obligations" means direct obligations of the United States for the payment of which the full faith and credit of the United States is pledged. SECTION 7.02. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to Section 7.01. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal and interest on the Securities. Money and securities so held in trust are not subject to the subordination provisions of Article Nine and need not be segregated from other funds except to the extent required by law. SECTION 7.03. Repayment to Company. The Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money or securities held by them at any time. The Trustee and the Paying Agent shall -45- pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years; provided, however, that the Trustee or such Paying Agent before being required to make any such repayment, may at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mail to each such Holder notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing any unclaimed balance of such money then remaining will be paid to the Company. SECTION 7.04. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 7.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 7.01 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section 7.01; provided, however, that if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE EIGHT AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 8.01. Without Consent of Holders. The Company may amend or supplement this Indenture or the Securities without notice to or consent of any Securityholder: (1) to cure any ambiguity, defect or inconsistency; (2) to comply with Section 4.01; -46- (3) to provide for uncertificated Securities in addition to certificated Securities; (4) to comply with any requirements of the SEC in order to effect or maintain the qualification of this Identure under the TIA; or (5) to make any change that would provide any additional benefit or rights to the Securityholders or that does not adversely affect the rights of any Securityholder. Notwithstanding the above, the Trustee and the Company may not make any change that adversely affects the legal rights of any Securityholders hereunder. SECTION 8.02. With Consent of Holders. Subject to Section 5.07, the Company, when authorized by a resolution of its Board of Directors, may amend or supplement this Indenture or the Securities with the written consent of the Holders of at least a majority in principal amount of the Securities then outstanding, and the Holders of a majority in principal amount of the Securities may waive compliance by the Company with any provision of this Indenture or the Securities. However, without the consent of each Securityholder affected, an amendment, supplement or waiver, including a waiver pursuant to Section 5.04, may not: (1) reduce the amount of Securities whose Holders must consent to an amendment, supplement or waiver; (2) reduce the rate of or change or extend the time for payment of principal of or interest on any Security; (3) reduce the principal of or change the fixed maturity of any Security; (4) waive a default in the payment of the principal of or interest on any Security; (5) make any Security payable in money other than that stated in the Security; (6) make any change in the subordination of the Securities in a manner that is adverse to the Holders; or -47- (7) make any change in this Section, Section 5.04 or Section 5.07. Notwithstanding the above and Section 5.07, the Holders of a majority in principal amount of the Securities then outstanding may waive compliance by the Company with Sections 3.10 and 3.11 of this Indenture. It shall not be necessary for the consent of the Holders under this Section 8.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. Any amendment, waiver or consent shall be deemed effective upon receipt by the Trustee of the necessary consents and shall not require execution of any supplemental indenture to be effective. After an amendment or waiver under this Section 8.02 becomes effective, the Company shall mail to the Holders of each Security affected thereby, with a copy to the Trustee, a notice briefly describing the amendment or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, waiver, consent or supplemental indenture. Except as otherwise provided in this Section 8.02, the Holders of a majority in aggregate principal amount of the Securities then outstanding may waive compliance in a particular instance by the Company with any provisions of this Indenture or the Securities. SECTION 8.03. Compliance with Trust Indenture Act. Every amendment to or supplement of this Indenture or the Securities shall comply with the TIA as then in effect. SECTION 8.04. Revocation and Effect of Consents. A consent to an amendment, supplement or waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, until an amendment or waiver becomes effective, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of a Security. For such revocation to be effective, the Trustee must receive the notice of revocation before the date the amendment, supplement or waiver becomes effective. -48- After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder unless it makes a change described in any of clauses (1) through (7) of Section 8.02. In that case the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security. SECTION 8.05. Notation on or Exchange of Securities. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. SECTION 8.06. Trustee Protected. The Trustee shall sign any amendment or supplement or waiver authorized pursuant to this Article if the amendment or supplement or waiver does not adversely affect the rights of the Trustee. If it does adversely affect the rights of the Trustee, the Trustee may but need not sign it. In signing such amendment or supplement or waiver the Trustee shall be entitled to receive, and (subject to Article Six) shall be fully protected in relying upon, an Opinion of Counsel stating that such amendment or supplement or waiver is authorized or permitted by and complies with this Indenture. The Company may not sign an amendment or supplement until the Board of Directors approves it. ARTICLE NINE SUBORDINATION SECTION 9.01. Securities Subordinated to Senior Indebtedness. The Company agrees, and each Holder of the Securities by its acceptance thereof likewise agrees, that the payment of all Obligations with respect to the Securities is subordinated, to the extent and in the manner provided in this Article, to the prior payment in full of all Senior Indebtedness. -49- This Article Nine shall constitute a continuing offer to all persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Indebtedness, and such provisions are made for the benefit of the holders of Senior Indebtedness, and such holders and/or each of them may enforce such provisions. No amendment of any provision of this Article Nine shall be effective as against any holder of Senior Indebtedness who has not consented thereto. SECTION 9.02. Company Not To Make Payments with Respect to Securities in Certain Circumstances. (a) Upon the maturity of the principal of any Senior Indebtedness by lapse of time, acceleration or otherwise, all Obligations thereon shall first be paid in full, or such payment duly provided for in cash or in a manner satisfactory to the holders of such Senior Indebtedness, before any payment is made on account of any Obligations with respect to the Securities or to acquire any of the Securities. (b) Upon the happening of an event of default (or if any event of default would result upon any payment with respect to the Securities) with respect to any Senior Indebtedness, as such event of default is defined therein or in the instrument under which it is outstanding, permitting the holders to accelerate the maturity thereof, and, if the default is other than default in payment of the principal or interest on such Senior Indebtedness (a "non-payment default"), upon written notice thereof given to the Company and the Trustee by the holders of such Senior Indebtedness or their representative, then, unless and until such event of default shall have been cured or waived or shall have ceased to exist, no payment shall be made by the Company of any Obligations with respect to the Securities or to acquire any of the Securities; provided, however, that in the event of a non-payment default, such payment blockage shall not exceed a period of 179 days commencing on the date of receipt by the Company of written notice of such non-payment default or event of default by a holder of such Senior Indebtedness or by their representatives; provided, that during any 360-day period the aggregate of all payment blockage periods pursuant hereto shall not exceed 179 days and there shall be a period of at least 181 consecutive days in each 360-day period when no payment blockage period pursuant hereto is in effect. (c) In the event that, notwithstanding the provisions of this Section 9.02, the Company shall make any payment to the Trustee or the Holders on account of any Obligations -50- with respect to the Securities, after the happening of a default in payment of the principal on Senior Indebtedness or an event of default in respect of the payment of interest on Senior Indebtedness or after receipt by the Company and the Trustee of written notice as provided in this Section 9.02 of an event of default with respect to any Senior Indebtedness, then, unless and until such default or event of default shall have been cured or waived or shall have ceased to exist, such payment (subject to the provisions of Sections 9.06 and 9.07) shall be held by the Trustee or Holders, as the case may be, in trust for the benefit of, and shall be paid over and delivered to, the holders of Senior Indebtedness (pro rata as to each of such holders on the basis of the respective amounts of Senior Indebtedness held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution or provision therefor to the holders of Senior Indebtedness. The Company shall give prompt written notice to the Trustee of any default under any Senior Indebtedness or under any agreement pursuant to which Senior Indebtedness may have been issued. SECTION 9.03. Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation or Reorganization of Company. Upon any distribution of assets of the Company upon any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Company: (a) the holders of all Senior Indebtedness shall first be entitled to receive payment in full of all Obligations due thereon (including without limitation interest accruing after the commencement of any such proceeding at the rate specified in the respective Senior Indebtedness) before the Holders of the Securities are entitled to receive any payment on account of any Obligations with respect to the Securities; -51- (b) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee on behalf of the Holders of the Securities would be entitled except for the provisions of this Article Nine, shall be paid by the liquidating trustee or agent or other person making such payment or distribution directly to the holders of Senior Indebtedness or their representative, or to the trustee under any indenture under which Senior Indebtedness may have been issued, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness; and (c) in the event that notwithstanding the foregoing provisions of this Section 9.03, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, shall be received by the Trustee or the Holders of the Securities on account of any Obligations with respect to the Securities before all Senior Indebtedness is paid in full, or effective provision made for its payment, such payment or distribution (subject to the provisions of Section 9.06 and 9.07) shall be received and held in trust for and shall be paid over to the holders of the Senior Indebtedness remaining unpaid or unprovided for or their representative, or to the trustee under any indenture under which Senior Indebtedness may have been issued, for application to the payment of such Senior Indebtedness until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness. The Company shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Company. SECTION 9.04. Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness. Subject to the payment in full of all Senior Indebtedness, the Holders of the Securities shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets of the Company applicable to the Senior Indebtedness until all amounts owing on the Securities shall be paid in full, and for the purpose of such -52- subrogation no payments or distributions to the holders of the Senior Indebtedness by or on behalf of the Company or by or on behalf of the Holders of the Securities by virtue of this Article which otherwise would have been made to the Holders of the Securities shall, as between the Company and the Holders of the Securities, be deemed to be payment by the Company to or on account of the Senior Indebtedness, it being understood that the provisions of this Article Nine are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of the Senior Indebtedness, on the other hand. SECTION 9.05. Obligation of the Company Unconditional. Nothing contained in this Article Nine or elsewhere in this Indenture or in any Security is intended to or shall impair, as between the Company and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon Default under this Indenture, subject to the rights, if any, under this Article Nine of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any distribution of assets of the Company referred to in this Article Nine, the Trustee, subject to the provisions of Sections 6.01 and 6.02, and the Holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other person making any distribution to the Trustee or to the Holders of the Securities, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Nine. -53- SECTION 9.06. Trustee Entitled To Assume Payments Not Prohibited in Absence of Notice. The Trustee shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee, unless it shall have received at its corporate trust department written notice thereof from the Company or from one or more holders of Senior Indebtedness or from any trustee thereof; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Article Six, shall be entitled to assume conclusively that no such facts exist. The Trustee shall be entitled to rely on the delivery to it of a written notice by a person representing himself to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to establish that such notice has been given by a holder of Senior Indebtedness or a trustee on behalf of any such holder or holders. SECTION 9.07. Application by Trustee of Monies Deposited with It. Except as provided in Section 7.02, any deposit of monies by the Company with the Trustee or any Paying Agent (whether or not in trust) for the payment of the principal of interest on any Securities shall be subject to the provisions of Sections 9.01, 9.02, 9.03 and 9.04 except that, if prior to the third business day prior to the date on which by the terms of this Indenture any such monies may become payable for any purpose (including, without limitation, the payment of either the principal or the interest on any Security) the Trustee or, in the case of any such deposit of monies with a Paying Agent, the Paying Agent shall not have received with respect to such monies the notice provided for in Section 9.06, then the Trustee or such Paying Agent, as the case may be, shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such third business day. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article Nine, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such person, the extent to which such person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such person under this Article Nine, -54- and if such evidence is not furnished the Trustee may defer any payment to such person pending judicial determination as to the right of such person to receive such payment. The Trustee, however, shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness but shall have only such obligations to such holders as are expressly set forth in this Article Nine. SECTION 9.08. Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior Indebtedness. No right of any present or future holders of any Senior Indebtedness to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. SECTION 9.09. Securityholders Authorize Trustee To Effectuate Subordination of Securities. Each Holder of the Securities by his acceptance thereof authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article Nine and appoints the Trustee his attorney-in-fact for such purpose, including, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Company, the immediate filing of a claim for the unpaid balance of its or his Securities in the form required in said proceedings and the causing of said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claims, then the holders of Senior Indebtedness are hereby authorized to have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Holders of said Securities. -55- SECTION 9.10. Right of Trustee To Hold Senior Indebtedness. The Trustee shall be entitled to all of the rights set forth in this Article Nine in respect of any Senior Indebtedness at any time held by it to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. SECTION 9.11. Article Nine Not To Prevent Events of Default. The failure to make a payment on account of principal or interest by reason of any provision in this Article Nine shall not be construed as preventing the occurrence of an Event of Default under Section 5.01. SECTION 9.12. Ranking; Designation. The Securities rank senior in right of payment to the 5 1/4% Debentures and pari passu in right of payment to the 10 3/8% Notes and the 8 1/4% Notes. The Indebtedness evidenced by the Securities is hereby irrevocably designated as "Senior Indebtedness" for purposes of the Indenture dated as of February 1, 1993 between the Company and First Trust National Association, as trustee, pursuant to which the 5 1/4% Debentures were issued. ARTICLE TEN MISCELLANEOUS SECTION 10.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. SECTION 10.02. Notices. Any notice or communication shall be sufficiently given if in writing and delivered in person or mailed by certified or registered mail (return receipt requested) addressed as follows: -56- If to the Company: Leucadia National Corporation 315 Park Avenue South New York, New York 10010 Attention: Secretary With a copy to: Weil Gotshal & Manges 767 Fifth Avenue New York, New York 10153 Attention: Stephen E. Jacobs, Esq. If to the Trustee: Attention: Corporate Trust Department The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Securityholder shall be mailed to him by first-class mail at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. If the Company mails notices or communications to Securityholders it shall mail a copy to the Trustee and each Agent at the same time. All notices or communications shall be in writing. SECTION 10.03. Communication by Holders with Other Holders. Securityholders may communicate pursuant to TIA ss. 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). -57- SECTION 10.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 10.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that each person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of each such person, such covenant or condition has been complied with. SECTION 10.06. When Treasury Securities Disregarded. In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by any Affiliate shall be disregarded, except that for the purpose of determining whether the Trustee shall be protected in relying -58- on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. SECTION 10.07. Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or a meeting of Securityholders. The Registrar or Paying Agent may make reasonable rules for its functions. SECTION 10.08. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday, or a day on which banks and trust companies in The City of New York, New York or Boston, Massachusetts are not required by law or executive order to be open. If a payment date is a Legal Holiday at a place of payment, payment may be made at the place on the next succeeding day that is not a Legal Holiday, without additional interest. SECTION 10.09. Governing Law. The laws of the State of New York shall govern this Indenture and the Securities without regard to principles of conflicts of laws. SECTION 10.10. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 10.11. No Recourse Against Others. All liability described in paragraph 17 of the Securities of any director, officer, employee or stockholder, as such, of the Company is waived and released. SECTION 10.12. Successors. All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. -59- SECTION 10.13. Duplicate Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same instrument. SECTION 10.14. Separability. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and a Holder shall have no claim therefor against any party hereto. -60- SIGNATURES LEUCADIA NATIONAL CORPORATION By ______________________________________ Name: Title: (Seal) Attest: By___________________________ Name: Title: [ ] By ______________________________________ Name: Title: (Seal) EXHIBIT A [Form of Security] [ ]% SENIOR SUBORDINATED NOTE DUE OCTOBER [ ], 2006 No. $ LEUCADIA NATIONAL CORPORATION (a New York corporation) promises to pay to ____________________ or registered assigns the principal sum of Dollars on October [ ], 2006. Interest Payment Dates: April [ ] and October [ ] Record Dates: [ ] and [ ] Dated: LEUCADIA NATIONAL CORPORATION _________________________________________ Chairman of the Board [Seal] Attest: __________________________________ Secretary -2- Certificate of Authentication This Note is one of the Securities referred to in the within-mentioned Indenture. [ ], TRUSTEE By__________________________________ Authorized Signatory [Seal] -3- LEUCADIA NATIONAL CORPORATION [ ]% Senior Subordinated Note due October [ ], 2006 1. Interest. Leucadia National Corporation (the "Company") promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Company will pay interest semiannually on April [ ] and October [ ] of each year commencing April [ ], 1997. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from October [ ], 1996. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) to the persons who are registered holders of Notes at the close of business on the [ ] or [ ] next preceding the interest payment date even though Notes are cancelled after the record date and on or before the interest payment date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay interest by check payable in such money. It may mail an interest check to a Holder's registered address. 3. Paying Agent, Registrar. Initially, [ ] will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its Subsidiaries (as defined in the Indenture) may act in any such capacity. 4. Indenture. The Company issued the Notes under an Indenture dated as of October [ ], 1996 (the "Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by -4- reference to the Trust Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture. The Notes are subject to all such terms, and Noteholders are referred to the Indenture and such Act for a statement of such terms. The Notes are general unsecured subordinated obligations of the Company limited to $135,000,000 aggregate principal amount, except as otherwise provided in the Indenture. 5. Subordination. The Notes are subordinated to Senior Indebtedness, which is defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Notes may be paid. Each Noteholder by accepting a Note agrees to such subordination and authorizes the Trustee to give it effect. 6. Maintenance of Consolidated Tangible Net Worth. If, on the last day of each of any two consecutive fiscal quarters of the Company (the last day of the second such fiscal quarter being referred to herein as the "Deficiency Date") the Company's Consolidated Tangible Net Worth is less than the Minimum Tangible Net Worth, then the Company is required, no later than 65 days after a Deficiency Date (110 days if a Deficiency Date is the last day of the Company's fiscal year), to make an offer to purchase (an "Offer") 10% of the aggregate principal amount of Notes originally issued (the "Offer Amount") at a purchase price of 100% of the principal amount of such Notes, plus accrued interest to the date of purchase. If the aggregate principal amount of Notes tendered to the Company exceeds the Offer Amount, the Company is required to purchase the Notes tendered to it pro rata among such Notes tendered (with such adjustments as may be appropriate so that only Notes in denominations of $1,000 and integral multiples thereof shall be purchased). The Company may reduce the principal amount of Notes to be purchased pursuant to the Offer by subtracting 100% of the principal amount of Notes acquired by the Company subsequent to the Deficiency Date through purchase (otherwise than pursuant to this provision, pursuant to a Change of Control offer or pursuant to a Certain Payment or Investment offer) or exchange, and surrendered for cancellation. -5- 7. Change of Control. In the event of a Change of Control of the Company, each Holder shall have the right, at such Holder's option, to require the Company to buy all or any portion of such Holder's Notes, at 101% of the principal amount thereof, plus accrued interest to the date of purchase. 8. Certain Payments or Investments. In the event of a Certain Payment or Investment by the Company, each Holder shall have the right, at such Holder's option, to require the Company to buy all or any portion of such Holder's Notes, at 101% of the principal amount thereof, plus accrued interest to the date of purchase. 9. Restrictive Covenants. The Indenture imposes certain limitations on, among other things, the ability of the Company to merge or consolidate with any other Person or sell, lease or otherwise transfer all or substantially all of its properties or assets, the ability of the Company to pay dividends and to make certain other distributions and payments and the ability of the Company and its Subsidiaries to make certain Investments or redeem, retire or repurchase or acquire for value shares of Capital Stock of the Company, the ability of the Company and the Subsidiaries to incur additional Indebtedness and the ability of the Company and the Subsidiaries to enter into certain transactions with Affiliates, all subject to certain limitations described in the Indenture. 10. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. 11. Persons Deemed Owners. The registered Holder of a Note may be treated as the owner of it for all purposes and neither the Company, the Trustee nor any Agent shall be affected by notice to the contrary. -6- 12. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its request. After that, Noteholders entitled to the money must look to the Company for payment unless an abandoned property law designates another person. 13. Amendment, Supplement, Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes, and any past default or noncompliance with any provision may be waived with the consent of the Holders of a majority in principal amount of the Notes. Without the consent of any Noteholder, the Company may amend or supplement the Indenture or the Notes to cure any ambiguity, omission, defect or inconsistency or to provide for uncertificated Notes in addition to certificated Notes or to make any change that does not adversely affect the rights of any Noteholder. 14. Successor Corporation. When a successor corporation assumes all the obligations of its predecessor under the Notes and the Indenture, the predecessor corporation will be released from those obligations. 15. Defaults and Remedies. The terms of the Notes include the Events of Default as set forth in Section 5.01 of the Indenture. Subject to certain limitations in the Indenture, if an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately, except that in the case of an Event of Default arising from certain events of bankruptcy, insolvency or reorganization relating to the Company, all outstanding Notes shall become due and payable immediately without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its -7- exercise of any trust or power. The Company must furnish quarterly compliance certificates to the Trustee. 16. Trustee Dealings with Company. [ ], the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its affiliates, and may otherwise deal with the Company or its affiliates, as if it were not the Trustee. 17. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Noteholder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes. 18. Authentication. This Note shall not be valid until the Trustee or an authenticating agent signs the certificate of authentication on the other side of this Note. 19. Abbreviations. Customary abbreviations may be used in the name of a Noteholder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to Minors Act). The Company will furnish to any Noteholder upon written request and without charge a copy of the Indenture. Requests may be made to: Secretary, Leucadia National Corporation, 315 Park Avenue South, New York, New York 10010. -8- ASSIGNMENT FORM To assign this Note, fill in the form below: I or we assign and transfer this Note to ___________________________________________ : : ___________________________________________ (Insert assignee's soc. sec. or tax ID no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________________________ agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. ________________________________________________________________________________ ________________________________________________________________________________ Your Signature: ____________________________________________________________ (Sign exactly as your name appears on the other side of this Note) Date: _______________________ -9- OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 3.10, Section 3.11 or Section 3.15 of the Indenture, check the appropriate box: Section 3.10 [ ] Section 3.11 [ ] Section 3.15 [ ] If you want to have only part of this Note purchased by the Company pursuant to Section 3.10, Section 3.11 or Section 3.15 of the Indenture, state the amount (in integral multiples of $1,000): $ Date: _____________________ Signature:__________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: ___________________________________________________________ EX-5 4 EXHIBIT 5 October 1, 1996 Leucadia National Corporation 315 Park Avenue South New York, New York 10010 Re: Leucadia National Corporation - Registration Statement on Form S-3 (No. 333-12071) ----------------------------------- Gentlemen: We have acted as counsel to Leucadia National Corporation (the "Company") in connection with the preparation and filing with the Securities and Exchange Commission of the Company's Registration Statement on Form S-3, File No. 333-12071 (as amended, the "Registration Statement") under the Securities Act of 1933, as amended, relating to $135,000,000 principal amount of the Company's Senior Subordinated Notes due 2006 (the "Securities"). In so acting, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the Registration Statement, the form of Underwriting Agreement (the "Underwriting Agreement") between the Company and Jefferies & Company, Inc. and CS First Boston Corporation, the form of Indenture (the "Indenture") between the Company and Fleet National Bank, as Trustee, pursuant to which the Securities will be issued, and such corporate records, agreements, documents and other instruments, and such certificates or comparable documents of public officials and of officers and representatives of the Company, and have made such inquiries of such officers and representatives as we have deemed relevant and necessary as a basis for the opinions hereinafter set forth. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of documents Leucadia National Corporation October 1, 1996 Page 2 submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents. As to all questions of fact material to this opinion that have not been independently established, we have relied upon certificates or comparable documents of officers and representatives of the Company. Based on the foregoing, and subject to the qualifications stated herein, we are of the opinion that the Securities are duly authorized and, when duly executed on behalf of the Company, authenticated by the Trustee under the Indenture and issued and sold in accordance with the terms of the Underwriting Agreement and as described in the Registration Statement, will be validly issued and will constitute legal and binding obligations of the Company in accordance with their terms and the terms of the Indenture, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair-dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). The opinions expressed herein are limited to the laws of the State of New York and the federal laws of the United States, and we express no opinion as to the effect on the matters covered by this opinion of the laws of any other jurisdiction. The opinions expressed herein are rendered solely for your benefit in connection with the transactions described herein. Those opinions may not be used or relied upon by any other person, nor may this letter or any copies thereof be furnished to a third party, filed with a governmental agency, quoted, cited or otherwise referred to without our prior written consent. We hereby consent to the use of this letter as an exhibit to the Registration Statement. We further consent to any and all references to our firm in the Prospectus which is a part of said Registration Statement. Very truly yours, /s/ WEIL, GOTSHAL & MANGES LLP EX-25 5 EXHIBIT 25 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM T-1 ---------- STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ---------- / / CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) FLEET NATIONAL BANK --------------------------------------------------------- (Exact name of trustee as specified in its charter) Not applicable 04-317415 - ------------------------------- ----------------------------- (State of incorporation (I.R.S. Employer if not a national bank) Identification No.) One Monarch Place, Springfield, MA 01102 - ---------------------------------------- ----------------------------- (Address of principal executive offices) (Zip Code)
Pat Beaudry, 777 Main Street, Hartford, CT 06115 (203) 728-2065 -------------------------------------------------------------- (Name, address and telephone number of agent for service) LEUCADIA NATIONAL CORPORATION --------------------------------------------------- (Exact name of obligor as specified in its charter) New York 13-2615557 - ------------------------------- ----------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 315 Park Avenue South New York, New York 10010 - ---------------------------------------- ----------------------------- (Address of principal executive offices) (Zip Code)
Senior Subordinated Notes due 2006 ------------------------------------------------------------------ (Title of the indenture securities) Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject, The Comptroller of the Currency, Washington, D.C. Federal Reserve Bank of Boston Boston, Massachusetts Federal Deposit Insurance Corporation Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers: The trustee is so authorized. Item 2. Affiliations with obligor and underwriter. If the obligor or any underwriter for the obligor is an affiliate of the trustee, describe each such affiliation. None with respect to the trustee. Item 16. List of exhibits. List below all exhibits filed as a part of this statement of eligibility and qualification. (1) A copy of the Articles of Association of the trustee as now in effect. (2) A copy of the Certificate of Authority of the trustee to do business. (3) A copy of the Certification of Fiduciary Powers of the trustee. (4) A copy of the By-Laws of the trustee as now in effect. (5) Consent of the trustee required by Section 321(b) of the Act. (6) A copy of the latest Consolidated Reports of Condition and Income of the trustee published pursuant to law or the requirements of its supervising or examining authority. NOTES In as much as this Form T-1 is filed prior to the ascertainment by the trustee of all facts on which to base answers to Item 2, the answers to said Items are based upon imcomplete information. Said Items may, however, be considered correct unless amended by an amendment to this Form T-1. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, Fleet National Bank, a national banking association organized and existing under the laws of the United States, has duly caused this statement of of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Hartford, and State of Connecticut, on the 25th day of September, 1996. FLEET NATIONAL BANK, AS TRUSTEE By: /s/ ------------------------- Robert L. Reynolds Its: Vice President EXHIBIT 1 ARTICLES OF ASSOCIATION OF FLEET NATIONAL BANK FIRST. The title of this Association, which shall carry on the business of banking under the laws of the United States, shall be "Fleet National Bank." SECOND. The main office of the Association shall be in Springfield, Hampden County Commonwealth of Massachusetts. The general business of the Association shall be conducted at its main office and its branches. THIRD. The board of directors of this Association shall consist of not less than five (5) nor more than twenty-five (25) shareholders, the exact number of directors within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full board of directors or by resolution of the shareholders at any annual or special meeting thereof. Unless otherwise provided by the laws of the United States, any vacancy in the board of directors for any reason, including an increase in the number thereof, may be filled by action of the board of directors. FOURTH. The annual meeting of the shareholders for the election of directors and the transaction of whatever other business may be brought before said meeting shall be held at the main office or such other place as the board of directors may designate, on the day of each year specified therefore in the bylaws, but if no election is held on that day, it may be held on any subsequent day according to the provisions of law; and all elections shall be held according to such lawful regulations as may be prescribed by the board of directors. FIFTH. The authorized amount of capital stock of this Association shall be eight million five hundred thousand (8,500,000) shares of which three million five hundred thousand (3,500,000) shares shall be common stock with a par value of six and 25/100 dollars ($6.25) each, and of which five million (5,000,000) shares without par value shall be preferred stock. The capital stock may be increased or decreased from time to time, in accordance with the provisions of the laws of the United States. No holder of shares of the capital stock of any class of the Association shall have any pre-emptive or preferential right of subscription to any shares of any class of stock of the Association, whether now or hereafter authorized, or to any obligations convertible into stock of the Association, issued or sold, nor any right of subscription to any thereof other than such, if any, as the board of directors, in its discretion, may from time to time determine and at such price as the board of directors may from time to time fix. The board of directors of the Association is authorized, subject to limitations prescribed by law and the provisions of this Article, to provide for the issuance from time to time in one or more series of any number of the preferred shares, and to establish the number of shares be included in each series, and to fix the designation, relative rights, preferences, qualifications and limitations of the shares of each such series. The authority of the board of directors with respect to each series shall include, but not be limited to, determination of the following: a. The number of shares constituting that series and the distinctive designation of that series; b. The dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and whether they shall be payable in preference to, or in another relation to, the dividends payable to any other class or classes or series of stock; c. Whether that series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; d. Whether that series shall have conversion or exchange privileges, and, if so, the terms and conditions of such conversion or exchange, including provision for the adjustment of the conversion or exchange rate in such events as the board of directors shall determine; e. Whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the manner of selecting shares for redemption if less than all shares are to be redeemed, the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; f. Whether that series shall be entitled to the benefit of a sinking fund to be applied to the purchase or redemption of shares of that series, and, if so, the terms and amounts of such sinking fund; g. The right of the shares of that series to the benefit of conditions and restrictions upon the creation of indebtedness of the Association or any subsidiary, upon the issue of any additional stock (including additional shares of such series or of any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the Association or any subsidiary of any outstanding stock of the Association; h. The right of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Association and whether such rights shall be in preference to, or in another relation to, the comparable rights of any other class or classes or series of stock; and i. Any other relative, participating, optional or other special rights, qualifications, limitations or restrictions of that series. Shares of any series of preferred stock which have been redeemed (whether through the operation of a sinking fund or otherwise) or which, if convertible or exchangeable, have been converted into or exchanged for shares of stock of any other class or classes shall have the status of authorized and unissued shares of preferred stock of the same series and may be reissued as a part of the series of which they were originally a part or may be reclassified and reissued as part of a new series of preferred stock to be created by resolution or resolutions of the board of directors or as part of any other series or preferred stock, all subject to the conditions and the restrictions adopted by the board of directors providing for the issue of any series of preferred stock and by the provisions of any applicable law. Subject to the provisions of any applicable law, or except as otherwise provided by the resolution or resolutions providing for the issue of any series of preferred stock, the holders of outstanding shares of common stock shall exclusively possess voting power for the election of directors and for all purposes, each holder of record of shares of common stock being entitled to one vote for each share of common stock standing in his name on the books of the Association. Except as otherwise provided by the resolution or resolutions providing for the issue of any series of preferred stock, after payment shall have been made to the holders of preferred stock of the full amount of dividends to which they shall be entitled pursuant to the resolution or resolutions providing for the issue of any other series of preferred stock, the holders of common stock shall be entitled, to the exclusion of the holders of preferred stock of any and all series, to receive such dividends as from time to time may be declared by the board of directors. Except as otherwise provided by the resolution or resolutions for the issue of any series of preferred stock, in the event of any liquidation, dissolution or winding up of the Association, whether voluntary or involuntary, after payment shall have been made to the holders of preferred stock of the full amount to which they shall be entitled pursuant to the resolution or resolutions providing for the issue of any series of preferred stock the holders of common stock shall be entitled, to the exclusion of the holders of preferred stock of any and all series, to share, ratable according to the number of shares of common stock held by them, in all remaining assets of the Association available for distribution to its shareholders. The number of authorized shares of any class may be increased or decreased by the affirmative vote of the holders of a majority of the stock of the Association entitled to vote. SIXTH. The board of directors shall appoint one of its members president of this Association, who shall be chairman of the board, unless the board appoints another director to be the chairman. The board of directors shall have the power to appoint one or more vice presidents; and to appoint a secretary and such other officers and employees as may be required to transact the business of this Association. The board of directors shall have the power to define the duties of the officers and employees of the Association; to fix the salaries to be paid to them; to dismiss them; to require bonds from them and to fix the penalty thereof; to regulate the manner in which any increase of the capital of the Association shall be made; to manage and administer the business and affairs of the Association; to make all bylaws that it may be lawful for them to make; and generally to do and perform all acts that it may be legal for a board of directors to do and perform. SEVENTH. The board of directors shall have the power to change the location of the main office to any other place within the limits of the City of Hartford, Connecticut, without the approval of the shareholders but subject to the approval of the Comptroller of the Currency; and shall have the power to establish or change the location of any branch or branches of the Association to any other location, without the approval of the shareholders but subject to the approval of the Comptroller of the Currency. EIGHTH. The corporate existence of this Association shall continue until terminated in accordance with the laws of the United States. NINTH. The board of directors of this Association, or any three or more shareholders owning, in the aggregate, not less than ten percent (10%) of the stock of this Association, may call a special meeting of shareholders at any time. Unless otherwise provided by the laws of the United States, a notice of the time, place and purpose of every annual and special meeting of the shareholders shall be given by first class mail, postage prepaid, mailed at least ten (10) days prior to the date of such meeting to each shareholder of record at his address as shown upon the books of this Association. TENTH. (a) Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (hereinafter a "proceeding"), by reason of the fact that he or she is or was a director, officer or employee of the Association or is or was serving at the request of the Association as a director, officer, employee or agent of another corporation or of a partnership, joint venture, limited liability company, trust, or other enterprise, including service with respect to an employee benefit plan, shall be indemnified and held harmless by the Association to the fullest extent authorized by the law of the state in which the Association's ultimate parent company is incorporated, except as provided in subsection (b). The aforesaid indemnity shall protect the indemnified person against all expense, liability and loss (including attorney's fees, judgements, fines ERISA excise taxes or penalties, and amounts paid in settlement) reasonably incurred by such person in connection with such a proceeding. Such indemnification shall continue as to a person who has ceased to be a director, officer or employee and shall inure to the benefit of his or her heirs, executors, and administrators, but shall only cover such person's period of service with the Association. The Association may, by action of its Board of Directors, grant rights to indemnification to agents of the Association and to any director, officer, employee or agent of any of its subsidiaries with the same scope and effect as the foregoing indemnification of directors and officers. (b) Restrictions on Indemnification. Notwithstanding the foregoing, (i) no person shall be indemnified hereunder by the Association against expenses, penalties, or other payments incurred in an administrative proceeding or action instituted by a federal bank regulatory agency which proceeding or action results in a final order assessing civil money penalties against that person, requiring affirmative action by that person in the form of payments to the Association, or removing or prohibiting that person from service with the Association, and any advancement of expenses to that person in that proceeding must be repaid; and (ii) no person shall be indemnified hereunder by the Association and no advancement of expenses shall be made to any person hereunder to the extent such indemnification or advancement of expenses would violate or conflict with any applicable federal statute now or hereafter in force or any applicable final regulation or interpretation now or hereafter adopted by the Office of the Comptroller of the Currency ("OCC") or the Federal Deposit Insurance Corporation ("FDIC"). The Association shall comply with any requirements imposed on it by any such statue or regulation in connection with any indemnification or advancement of expenses hereunder by the Association. With respect to proceedings to enforce a claimant's rights to indemnification, the Association shall indemnify any such claimant in connection with such a proceeding only as provided in subsection (d) hereof. (c) Advancement of Expenses. The conditional right to indemnification conferred in this section shall be a contract right and shall include the right to be paid by the Association the reasonable expenses (including attorney's fees) incurred in defending a proceeding in advance of its final disposition (an "advancement of expenses"); provided, however, that an advancement of expenses shall be made only upon (i) delivery to the Association of a binding written undertaking by or on behalf of the person receiving the advancement to repay all amounts so advanced if it is ultimately determined that such person is not entitled to be indemnified in such proceeding, including if such proceeding results in a final order assessing civil money penalties against that person, requiring affirmative action by that person in the form of payments to the Association, or removing or prohibiting that person from service with the Association, and (ii) compliance with any other actions or determinations required by applicable law, regulation or OCC or FDIC interpretation to be taken or made by the Board of Directors of the Association or other persons prior to an advancement of expenses. The Association shall cease advancing expenses at any time its Board of Directors believes that any of the prerequisites for advancement of expenses are no longer being met. (d) Right of Claimant to Bring Suit. If a claim under subsection (a) of the section is not paid in full by the Association within thirty (30) days after written claim has been received by the Association, the claimant may at any time thereafter bring suit against the Association to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Association to recover an advancement of expenses pursuant to the terms of an undertaking, the claimant shall be entitled to be paid also the expense of prosecuting or defending such claim. It shall be a defense to any such action brought by the claimant to enforce a right to indemnification hereunder (other than an action brought to enforce a claim for an advancement of expenses where the required undertaking, if any, has been tendered to the Association) that the claimant has not met any applicable standard for indemnification under the law of the state in which the Association's ultimate parent company is incorporated. In any suit brought by the Association to recover an advancement of expenses pursuant to the terms of an undertaking, the Association shall be entitled to recover such expenses upon a final adjudication that the claimant has not met any applicable standard for indemnification standard for indemnification under the law of the state in which the Association's ultimate parent company is incorporated. (e) Non-Exclusivity of Rights. The rights to indemnification and the advancement of expenses conferred in this section shall not be exclusive of any other right which any person may have or hereafter acquired under any statute, agreement, vote of stockholders or disinterested directors or otherwise. (f) Insurance. The Association may purchase, maintain, and make payment or reimbursement for reasonable premiums on, insurance to protect itself and any director, officer, employee or agent of the Association or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Association would have the power to indemnify such person against such expense, liability or loss under the law of the state in which the Association's ultimate parent company is incorporated; provided however, that such insurance shall explicitly exclude insurance coverage for a final order of a federal bank regulatory agency assessing civil money penalties against an Association director, officer, employee or agent. ELEVENTH. These articles of association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of this Association, unless the vote of the holders of greater amount of stock is required by law, and in that case by the vote of the holders of such greater amount. The notice of any shareholders' meeting at which an amendment to the articles of association of this Association is to be considered shall be given as hereinabove set forth. I hereby certify that the articles of association of this Association, in their entirety, are listed above in items first through eleventh. Secretary/Assistant Secretary - -------------------------------------------------- Dated at , as of . --------------------------------------- -------------------- Revision of February 15, 1996 EXHIBIT 2 [LOGO] - -------------------------------------------------------------------------------- COMPTROLLER OF THE CURRENCY ADMINISTRATOR OF NATIONAL BANKS - -------------------------------------------------------------------------------- Washington, D.C. 20219 CERTIFICATE I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that: (1) The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and control of all records pertaining to the chartering, regulation and supervision of all National Banking Associations. (2) "Fleet National Bank", Springfield, Massachusetts (Charter No. 1338), is a National Banking Association formed under the laws of the United States and is authorized thereunder to transact the business of banking on the date of this Certificate. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the Treasury Department, in the City of Washington and District of Columbia, this 14th day of August, 1996. /s/ EUGENE A. LUDWIG ---------------------------------- Comptroller of the Currency EXHIBIT 2 [LOGO] - -------------------------------------------------------------------------------- COMPTROLLER OF THE CURRENCY ADMINISTRATOR OF NATIONAL BANKS - -------------------------------------------------------------------------------- Washington, D.C. 20219 Certification of Fiduciary Powers I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify the records in this Office evidence "Fleet National Bank", Springfield, Massachusetts, (Charter No. 1338), was granted, under the hand and seal of the Comptroller, the right to act in all fiduciary capacities authorized under the provisions of The Act of Congress approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a. I further certify the authority so granted remains in full force and effect. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of Office of the Comptroller of the Currency to be affixed to these presents at the Treasury Department, in the City of Washington and District of Columbia, this 4th day of April, 1996. /s/ EUGENE A. LUDWIG ---------------------------------- Comptroller of the Currency EXHIBIT 4 AMENDED AND RESTATED BY-LAWS OF FLEET NATIONAL BANK ARTICLE I MEETINGS OF SHAREHOLDERS Section 1. Annual Meeting. The regular annual meeting of the shareholders for the election of Directors and the transaction of any other business that may properly come before the meeting shall be held at the Main Office of the Association, or such other place as the Board of Directors may designate, on the fourth Thursday of April in each year at 1:15 o'clock in the afternoon unless some other hour of such day is fixed by the Board of Directors. If, from any cause, an election of Directors is not made on such day, the Board of Directors shall order the election to be held on some subsequent day, of which special notice shall be given in accordance with the provisions of law, and of these bylaws. Section 2. Special Meetings. Special meetings of the shareholders may be called at any time by the Board of Directors, the President, or any shareholders owning not less than twenty-five percent (25%) of the stock of the Association. Section 3. Notice of Meetings of Shareholders. Except as otherwise provided by law, notice of the time and place of annual or special meetings of the shareholders shall be mailed, postage prepaid, at least ten (10) days before the date of the meeting to each shareholder of record entitled to vote thereat at his address as shown upon the books of the Association; but any failure to mail such notice to any shareholder or any irregularity therein, shall not affect the validity of such meeting or of any of the proceedings thereat. Notice of a special meeting shall also state the purpose of the meeting. Section 4. Quorum; Adjourned Meetings. Unless otherwise provided by law, a quorum for the transaction of business at every meeting of the shareholders shall consist of not less than two-fifths (2/5) of the outstanding capital stock represented in person or by proxy; less than such quorum may adjourn the meeting to a future time. No notice need be given of an adjourned annual or special meeting of the shareholders if the adjournment be to a definite place and time. Section 5. Votes and Proxies. At every meeting of the shareholders, each share of the capital stock shall be entitled to one vote except as otherwise provided by law. A majority of the votes cast shall decide every question or matter submitted to the shareholder at any meeting, unless otherwise provided by law or by the Articles of Association or these By-laws. Share- holders may vote by proxies duly authorized in writing and filed with the Cashier, but no officer, clerk, teller or bookeeper of the Association may act as a proxy. Section 6. Nominations to Board of Directors. At any meeting of shareholders held for the election of Directors, nominations for election to the Board of Directors may be made, subject to the provisions of this section, by any share- holder of record of any outstanding class of stock of the Association entitled to vote for the election of Directors. No person other than those whose names are stated as proposed nominees in the proxy statement accompanying the notice of the meeting may be nominated as such meeting unless a shareholder shall have given to the President of the Association and to the Comptroller of the Currency, Washington, DC written notice of intention to nominate such other person mailed by certified mail or delivered not less than fourteen (14) days nor more than fifty (50) days prior to the meeting of shareholders at which such nomination is to be made; provided, however, that if less than twenty-one (21) days' notice of such meeting is given to shareholders, such notice of intention to nominate shall be mailed by certified mail or delivered to said President and said Comptroller on or before the seventh day following the day on which the notice of such meeting was mailed. Such notice of intention to nominate shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of capital stock of the Association that will be voted for each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of capital stock of the Association owned by the notifying shareholder. In the event such notice is given, the proposed nominee may be nominated either by the shareholder giving such notice or by any other shareholder present at the meeting at which such nomination is to be made. Such notice may contain the names of more than one proposed nominee, and if more than one is named, any one or more of those named may be nominated. Section 7. Action Taken Without a Shareholder Meeting. Any action requiring shareholder approval or consent may be taken without a meeting and without notice of such meeting by written consent of the shareholders. ARTICLE II DIRECTORS Section 1. Number. The Board of Directors shall consist of such number of shareholders, not less than five (5) nor more than twenty-five (25), as from time to time shall be determined by a majority of the votes to which all of its shareholders are at the time entitled, or by the Board of Directors as hereinafter provided. Section 2. Mandatory Retirement for Directors. No person shall be elected a director who has attained the age of 68 and no person shall continue to serve as a director after the date of the first meeting of the stockholders of the Association held on or after the date on which such person attains the age of 68; provided, however, that any director serving on the Board as of December 15, 1995 who has attanined the age of 65 on or prior to such date shall be permitted to continue to serve as a director until the date of the first meeting of the stockholders of the Association held on or after the date on which such person attains the age of 70. -2- Section 3. General Powers. The Board of Directors shall exercise all the coporate powers of the Association, except as expressly limited by law, and shall have the control, management, direction and dispositon of all its property and affairs. Section 4. Annual Meeting. Immediately following a meeting of shareholders held for the election of Directors, the Cashier shall notify the directors- elect who may be present of their election and they shall then hold a meeting at the Main Office of the Association, or such other place as the Board of Directors may designate, for the purpose of taking their oaths, organizing the new Board, electing officers and transacting any other business that may come before such meeting. Section 5. Regular Meeting. Regular meetings of the Board of Directors shall be held without notice at the Main Office of the Association, or such other place as the Board of Directors may designate, at such dates and times as the Board shall determine. If the day designated for a regular meeting falls on a legal holiday, the meeting shall be held on the next business day. Section 6. Special Meetings. A special meeting of the Board of Directors may be called at anytime upon the written request of the Chairman of the Board, the President, or of two Directors, stating the purpose of the meeting. Notice of the time and place shall be given not later than the day before the date of the meeting, by mailing a notice to each Director at his last known address, by delivering such notice to him personally, or by telephoning. Section 7. Quorum; Votes. A majority of the Board of Directors at the time holding office shall constitute a quorum for the transaction of all business, except when otherwise provided by law, but less than a quorum may adjourn a meeting from time to time, and the meeting may be held, as adjourned, without further notice. If a quorum is present when a vote is taken, the affirmative vote of a majority of Directors present is the act of the Board of Directors. Section 8. Action by Directors Without a Meeting. Any action requiring Director approval or consent may be taken without a meeting and without notice of such meeting by written consent of all the Directors. Section 9. Telephonic Participation in Directors' Meetings. A Director or member of a Committee of the Board of Directors may participate in a meeting of the Board or of such Committee may participate in a meeting of the Board or of such Committee by means of a conference telephone or similar communications equipment enabling all Directors participating in the meeting to hear one another, and participation in such a meeting shall constitute presence in person at such a meeting. Section 10. Vacancies. Vacancies in the Board of Directors may be filled by the remaining members of the Board at any regular or special meeting of the Board. Section 11. Interim Appointments. The Board of Directors shall, if the share- holders at any meeting for the election of Directors have determined a number of Directors less than twenty-five (25), have the power, by affirmative vote of the majority of all the Directors, to increase such number of Directors to not more than twenty-five (25) and to elect Directors to fill the resulting vacancies and to serve until the next annual meeting of shareholders or the next election of Directors; provided, however, that the number of Directors shall not be so increased by more than two (2) if the number last determined by shareholders was fifteen (15) or less, or increased by more than four (4) if the number last determined by shareholders was sixteen (16) or more. Section 12. Fees. The Board of Directors shall fix the amount and direct the payment of fees which shall be paid to each Director for attendance at any meeting of the Board of Directors or of any Committees of the Board. ARTICLE III COMMITTEES OF THE BOARD Section 1. Executive Committee. The Board of Directors shall appoint from its members an Executive Committee which shall consist of such number of persons as the Board of Directors shall determine; the Chairman of the Board and the President shall be members ex-officio of the Executive Committee with full voting power. The Chairman of the Board or the President may from time to time appoint from the Board of Directors as temporary additional members of the Executive Committee, with full voting powers, not more than two members to serve for such periods as the Chairman of the Board or the President may determine. The Board of Directors shall designate a member of the Executive Committee to serve as Chairman thereof. A meeting of the Executive Committee may be called at any time upon the written request of the Chairman of the Board, the President or the Chairman of the Executive Committee, stating the purpose of the meeting. Not less than twenty four hours' notice of said meeting shall be given to each member of the Committee personally, by telephoning, or by mail. The Chairman of the Executive Committee or, in his absence, a member of the Committee chosen by a majority of the members present shall preside at meetings of the Executive Committee. -3- The Executive Committee shall possess and may exercise all the powers of the Board when the Board is not in session except such as the Board, only, by law, is authorized to exercise; it shall keep minutes of its acts and proceedings and cause same to be presented and reported at every regular meeting and at any special meeting of the Board including specifically, all its actions relating to loans and discounts. All acts done and powers and authority conferred by the Executive Committee, from time to time, within the scope of its authority, shall be deemed to be, and may be certified as being, the acts of and under the authority of the Board. Section 2. Risk Management Committee. The Board shall appoint from its members a Risk Management Committee which shall consist of such number as the Board shall determine. The Board shall designate a member of the Risk Management Committee to serve as Chairman thereof. It shall be the duty of the Risk Management Committee to (a) serve as the channel of communication with management and the Board of Directors of Fleet Financial Group, Inc. to assure that formal processes supported by management information systems are in place for the identification, evaluation and management of significant risks inherent in or associated with lending activities, the loan portfolio, asset-liablity management, the investment portfolio, trust and investment advisory activities, the sale of nondeposit investment products and new products and services and such additional activities or functions as the Board may determine from time to time; (b) assure the formulation and adoption of policies approved by the Risk Management Committee or Board governing lending activities, management of the loan portfolio, the maintenance of an adequate allowance for loan and lease losses, asset-liability management, the investment portfolio, the retail sale of non-deposit investment products, new products and services and such additional activities or functions as the Board may determine from time to time (c) assure that a comprehensive independent loan review program is in place for the early detection of problem loans and review significant reports of the loan review department, management's responses to those reports and the risk attributed to unresolved issues; (d) subject to control of the Board, exercise general supervision over trust activities, the investment of trust funds, the disposition of trust investments and the acceptance of new trusts and the terms of such acceptance, and (e) perform such additional duties and exercise such additional powers of the Board as the Board may determine from time to time. Section 3. Audit Committee. The Board shall appoint from its members and Audit Committee which shall consist of such number as the Board shall determine no one of whom shall be an active officer or employee of the Association or Fleet Financial Group, Inc. or any of its affiliates. In addition, members of the Audit Committee must not (i) have served as an officer or employee of the Association or any of its affiliates at any time during the year prior to their appointment; or (ii) own, control, or have owned or controlled at any time during the year prior to appointment, ten percent (10%) or more of any outstanding class of voting securities of the Association. At least two (2) members of the Audit Committee must have significant executive, professional, educational or regulatory experience in financial, auditing, accounting, or banking matters. No member of the Audit Commitee may have significant direct or indirect credit or other relationships with the Association, the termination of which would materially adversely affect the Association's financial condition or results of operations. The Board shall designate a member of the Audit Committee to serve as Chairman thereof. It shall be the duty of the Audit Committee to (a) cause a continuous audit and examination to be made on its behalf into the affairs of the Association and to review the results of such examination; (b) review significant reports of the internal auditing department, management's responses to those reports and the risk attributed to unresolved issues; (c) review the basis for the reports issued under Section 112 of The Federal Deposit Insurance Corporation Improvement Act of 1991; (d) consider, in consultation with the independent auditor and an internal auditing executive, the adequacy of the Association's internal controls, including the resolution of identified material weakness and reportable conditions; (e) review regulatory communications received from any federal or state agency with supervisory jurisdiction or other examining authority and monitor any needed corrective action by management; (f) ensure that a formal system of internal controls is in place for maintaining compliance with laws and regulations; (g) cause an audit of the Trust Department at least once during each calendar year and within 15 months of the last such audit or, in liew thereof, adopt a continuous audit system and report to the Board each calendar year and within 15 months of the previous report on the performance of such audit function; and (h) perform such additional duties and exercise such additional powers of the Board as the Board may determine from time to time. The Audit Committee may consult with internal counsel and retain its own outside counsel without approval (prior or otherwise) from the Board or management and obligate the Association to pay the fees of such counsel. -4- Section 4. Community Affairs Committee. The Board shall appoint from its members a Community Affairs Committee which shall consist of such number as the Board shall determine. The Board shall designate a member of the Community Affairs Committee to serve as Chairman thereof. It shall be the duty of the Commmunity Affairs Committee to (a) oversee compliance by the Association with the Community Reinvestment Act of 1977, as amended, and the regulations promulgated thereunder; and (b) perform such additional duties and exercise such additional powers of the Board as the Board may determine from time to time. Section 5. Regular Meetings. Except for the Executive Committee which shall meet on an ad hoc basis as set forth in Section 1 of this Article, regular meetings of the Committees of the Board of Directors shall be held, without notice, at such time and place as the Committee or the Board of Directors may appoint and as often as the business of the Association may require. Section 6. Special Meetings. A Special Meeting of any of the Committees of the Board of Directors may be called upon the written request of the Chairman of the Board or the President, or of any two members of the respective Committee, stating the purpose of the meeting. Not less than twenty-four hours' notice of such special meeting shall be given to each member of the Committee personally, by telephoning, or by mail. Section 7. Emergency Meetings. An Emergency Meeting of any of the Committees of the Board of Directors may be called at the request of the Chairman of the Board or the President, who shall state that an emergency exists, upon not less than one hour's notice to each member of the Committee personally or by telephoning. Section 8. Action Taken Without a Committee Meeting. Any Committee of the Board of Directors may take action without a meeting and without notice of such meeting by resolution assented to in writing by all members of such Committee. Section 9. Quorum. A majority of a Committee of the Board of Directors shall constitute a quorum for the transaction of any business at any meeting of such Committee. If a quorum is not available, the Chairman of the Board or the President shall have power to make temporary appointments to a Committee of- members of the Board of Directors, to act in the place and stead of members who temporarily cannot attend any such meeting; provided, however, that any temporary appointment to the Audit Committee must meet the requirements for members of that Committee set forth in Section 3 of this Article. Section 10. Record. The committes of the Board of Directors shall keep a record of their respective meetings and proceedings which shall be presented at the regular meeting of the Board of Directors held in the calendar month next following the meetings of the Committees. If there is no regular Board of Directors meeting held in the calendar month next following the meeting of a Committee, then such Committee's records shall be presented at the next regular Board of Directors meeting held in a month subsequent to such Committee meeting. Section 11. Changes and Vacancies. The Board of Directors shall have power to change the members of any Committee at any time and to fill vacancies on any Committee; provided, however, that any newly appointed member of the Audit Committee must meet the requirements for members of that Committee set forth in Section 3 of this Article. Section 12. Other Committees. The Board of Directors may appoint, from time to time, other committees of one or more persons, for such purposes and with such powers as the Board may determine. ARTICLE IV WAIVER OF NOTICE OF MEETINGS Section 1. Waiver. Whenever notice is required to be given to any shareholder, Director, or member of a Committee of the Board of Directors, such notice may be waived in writing either before or after such meeting by any shareholder, Director or Committee member respectively, as the case may be, who may be entitled to such notice; and such notice will be deemed to be waived by attendance at any such meeting. -5- ARTICLE V OFFICERS AND AGENTS Section 1. Officers. The Board shall appoint a Chairman of the Board and a President, and shall have the power to appoint one or more Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a Cashier, a Secretary, an Auditor, a Controller, one or more Trust Officers and- such other officers as are deemed necessary or desirable for the proper transaction of business of the Association. The Chairman of the Board and the President shall be appointed from members of the Board of Directors. Any two or more offices, except those of President and Cashier, or Secretary, may be held by the same person. The Board may, from time to time, by resolution passed by a majority of the entire Board, designate one or more officers of the Association or of an affiliate or of Fleet Financial Group, Inc. with power to appoint one or more Vice Presidents and such other officers of the Association below the level of Vice President as the officer or officers designated in such resolution deem necessary or desirable for the proper transaction of the business of the Association. Section 2. Chairman of the Board. The chairman of the Board shall preside at all meetings of the Board of Directors. Subject to definition by the Board of Directors, he shall have general executive powers and such specific powers and duties as from time to time may be conferred upon or assigned to him by the Board of Directors. Section 3. President. The President shall preside at all meetings of the Board of Directors if there be no Chairman or if the Chairman be absent. Subject to definition by the Board of Directors, he shall have general executive powers and such specific powers and duties as from time to time may be conferred upon or assigned to him by the Board of Directors. -6- Section 4. Cashier and Secretary. The Cashier shall be the Secretary of the Board and of the Executive Committee, and shall keep accurate minutes of their meetings and of all meetings of the shareholders. He shall attend to the giving of all notices required by these By-laws. He shall be custodian of the corporate seal, records, documents and papers of the Association. He shall have such powers and perform such duties as pertain by law or regulation to the office of Cashier, or as are imposed by these By-laws, or as may be delegated to him from time to time by the Board of Directors, the Chairman of the Board or the President. Section 5. Auditor. The Auditor shall be the chief auditing officer of the Association. He shall continuously examine the affairs of the Association and from time to time shall report to the Board of Directors. He shall have such powers and perform such duties as are conferred upon, or assigned to him by these By-laws, or as may be delegated to him from time to time by the Board of Directors. Section 6. Officers Seriatim. The Board of Directors shall designate from time to time not less than two officers who shall in the absence or disability of the Chairman or President or both, succeed seriatim to the duties and responsibilities of the Chairman and President respectively. Section 7. Clerks and Agents. The Board of Directors may appoint, from time to time, such clerks, agents and employees as it may deem advisable for the prompt and orderly transaction of the business of the Association, define their duties, fix the salaries to be paid them and dismiss them. Subject to the authority of the Board of Directors, the Chairman of the Board or the President, or any other officer of the Association authorized by either of them may appoint and dismiss all or any clerks, agents and employees and prescribe their duties and the conditions of their employment, and from time to time fix their compensation. Section 8. Tenure. The Chairman of the Board of Directors and the President shall, except in the case of death, resignation, retirement or disqualification under these By-laws, or unless removed by the affirmative vote of at least two- thirds of all of the members of the Board of Directors, hold office for the term of one year or until their respective successors are appointed. Either of such officers appointed to fill a vacancy occurring in an unexpired term shall serve for such unexpired term of such vacancy. All other officers, clerks, agents, attorneys-in-fact and employees of the Association shall hold office during the pleasure of the Board of Directors or of the officer or committee appointing them respectively. ARTICLE VI TRUST DEPARTMENT Section 1. General Powers and Duties. All fiduciary powers of the Association shall be exercised through the Trust Department, subject to such regulations as the Comptroller of the Currency shall from time to time establish. The Trust Department shall be to placed under the management and immediate supervision of an officer or officers appointed by the Board of Directors. The duties of all officers of the Trust Department shall be to cause the policies and instructions of the Board and the Risk Management Committee with respect to the trusts under their supervision to be carried out, and to supervise the due performance of the trusts and agencies entrusted to the Association and under their supervision, in accordance with law and in accordance with the terms of such trusts and agencies. -7- ARTICLE VII BRANCH OFFICES Section 1. Establishment. The Board of Directors shall have full power to establish, to discontinue, or, from time to time, to change the location of any branch office, subject to such limitations as may be provided by law. Section 2. Supervision and Control. Subject to the general supervision and control of the Board of Directors, the affairs of branch offices shall be under the immediate supervision and control of the President or of such other officer or officers, employee or employees, or other individuals as the Board of Directors may from time to time determine, with such powers and duties as the Board of Directors may confer upon or assign to him or them. ARTICLE VIII SIGNATURE POWERS Section 1. Authorization. The power of officers, employees, agents and attorneys to sign on behalf of and to affix the seal of the Association shall be prescribed by the Board of Directors or by the Executive Committee or by both; provided that the President is authorized to restrict such power of any officer, employee, agent or attorney to the business of a specific department or departments, or to a specific branch office or branch offices. Facsimile signatures may be authorized. -8- ARTICLE IX STOCK CERTIFICATES AND TRANSFERS Section 1. Stock Records. The Trust Department shall have custody of the stock certificate books and stock ledgers of the Association, and shall make all transfers of stock, issue certificates thereof and disburse dividends declared thereon. Section 2. Form of Certificate. Every shareholder shall be entitled to a certificate conforming to the requirements of law and otherwise in such form as the Board of Directors may approve. The certificates shall state on the face thereof that the stock is transferable only on the books of the Association and shall be signed by such officers as may be prescribed from time to time by the Board of Directors or Executive Committee. Facsimile signatures may be authorized. Section 3. Transfers of Stock. Transfers of stock shall be made only on the books of the Association by the holder in person, or by attorney duly authorized in writing, upon surrender of the certificate therefor properly endorsed, or upon the surrender of such certificate accompanied by a properly executed written assignment of the same, or a written power of attorney to sell, assign or transfer the same or the shares represented thereby. Section 4. Lost Certificate. The Board of Directors or Executive Committee may order a new certificate to be issued in place of a certificate lost or destroyed, upon proof of such loss or destruction and upon tender to the Association by the shareholder, of a bond in such amount and with or without surety, as may be ordered, indemnifying the Association against all liability, loss, cost and damage by reason of such loss or destruction and the issuance of a new certificate. Section 5. Closing Transfer Books. The Board of Directors may close the transfer books for a period not exceeding thirty days preceding any regular or special meeting of the shareholders, or the day designated for the payment of a dividend or the allotment of rights. In lieu of closing the transfer books the Board of Directors may fix a day and hour not more than thirty days prior to the day of holding any meeting of the shareholders, or the day designated for the payment of a dividend, or the day designated for the allotment of rights, or the day when any change of conversion or exchange of capital stock is to go into effect, as the day as of which shareholders entitled to notice of and to vote at such meetings or entitled to such dividend or to such allotment of rights or to exercise the rights in respect of any such change, conversion or exchange of capital stock, shall be determined, and only such shareholders as shall be shareholders of record on the day and hour so fixed shall be entitled to notice of and to vote at such meeting or to receive payment of such dividend or to receive such allotment of rights or to exercise such rights, as the case may be. ARTICLE X THE CORPORATE SEAL Section 1. Seal. The following is an impression of the seal of the Association adopted by the Board of Directors. ARTICLE XI BUSINESS HOURS Section 1. Business Hours. The main office of this Association and each branch office thereof shall be open for business on such days, and for such hours as the Chairman, or the President, or any Executive Vice President, or such other officer as the Board of Directors shall from time to time designate, may determine as to each office to conform to local custom and convenience, provided that any one or more of the main and branch offices or certain departments thereof may be open for such hours as the President, or such other officer as the Board of Directors shall from time to time designate, may determine as to each office or department on any legal holiday on which work is not prohibited by law, and provided further that any one or more of the main and branch offices or certain departments thereof may be ordered closed or open on any day for such hours as to each office or department as the President, or such other officer as the Board of Directors shall from time to time designate, subject to applicable laws regulations, may determine when such action may be required by reason of disaster or other emergency condition. ARTICLE IX CHANGES IN BY-LAWS Section 1. Amendments. These By-laws may be amended upon vote of a majority of the entire Board of Directors at any meeting of the Board, provided ten (10) day's notice of the proposed amendment has been given to each member of the Board of Directors. No amendment may be made unless the By-law, as amended, is consistent with the requirements of law and of the Articles of Association. These By-laws may also be amended by the Association's shareholders. A true copy Attest: Secretary/Assistant Secretary - --------------------------------------- Dated at , as of . --------------------------------------- ---------------------- Revision of January 11, 1993 -9- EXHIBIT 5 CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE TRUST INDENTURE ACT OF 1939 The undersigned, as Trustee under the Indenture to be entered into between Leucadia National Corporation and Fleet National Bank, as Trustee, does hereby consent that, pursuant to Section 321(b) of the Trust Indenture Act of 1939, reports of examinations with respect to the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. FLEET NATIONAL BANK, AS TRUSTEE By /s/ Robert L. Reynolds ------------------------------- Robert L. Reynolds Its: Vice President Dated: Board of Governors of the Federal Reserve System OMB Number: 7100-0036 Federal Deposit Insurance Corporation OMB Number: 3064-0052 Office of the Comptroller of the Currency OMB Number: 1557-0081 Expires March 31, 1999 Federal Financial Institutions Examination Council - -------------------------------------------------------------------------------- [FEDERAL FINANCIAL Please refer to page i, [1] INSTITUTIONS EXAMINATION Table of Contents, for COUNCIL LOGO] the required disclosure of estimated burden. - -------------------------------------------------------------------------------- CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031 (960630) REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1996 ----------- (RCRI 9999) This report is required by law: 12 U.S.C. Section 324 (State member banks); 12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161 (National banks). This report form is to be filed by banks with branches and consolidated subsidiaries in U.S. territories and possessions, Edge or Agreement subsidiaries, foreign branches, consolidated foreign subsidiaries, or International Banking Facilities. - -------------------------------------------------------------------------------- NOTE: The Reports of Condition and Income must be signed by an authorized officer and the Report of Condition must be attested to by not less than two directors (trustees) for State nonmember banks and three directors for State member and National banks. I, Giro S. DeRosa, Vice President ----------------------------------------------------------------------------- Name and Title of Officer Authorized to Sign Report of the named bank do hereby declare that these Reports of Condition and Income (including the supporting schedules) have been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and are true to the best of my knowledge and belief. /s/ Giro DeRosa - -------------------------------------------------------------------------------- Signature of Officer Authorized to Sign Report July 25, 1996 - -------------------------------------------------------------------------------- Date of Signature The Reports of Condition and Income are to be prepared in accordance with Federal regulatory authority instructions. NOTE: These instructions may in some cases differ from generally accepted accounting principles. We, the undersigned directors (trustees), attest to the correctness of this Report of Condition (including the supporting schedules) and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. /s/ - -------------------------------------------------------------------------------- Director (Trustee) /s/ - -------------------------------------------------------------------------------- Director (Trustee) /s/ - -------------------------------------------------------------------------------- Director (Trustee) - -------------------------------------------------------------------------------- For Banks Submitting Hard Copy Report Forms: State Member Banks: Return the original and one copy to the appropriate Federal Reserve District Bank. State Nonmember Banks: Return the original only in the special return address envelope provided. If express mail is used in lieu of the special return address envelope, return the original only to the FDIC, c/o Quality Data systems, 2127 Espey Court, Suite 204, Crofton, MD 21114. National Banks: Return the original only in the special return address envelope provided. If express mail is used in lieu of the special return address envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114. - -------------------------------------------------------------------------------- FDIC Certificate Number | 0 | 2 | 4 | 9 | 9 | Banks should affix --------------------- the address label (RCRI 90150) in this space. CALL NO. 196 31 06-30-96 STAR: 25-0590 00327 STCERT: 25-02490 FLEET NATIONAL BANK ONE MONARCH PLACE SPRINGFIELD, MA 01102 Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency FOR BANKS SUBMITTING HARD COPY REPORT FORMS: STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal Reserve District Bank. STATE NONMEMBER BANKS: Return the original only in the special return address envelope provided. If express mail is used in lieu of the special return address envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114. NATIONAL BANKS: Return the original only in the special return address envelope provided. If express mail is used in lieu of the special return address envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
- ----------------------------------------------------------------------------------------------------------------------------- ___ ___ FDIC Certificate Number | 0 | 2 | 4 | 9 | 9 | | Banks should affix the address label in this space. | ______________________ (RCRI 9050) CALL NO. 196 31 06-30-96 STBK: 25-0590 00327 STCERT: 25-02499 FLEET NATIONAL BANK ONE MONARCH PLACE SPRINGFIELD, MA 01102 |___ ___|
Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency FFIEC 031 Page i /2/ Consolidated Reports of Condition and Income for A Bank With Domestic and Foreign Offices ________________________________________________________________________________ TABLE OF CONTENTS SIGNATURE PAGE Cover REPORT OF INCOME Schedule RI--Income Statement...........................................RI-1,2,3 Schedule RI-A--Changes in Equity Capital....................................RI-4 Schedule RI-B--Charge-offs and Recoveries and Changes in Allowance for Loan and Lease Losses..................................................................RI-4,5 Schedule RI-C--Applicable Income Taxes by Taxing Authority..........................................................RI-5 Schedule RI-D--Income from International Operations..................................................RI-6 Schedule RI-E--Explanations...............................................RI-7,8 REPORT OF CONDITION Schedule RC--Balance Sheet................................................RC-1,2 Schedule RC-A--Cash and Balances Due From Depository Institutions..............................................RC-3 Schedule RC-B--Securities...............................................RC-3,4,5 Schedule RC-C--Loans and Lease Financing Receivables: Part I. Loans and Leases..............................................RC-6,7 Part II. Loans to Small Businesses and Small Farms (included in the forms for June 30 only).....................................................RC-7a,7b Schedule RC-D--Trading Assets and Liabilities (to be completed only by selected banks)..................................RC-8 Schedule RC-E--Deposit Liabilities....................................RC-9,10,11 Schedule RC-F--Other Assets................................................RC-11 Schedule RC-G--Other Liabilities...........................................RC-11 Schedule RC-H--Selected Balance Sheet Items for Domestic Offices.........................................................RC-12 Schedule RC-I--Selected Assets and Liabilities of IBFs..................................................................RC-13 Schedule RC-K--Quarterly Averages..........................................RC-13 Schedule RC-L--Off-Balance Sheet Items...............................RC-14,15,16 Schedule RC-M--Memoranda................................................RC-17,18 Schedule RC-N--Past Due and Nonaccrual Loans, Leases, and Other Assets..............................................RC-19,20 Schedule RC-O--Other Data for Deposit Insurance Assessments.................................................RC-21,22 Schedule RC-R--Regulatory Capital.......................................RC-23,24 Optional Narrative Statement Concerning the Amounts Reported in the Reports of Condition and Income.....................................................RC-25 Special Report (TO BE COMPLETED BY ALL BANKS) Schedule RC-J--Repricing Opportunities (sent only to and to be completed only by savings banks) DISCLOSURE OF ESTIMATED BURDEN The estimated average burden associated with this information collection is 32.2 hours per respondent and is estimated to vary from 15 to 230 hours per response, depending on individual circumstances. Burden estimates include the time for reviewing instructions, gathering and maintaining data in the required form, and completing the information collection, but exclude the time for compiling and maintaining business records in the normal course of a respondent's activities. Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be directed to the Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503, and to one of the following: Secretary Board of Governors of the Federal Reserve System Washington, D.C. 20551 Legislative and Regulatory Analysis Division Office of the Comptroller of the Currency Washington, D.C. 20219 Assistant Executive Secretary Federal Deposit Insurance Corporation Washington, D.C. 20429 For information or assistance, National and State nonmember banks should contact the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington, D.C. 20429, toll free on (800) 688-FDIC (3342), Monday through Friday between 8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their Federal Reserve District Bank.
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RI-1 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Consolidated Report of Income for the period January 1, 1996 - June 30, 1996 All Report of Income schedules are to be reported on a calendar year-to-date basis in thousands of dollars.
Schedule RI--Income Statement _________ | I480 | ______________________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | ______________________________________________________________________________________________|_____________________| 1. Interest income: | ////////////////// | a. Interest and fee income on loans: | ////////////////// | (1) In domestic offices: | ////////////////// | (a) Loans secured by real estate .................................................. | 4011 616,395 | 1.a.(1)(a) (b) Loans to depository institutions .............................................. | 4019 588 | 1.a.(1)(b) (c) Loans to finance agricultural production and other loans to farmers ........... | 4024 286 | 1.a.(1)(c) (d) Commercial and industrial loans ............................................... | 4012 562,807 | 1.a.(1)(d) (e) Acceptances of other banks .................................................... | 4026 261 | 1.a.(1)(e) (f) Loans to individuals for household, family, and other personal expenditures: | ////////////////// | (1) Credit cards and related plans ............................................ | 4054 9,643 | 1.a.(1)(f)(1) (2) Other ..................................................................... | 4055 97,346 | 1.a.(1)(f)(2) (g) Loans to foreign governments and official institutions ........................ | 4056 0 | 1.a.(1)(g) (h) Obligations (other than securities and leases) of states and political | ////////////////// | subdivisions in the U.S.: | ////////////////// | (1) Taxable obligations ....................................................... | 4503 0 | 1.a.(1)(h)(1) (2) Tax-exempt obligations .................................................... | 4504 5,232 | 1.a.(1)(h)(2) (i) All other loans in domestic offices ........................................... | 4058 84,576 | 1.a.(1)(i) (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 4059 1,981 | 1.a.(2) b. Income from lease financing receivables: | ////////////////// | (1) Taxable leases .................................................................... | 4505 75,341 | 1.b.(1) (2) Tax-exempt leases ................................................................. | 4307 791 | 1.b.(2) c. Interest income on balances due from depository institutions:(1) | ////////////////// | (1) In domestic offices ............................................................... | 4105 914 | 1.c.(1) (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 4106 142 | 1.c.(2) d. Interest and dividend income on securities: | ////////////////// | (1) U.S. Treasury securities and U.S. Government agency and corporation obligations ... | 4027 209,142 | 1.d.(1) (2) Securities issued by states and political subdivisions in the U.S.: | ////////////////// | (a) Taxable securities ............................................................ | 4506 0 | 1.d.(2)(a) (b) Tax-exempt securities ......................................................... | 4507 2,953 | 1.d.(2)(b) (3) Other domestic debt securities .................................................... | 3657 12,164 | 1.d.(3) (4) Foreign debt securities ........................................................... | 3658 3,348 | 1.d.(4) (5) Equity securities (including investments in mutual funds) ......................... | 3659 10,212 | 1.d.(5) e. Interest income from trading assets.................................................... | 4069 360 | 1.e. ______________________
____________ (1) Includes interest income on time certificates of deposit not held for trading. 3 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RI-2 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RI--Continued ________________ Dollar Amounts in Thousands | Year-to-date | ___________________________________________________________________________________ ______________ 1. Interest income (continued) | RIAD Bil Mil Thou | f. Interest income on federal funds sold and securities purchased | ////////////////// | under agreements to resell in domestic offices of the bank and of | ////////////////// | its Edge and Agreement subsidiaries, and in IBFs .................... | 4020 24,925 | 1.f. g. Total interest income (sum of items 1.a through 1.f) ................ | 4107 1,719,407 | 1.g. 2. Interest expense: | ////////////////// | a. Interest on deposits: | ////////////////// | (1) Interest on deposits in domestic offices: | ////////////////// | (a) Transaction accounts (NOW accounts, ATS accounts, and | ////////////////// | telephone and preauthorized transfer accounts) .............. | 4508 8,583 | 2.a.(1)(a) (b) Nontransaction accounts: | ////////////////// | (1) Money market deposit accounts (MMDAs) ................... | 4509 133,915 | 2.a.(1)(b)(1) (2) Other savings deposits .................................. | 4511 26,678 | 2.a.(1)(b)(2) (3) Time certificates of deposit of $100,000 or more ........ | 4174 88,690 | 2.a.(1)(b)(3) (4) All other time deposits ................................. | 4512 214,225 | 2.a.(1)(b)(4) (2) Interest on deposits in foreign offices, Edge and Agreement | ////////////////// | subsidiaries, and IBFs .......................................... | 4172 50,022 | 2.a.(2) b. Expense of federal funds purchased and securities sold under | ////////////////// | agreements to repurchase in domestic offices of the bank and of | ////////////////// | its Edge and Agreement subsidiaries, and in IBFs .................... | 4180 152,094 | 2.b. c. Interest on demand notes issued to the U.S. Treasury, trading | ////////////////// | liabilities, and other borrowed money ............................... | 4185 121,525 | 2.c. d. Interest on mortgage indebtedness and obligations under | ////////////////// | capitalized leases .................................................. | 4072 361 | 2.d. e. Interest on subordinated notes and debentures ....................... | 4200 26,110 | 2.e. f. Total interest expense (sum of items 2.a through 2.e) ............... | 4073 822,203 | 2.f. ___________________________ 3. Net interest income (item 1.g minus 2.f) ............................... | ////////////////// | RIAD 4074 | 897,204 | 3. ___________________________ 4. Provisions: | ////////////////// | ___________________________ a. Provision for loan and lease losses ................................. | ////////////////// | RIAD 4230 | 21,672 | 4.a. b. Provision for allocated transfer risk ............................... | ////////////////// | RIAD 4243 | 0 | 4.b. ___________________________ 5. Noninterest income: | ////////////////// | a. Income from fiduciary activities .................................... | 4070 144,614 | 5.a. b. Service charges on deposit accounts in domestic offices ............. | 4080 111,736 | 5.b. c. Trading revenue (must equal Schedule RI, sum of Memorandum | ////////////////// | items 8.a through 8.d)............................................... A220 10,646 5.c. d. Other foreign transaction gains (losses) ............................ | 4076 247 | 5.d. e. Not applicable | ////////////////// | f. Other noninterest income: | ////////////////// | (1) Other fee income ................................................ | 5407 372,950 | 5.f.(1) (2) All other noninterest income* ................................... | 5408 211,593 | 5.f.(2) ___________________________ g. Total noninterest income (sum of items 5.a through 5.f) ............. | ////////////////// | RIAD 4079 | 851,786 | 5.g. 6. a. Realized gains (losses) on held-to-maturity securities .............. | ////////////////// | RIAD 3521 | 1 | 6.a. b. Realized gains (losses) on available-for-sale securities ............ | ////////////////// | RIAD 3196 | 16,126 | 6.b. ___________________________ 7. Noninterest expense: | ////////////////// | a. Salaries and employee benefits ...................................... | 4135 322,146 | 7.a. b. Expenses of premises and fixed assets (net of rental income) | ////////////////// | (excluding salaries and employee benefits and mortgage interest) .... | 4217 114,912 | 7.b. c. Other noninterest expense* .......................................... | 4092 631,554 | 7.c. ___________________________ d. Total noninterest expense (sum of items 7.a through 7.c) ............ | ////////////////// | RIAD 4093 | 1,068,612 | 7.d. ___________________________ 8. Income (loss) before income taxes and extraordinary items and other | ////////////////// | ___________________________ adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d)| ////////////////// | RIAD 4301 | 674,833 | 8. 9. Applicable income taxes (on item 8) .................................... | ////////////////// | RIAD 4302 | 280,303 | 9. ___________________________ 10. Income (loss) before extraordinary items and other adjustments | ////////////////// | ___________________________ (item 8 minus 9) ....................................................... | ////////////////// | RIAD 4300 | 394,530 | 10. _________________________________________________
____________ *Describe on Schedule RI-E--Explanations. 4 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RI-3 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RI--Continued ________________ | Year-to-date | ______ ______________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | ___________________________________________________________________________________ ______________ 11. Extraordinary items and other adjustments: | ////////////////// | a. Extraordinary items and other adjustments, gross of income taxes* . | 4310 0 | 11.a. b. Applicable income taxes (on item 11.a)* ........................... | 4315 0 | 11.b. c. Extraordinary items and other adjustments, net of income taxes | ////////////////// |__________________________ (item 11.a minus 11.b) ............................................ | ////////////////// | RIAD 4320 | 0 | 11.c. 12. Net income (loss) (sum of items 10 and 11.c) ......................... | ////////////////// | RIAD 4340 | 394,530 | 12. _________________________________________________
__________ | I481 | _______________ Memoranda | Year-to-date | ______ ______________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | ______________________________________________________________________________________________________ ____________________ 1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after | ////////////////// | August 7, 1986, that is not deductible for federal income tax purposes .......................... | 4513 1,798 | M.1. 2. Income from the sale and servicing of mutual funds and annuities in domestic offices | ////////////////// | (included in Schedule RI, item 8) ............................................................... | 8431 20,910 | M.2. 3.-4. Not applicable | ////////////////// | 5. Number of full-time equivalent employees on payroll at end of current period (round to | //// Number | nearest whole number) ........................................................................... | 4150 9,852 | M.5. 6. Not applicable | ////////////////// | 7. If the reporting bank has restated its balance sheet as a result of applying push down | //// MM DD YY | accounting this calendar year, report the date of the bank's acquisition ........................ | 9106 00/00/00 | M.7. 8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) | ////////////////// | (sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c): | //// Bil Mil Thou | a. Interest rate exposures ...................................................................... | 8757 1,428 | M.8.a. b. Foreign exchange exposures ................................................................... | 8758 9,218 | M.8.b. c. Equity security and index exposures .......................................................... | 8759 0 | M.8.c. d. Commodity and other exposures ................................................................ | 8760 0 | M.8.d. 9. Impact on income of off-balance sheet derivatives held for purposes other than trading: | ////////////////// | a. Net increase (decrease) to interest income.....................................................| 8761 (5,575)| M.9.a. b. Net (increase) decrease to interest expense ...................................................| 8762 (5,752)| M.9.b. c. Other (noninterest) allocations ...............................................................| 8763 (172)| M.9.c. 10. Credit losses on off-balance sheet derivatives (see instructions).................................| A251 0 | M.10.
____________ *Describe on Schedule RI-E--Explanations. 5 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RI-4 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RI-A--Changes in Equity Capital Indicate decreases and losses in parentheses. _________ | I483 | _____________________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | ______________________________________________________________________________________________________|____________________| 1. Total equity capital originally reported in the December 31, 1995, Reports of Condition | ////////////////// | and Income ...................................................................................... | 3215 1,342,473 | 1. 2. Equity capital adjustments from amended Reports of Income, net* ................................. | 3216 0 | 2. 3. Amended balance end of previous calendar year (sum of items 1 and 2) ............................ | 3217 1,342,473 | 3. 4. Net income (loss) (must equal Schedule RI, item 12) ............................................. | 4340 394,530 | 4. 5. Sale, conversion, acquisition, or retirement of capital stock, net .............................. | 4346 0 | 5. 6. Changes incident to business combinations, net .................................................. | 4356 4,161,079 | 6. 7. LESS: Cash dividends declared on preferred stock ................................................ | 4470 0 | 7. 8. LESS: Cash dividends declared on common stock ................................................... | 4460 490,634 | 8. 9. Cumulative effect of changes in accounting principles from prior years* (see instructions | ////////////////// | for this schedule) .............................................................................. | 4411 0 | 9. 10. Corrections of material accounting errors from prior years* (see instructions for this schedule) | 4412 0 | 10. 11. Change in net unrealized holding gains (losses) on available-for-sale securities ................ | 8433 (46,607)| 11. 12. Foreign currency translation adjustments ........................................................ | 4414 0 | 12. 13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ........ | 4415 (1,003,722)| 13. 14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule RC, | ////////////////// | item 28) ........................................................................................ | 3210 4,357,119 | 14. ______________________
____________ *Describe on Schedule RI-E--Explanations.
Schedule RI-B--Charge-offs and Recoveries and Changes in Allowance for Loan and Lease Losses Part I. Charge-offs and Recoveries on Loans and Leases Part I excludes charge-offs and recoveries through the allocated transfer risk reserve. __________ | I486 | __________________________________________ | (Column A) | (Column B) | | Charge-offs | Recoveries | ____________________ ____________________ | Calendar year-to-date | _________________________________________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou | ______________________________________________________________________________ ____________________ ____________________ 1. Loans secured by real estate: | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ......................................... | 4651 35,701 | 4661 8,412 | 1.a. b. To non-U.S. addressees (domicile) ..................................... | 4652 0 | 4662 0 | 1.b. 2. Loans to depository institutions and acceptances of other banks: | ////////////////// | ////////////////// | a. To U.S. banks and other U.S. depository institutions .................. | 4653 0 | 4663 0 | 2.a. b. To foreign banks ...................................................... | 4654 0 | 4664 0 | 2.b. 3. Loans to finance agricultural production and other loans to farmers ...... | 4655 2 | 4665 22 | 3. 4. Commercial and industrial loans: | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ......................................... | 4645 38,139 | 4617 19,005 | 4.a. b. To non-U.S. addressees (domicile) ..................................... | 4646 0 | 4618 102 | 4.b. 5. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// | expenditures: | ////////////////// | ////////////////// | a. Credit cards and related plans ........................................ | 4656 1,137 | 4666 733 | 5.a. b. Other (includes single payment, installment, and all student loans) ... | 4657 7,864 | 4667 2,681 | 5.b. 6. Loans to foreign governments and official institutions ................... | 4643 0 | 4627 0 | 6. 7. All other loans .......................................................... | 4644 826 | 4628 541 | 7. 8. Lease financing receivables: | ////////////////// | ////////////////// | a. Of U.S. addressees (domicile) ......................................... | 4658 3,729 | 4668 3,241 | 8.a. b. Of non-U.S. addressees (domicile) ..................................... | 4659 0 | 4669 0 | 8.b. 9. Total (sum of items 1 through 8) ......................................... | 4635 87,398 | 4605 34,737 | 9. ___________________________________________
6 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RI-5 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RI-B--Continued Part I. Continued Memoranda __________________________________________ | (Column A) | (Column B) | | Charge-offs | Recoveries | ____________________ ____________________ | Calendar year-to-date | _________________________________________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou | ______________________________________________________________________________ ____________________ ____________________ 1-3. Not applicable | ////////////////// | ////////////////// | 4. Loans to finance commercial real estate, construction, and land | ////////////////// | ////////////////// | development activities (not secured by real estate) included in | ////////////////// | ////////////////// | Schedule RI-B, part I, items 4 and 7, above .............................. | 5409 383 | 5410 1,374 | M.4. 5. Loans secured by real estate in domestic offices (included in | ////////////////// | ////////////////// | Schedule RI-B, part I, item 1, above): | ////////////////// | ////////////////// | a. Construction and land development ..................................... | 3582 189 | 3583 253 | M.5.a. b. Secured by farmland ................................................... | 3584 145 | 3585 131 | M.5.b. c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// | (1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// | properties and extended under lines of credit ..................... | 5411 2,650 | 5412 108 | M.5.c.(1) (2) All other loans secured by 1-4 family residential properties ...... | 5413 13,892 | 5414 1,231 | M.5.c.(2) d. Secured by multifamily (5 or more) residential properties ............. | 3588 837 | 3589 395 | M.5.d. e. Secured by nonfarm nonresidential properties .......................... | 3590 17,988 | 3591 6,294 | M.5.e. |_________________________________________|
Part II. Changes in Allowance for Loan and Lease Losses
_____________________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | ___________________________________________________________________________________________________ ____________________ 1. Balance originally reported in the December 31, 1995, Reports of Condition and Income.......... | 3124 266,943 | 1. 2. Recoveries (must equal part I, item 9, column B above) ........................................ | 4605 34,737 | 2. 3. LESS: Charge-offs (must equal part I, item 9, column A above) ................................. | 4635 87,398 | 3. 4. Provision for loan and lease losses (must equal Schedule RI, item 4.a)......................... | 4230 21,672 | 4. 5. Adjustments* (see instructions for this schedule) ................................ ............ | 4815 636,497 | 5. 6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, | ////////////////// | item 4.b) ..................................................................................... | 3123 872,451 | 6. |____________________|
____________ *Describe on Schedule RI-E--Explanations. Schedule RI-C--Applicable Income Taxes by Taxing Authority Schedule RI-C is to be reported with the December Report of Income.
| I489 | <- ____________ ________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | ___________________________________________________________________________________________________ ____________________ 1. Federal ....................................................................................... | 4780 N/A | 1. 2. State and local................................................................................ | 4790 N/A | 2. 3. Foreign ....................................................................................... | 4795 N/A | 3. 4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) ............ | 4770 N/A | 4. ____________________________| | 5. Deferred portion of item 4 ........................................ | RIAD 4772 | N/A | ////////////////// | 5. __________________________________________________
7 Legal Title of Bank: Fleet National Bank Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031 Address: One Monarch Place Page RI-6 City, State Zip: Springfield, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RI-D--Income from International Operations For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs where international operations account for more than 10 percent of total revenues, total assets, or net income. Part I. Estimated Income from International Operations __________ | I492 | <- ______ ________ | Year-to-date | ______ ______________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | _________________________________________________________________________________________________ ____________________ 1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, | ////////////////// | and IBFs: | ////////////////// | a. Interest income booked ................................................................... | 4837 N/A | 1.a. b. Interest expense booked .................................................................. | 4838 N/A | 1.b. c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and IBFs | ////////////////// | (item 1.a minus 1.b) ..................................................................... | 4839 N/A | 1.c. 2. Adjustments for booking location of international operations: | ////////////////// | a. Net interest income attributable to international operations booked at domestic offices .. | 4840 N/A | 2.a. b. Net interest income attributable to domestic business booked at foreign offices .......... | 4841 N/A | 2.b. c. Net booking location adjustment (item 2.a minus 2.b) ..................................... | 4842 N/A | 2.c. 3. Noninterest income and expense attributable to international operations: | ////////////////// | a. Noninterest income attributable to international operations .............................. | 4097 N/A | 3.a. b. Provision for loan and lease losses attributable to international operations ............. | 4235 N/A | 3.b. c. Other noninterest expense attributable to international operations ....................... | 4239 N/A | 3.c. d. Net noninterest income (expense) attributable to international operations (item 3.a | ////////////////// | minus 3.b and 3.c) ....................................................................... | 4843 N/A | 3.d. 4. Estimated pretax income attributable to international operations before capital allocation | ////////////////// | adjustment (sum of items 1.c, 2.c, and 3.d) ................................................. | 4844 N/A | 4. 5. Adjustment to pretax income for internal allocations to international operations to reflect | ////////////////// | the effects of equity capital on overall bank funding costs ................................. | 4845 N/A | 5. 6. Estimated pretax income attributable to international operations after capital allocation | ////////////////// | adjustment (sum of items 4 and 5) ........................................................... | 4846 N/A | 6. 7. Income taxes attributable to income from international operations as estimated in item 6 .... | 4797 N/A | 7. 8. Estimated net income attributable to international operations (item 6 minus 7) .............. | 4341 N/A | 8. ______________________ Memoranda ______________________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | _________________________________________________________________________________________________ ____________________ 1. Intracompany interest income included in item 1.a above ..................................... | 4847 N/A | M.1. 2. Intracompany interest expense included in item 1.b above .................................... | 4848 N/A | M.2. ______________________
Part II. Supplementary Details on Income from International Operations Required by the Departments of Commerce and Treasury for Purposes of the U.S. International Accounts and the U.S. National Income and Product Accounts ________________ | Year-to-date | ______ ______________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | _________________________________________________________________________________________________ ____________________ 1. Interest income booked at IBFs .............................................................. | 4849 N/A | 1. 2. Interest expense booked at IBFs ............................................................. | 4850 N/A | 2. 3. Noninterest income attributable to international operations booked at domestic offices | ////////////////// | (excluding IBFs): | ////////////////// | a. Gains (losses) and extraordinary items ................................................... | 5491 N/A | 3.a. b. Fees and other noninterest income ........................................................ | 5492 N/A | 3.b. 4. Provision for loan and lease losses attributable to international operations booked at | ////////////////// | domestic offices (excluding IBFs) ........................................................... | 4852 N/A | 4. 5. Other noninterest expense attributable to international operations booked at domestic offices | ////////////////// | (excluding IBFs) ............................................................................ | 4853 N/A | 5. ______________________
8 Legal Title of Bank: Fleet National Bank Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: One Monarch Place Page RI-7 City, State Zip: Springfield, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RI-E--Explanations Schedule RI-E is to be completed each quarter on a calendar year-to-date basis. Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.) __________ | I495 | <- ______ ________ | Year-to-date | ______ ______________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | __________________________________________________________________________________________________ ____________________ 1. All other noninterest income (from Schedule RI, item 5.f.(2)) | ////////////////// | Report amounts that exceed 10% of Schedule RI, item 5.f.(2): | ////////////////// | a. Net gains on other real estate owned ..................................................... | 5415 0 | 1.a. b. Net gains on sales of loans .............................................................. | 5416 0 | 1.b. c. Net gains on sales of premises and fixed assets .......................................... | 5417 0 | 1.c. Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// | Schedule RI, item 5.f.(2): | ////////////////// | _____________ d. | TEXT 4461 | Income on Mortgages Held for Resale | 4461 81,194 | 1.d. e. | TEXT 4462 | Gain From Branch Divestitures | 4462 77,976 | 1.e. ___________ f. | TEXT 4463 |______________________________________________________________________________| 4463 | 1.f. _____________ 2. Other noninterest expense (from Schedule RI, item 7.c): | ////////////////// | a. Amortization expense of intangible assets ................................................ | 4531 135,939 | 2.a. Report amounts that exceed 10% of Schedule RI, item 7.c: | ////////////////// | b. Net losses on other real estate owned .................................................... | 5418 0 | 2.b. c. Net losses on sales of loans ............................................................. | 5419 0 | 2.c. d. Net losses on sales of premises and fixed assets ......................................... | 5420 0 | 2.d. Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// | Schedule RI, item 7.c: | ////////////////// | _____________ e. | TEXT 4464 | Intercompany Corporate Support Function Charges | 4464 143,184 | 2.e. ___________ f. | TEXT 4467 | Intercompany Data Processing & Programming Charges | 4467 158,034 | 2.f. ___________ g. | TEXT 4468 |______________________________________________________________________________| 4468 | 2.g. _____________ 3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and | ////////////////// | applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe | ////////////////// | all extraordinary items and other adjustments): | ////////////////// | _____________ a. (1) | TEXT 4469 |__________________________________________________________________________| 4469 | 3.a.(1) _____________ (2) Applicable income tax effect | RIAD 4486 | | ////////////////// | 3.a.(2) _____________ ____________________________ b. (1) | TEXT 4487 |__________________________________________________________________________| 4487 | 3.b.(1) _____________ (2) Applicable income tax effect | RIAD 4488 | | ////////////////// | 3.b.(2) _____________ ____________________________ c. (1) | TEXT 4489 |__________________________________________________________________________| 4489 | 3.c.(1) _____________ (2) Applicable income tax effect | RIAD 4491 | | ////////////////// | 3.c.(2) ____________________________ 4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, | ////////////////// | item 2) (itemize and describe all adjustments): | ////////////////// | _____________ a. | TEXT 4492 |______________________________________________________________________________| 4492 | 4.a. ___________ b. | TEXT 4493 |______________________________________________________________________________| 4493 | 4.b. _____________ 5. Cumulative effect of changes in accounting principles from prior years (from | ////////////////// | Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): | ////////////////// | _____________ a. | TEXT 4494 |______________________________________________________________________________| 4494 | 5.a. ___________ b. | TEXT 4495 |______________________________________________________________________________| 4495 | 5.b. _____________ 6. Corrections of material accounting errors from prior years (from Schedule RI-A, | ////////////////// | item 10) (itemize and describe all corrections): | ////////////////// | _____________ a. | TEXT 4496 | 4496 | 6.a. ___________|______________________________________________________________________________ b. | TEXT 4497 4497 | 6.b. ____________|____________________________________________________________________________________________________
9 Legal Title of Bank: Fleet National Bank Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031 Address: One Monarch Place Page RI-8 City, State Zip: Springfield, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RI-E--Continued ________________ | Year-to-date | ______ ______________ Dollar Amounts in Thousands | RIAD Bil Mil Thou | __________________________________________________________________________________________________ ____________________ 7. Other transactions with parent holding company (from Schedule RI-A, item 13) | ////////////////// | (itemize and describe all such transactions): | ////////////////// | _____________ a. | TEXT 4498 | Fleet National Bank Surplus Distribution to FFG | 4498 (1,003,722) | 7.a. __________________________________________________________________________________________| | b. | TEXT 4499 | | 4499 | 7.b. ___________________________________________________________________________________________ 8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, | ////////////////// | item 5) (itemize and describe all adjustments): | ////////////////// | _____________ | | a. | TEXT 4521 | 12/31/95 Ending Balance of Pooled Entities | 4521 | 8.a. ___________________________________________________________________________________________| | b. | TEXT 4522 | | 4522 | 8.b. ___________________________________________________________________________________________| | ____________________ 9. Other explanations (the space below is provided for the bank to briefly describe, | I498 | I499 | <- ______________________ at its option, any other significant items affecting the Report of Income): ___ No comment |X| (RIAD 4769) ___ Other explanations (please type or print clearly): (TEXT 4769)
10 Legal Title of Bank: Fleet National Bank Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: One Monarch Place Page RC-1 City, State Zip: Springfield, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for June 30, 1996 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. Schedule RC--Balance Sheet __________ | C400 | <- ____________ ________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | __________________________________________________________________________________________________ ____________________ ASSETS | ////////////////// | 1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// | a. Noninterest-bearing balances and currency and coin(1) ................................... | 0081 4,130,928 | 1.a. b. Interest-bearing balances(2) ............................................................ | 0071 46,521 | 1.b. 2. Securities: | ////////////////// | a. Held-to-maturity securities (from Schedule RC-B, column A) .............................. | 1754 257,441 | 2.a. b. Available-for-sale securities (from Schedule RC-B, column D) ............................ | 1773 7,250,067 | 2.b. 3. Federal funds sold and securities purchased under agreements to resell in domestic offices | ////////////////// | of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// | a. Federal funds sold ...................................................................... | 0276 17,428 | 3.a. b. Securities purchased under agreements to resell ......................................... | 0277 0 | 3.b. 4. Loans and lease financing receivables: ____________________________| ////////////////// | a. Loans and leases, net of unearned income (from Schedule RC-C) | RCFD 2122 | 31,278,251 | ////////////////// | 4.a. b. LESS: Allowance for loan and lease losses ................... | RCFD 3123 | 872,451 | ////////////////// | 4.b. c. LESS: Allocated transfer risk reserve ....................... | RCFD 3128 | 0 | ////////////////// | 4.c. ____________________________ d. Loans and leases, net of unearned income, | ////////////////// | allowance, and reserve (item 4.a minus 4.b and 4.c) ..................................... | 2125 30,405,800 | 4.d. 5. Trading assets (from schedule RC-D )........................................................ | 3545 71,354 | 5. 6. Premises and fixed assets (including capitalized leases) ................................... | 2145 534,844 | 6. 7. Other real estate owned (from Schedule RC-M) ............................................... | 2150 34,546 | 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ... | 2130 0 | 8. 9. Customers' liability to this bank on acceptances outstanding ............................... | 2155 16,634 | 9. 10. Intangible assets (from Schedule RC-M) ..................................................... | 2143 2,283,414 | 10. 11. Other assets (from Schedule RC-F) .......................................................... | 2160 3,978,638 | 11. 12. Total assets (sum of items 1 through 11) ................................................... | 2170 49,027,615 | 12. ______________________
____________ (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 11 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-2 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC--Continued ___________________________ Dollar Amounts in Thousands | ///////// Bil Mil Thou | _______________________________________________________________________________________________ _________________________ LIABILITIES | /////////////////////// | 13. Deposits: | /////////////////////// | a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, | /////////////////////// | part I) ............................................................................... | RCON 2200 34,110,580 | 13.a. ____________________________ (1) Noninterest-bearing(1) ................................ | RCON 6631 10,202,036 | /////////////////////// | 13.a.(1) (2) Interest-bearing ...................................... | RCON 6636 23,908,544 | /////////////////////// | 13.a.(2) ____________________________ b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, | /////////////////////// | part II) .............................................................................. | RCFN 2200 1,745,663 | 13.b. ____________________________ (1) Noninterest-bearing ................................... | RCFN 6631 400 | /////////////////////// | 13.b.(1) (2) Interest-bearing ...................................... | RCFN 6636 1,745,263 | /////////////////////// | 13.b.(2) ____________________________ 14. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// | offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | /////////////////////// | a. Federal funds purchased ............................................................... | RCFD 0278 4,302,800 | 14.a. b. Securities sold under agreements to repurchase ........................................ | RCFD 0279 566,036 | 14.b. 15. a. Demand notes issued to the U.S. Treasury .............................................. | RCON 2840 14,411 | 15.a. b. Trading liabilities (from Schedule RC-D) .............................................. | RCFD 3548 57,446 | 15.b. 16. Other borrowed money: | /////////////////////// | a. With a remaining maturity of one year or less.......................................... | RCFD 2332 487,435 | 16.a. b. With a remaining maturity of more than one year........................................ | RCFD 2333 893,259 | 16.b. 17. Mortgage indebtedness and obligations under capitalized leases ........................... | RCFD 2910 11,561 | 17. 18. Bank's liability on acceptances executed and outstanding ................................. | RCFD 2920 16,634 | 18. 19. Subordinated notes and debentures ........................................................ | RCFD 3200 1,213,219 | 19. 20. Other liabilities (from Schedule RC-G) ................................................... | RCFD 2930 1,251,452 | 20. 21. Total liabilities (sum of items 13 through 20) ........................................... | RCFD 2948 44,670,496 | 21. | /////////////////////// | 22. Limited-life preferred stock and related surplus ......................................... | RCFD 3282 0 | 22. EQUITY CAPITAL | /////////////////////// | 23. Perpetual preferred stock and related surplus ............................................ | RCFD 3838 125,000 | 23. 24. Common stock ............................................................................. | RCFD 3230 19,487 | 24. 25. Surplus (exclude all surplus related to preferred stock).................................. | RCFD 3839 2,551,927 | 25. 26. a. Undivided profits and capital reserves ................................................ | RCFD 3632 1,693,408 | 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities ................ | RCFD 8434 (32,703)| 26.b. 27. Cumulative foreign currency translation adjustments ...................................... | RCFD 3284 0 | 27. 28. Total equity capital (sum of items 23 through 27) ........................................ | RCFD 3210 4,357,119 | 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, | /////////////////////// | and 28) .................................................................................. | RCFD 3300 49,027,615 | 29. ___________________________
Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the Number most comprehensive level of auditing work performed for the bank by independent external __________________ auditors as of any date during 1995 ............................................................... | RCFD 6724 N/A | M.1. __________________ 1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other with generally accepted auditing standards by a certified external auditors (may be required by state chartering public accounting firm which submits a report on the bank authority) 2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external submits a report on the consolidated holding company auditors (but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work) 3 = Directors' examination of the bank conducted in 8 = No external audit work accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority)
____________ (1) Includes total demand deposits and noninterest-bearing time and savings deposits. 12 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-3 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-A--Cash and Balances Due From Depository Institutions Exclude assets held for trading. __________ | C405 | <- _________________________________ ________ | (Column A) | (Column B) | | Consolidated | Domestic | | Bank | Offices | ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou | _____________________________________________________________________________ ____________________ ____________________ 1. Cash items in process of collection, unposted debits, and currency and | ////////////////// | ////////////////// | coin .................................................................... | 0022 3,402,522 | ////////////////// | 1. a. Cash items in process of collection and unposted debits .............. | ////////////////// | 0020 2,655,163 | 1.a. b. Currency and coin .................................................... | ////////////////// | 0080 747,539 | 1.b. 2. Balances due from depository institutions in the U.S. ................... | ////////////////// | 0082 500,301 | 2. a. U.S. branches and agencies of foreign banks (including their IBFs) ... | 0083 0 | ////////////////// | 2.a. b. Other commercial banks in the U.S. and other depository institutions | ////////////////// | ////////////////// | in the U.S. (including their IBFs) ................................... | 0085 500,373 | ////////////////// | 2.b. 3. Balances due from banks in foreign countries and foreign central banks .. | ////////////////// | 0070 7,902 | 3. a. Foreign branches of other U.S. banks ................................. | 0073 690 | ////////////////// | 3.a. b. Other banks in foreign countries and foreign central banks ........... | 0074 7,948 | ////////////////// | 3.b. 4. Balances due from Federal Reserve Banks ................................. | 0090 265,916 | 0090 0 | 4. 5. Total (sum of items 1 through 4) (total of column A must equal | ////////////////// | ////////////////// | Schedule RC, sum of items 1.a and 1.b) .................................. | 0010 4,177,449 | 0010 4,176,641 | 5. ___________________________________________ ______________________ Memorandum Dollar Amounts in Thousands | RCON Bil Mil Thou | __________________________________________________________________________________________________ ____________________ 1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, | ////////////////// | column B above) .............................................................................. | 0050 453,780 | M.1. ______________________
Schedule RC-B--Securities Exclude assets held for trading.
_______ | C410 | <- ___________________________________________________________________________ ________ | Held-to-maturity | Available-for-sale | _________________________________________ _________________________________________ | (Column A) | (Column B) | (Column C) | (Column D) | | Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) | ____________________ ____________________ ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ______________________________________ ____________________ ____________________ ____________________ ____________________ 1. U.S. Treasury securities ......... | 0211 250 | 0213 250 | 1286 1,274,624 | 1287 1,252,546 | 1. 2. U.S. Government agency | ////////////////// | ////////////////// | ////////////////// | ////////////////// | and corporation obligations | ////////////////// | ////////////////// | ////////////////// | ////////////////// | (exclude mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// | securities): | ////////////////// | ////////////////// | ////////////////// | ////////////////// | a. Issued by U.S. Govern- | ////////////////// | ////////////////// | ////////////////// | ////////////////// | ment agencies(2) .............. | 1289 0 | 1290 0 | 1291 0 | 1293 0 | 2.a. b. Issued by U.S. | ////////////////// | ////////////////// | ////////////////// | ////////////////// | Government-sponsored | ////////////////// | ////////////////// | ////////////////// | ////////////////// | agencies(3) ................... | 1294 0 | 1295 0 | 1297 498 | 1298 505 | 2.b. _____________________________________________________________________________________
_____________ (1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D. (2) Includes Small Business Administration "Guaranteed Loan Pool Certificates," U.S. Maritime Administration obligations, and Export-Import Bank participation certificates. (3) Includes obligations (other than mortgage-backed securities) issued by the Farm Credit System, the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Financing Corporation, Resolution Funding Corporation, the Student Loan Marketing Association, and the Tennessee Valley Authority. 13 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-4 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-B--Continued _____________________________________________________________________________________ | Held-to-maturity | Available-for-sale | _________________________________________ _________________________________________ | (Column A) | (Column B) | (Column C) | (Column D) | | Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) | ____________________ ____________________ ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ____________________________________ ____________________ ____________________ ____________________ ____________________ 3. Securities issued by states | ////////////////// |/ //////////////// | ////////////////// | ///////////////// | and political subdivisions | ////////////////// |////////////////// | ////////////////// | ///////////////// | in the U.S.: | ////////////////// |////////////////// | ////////////////// | ///////////////// | a. General obligations ......... | 1676 150,357 |1677 150,242 | 1678 0 | 1679 0 | 3.a. b. Revenue obligations ......... | 1681 8,887 |1686 8,889 | 1690 0 | 1691 0 | 3.b. c. Industrial development | ////////////////// |////////////////// | ////////////////// | ///////////////// | and similiar obligations .....| 1694 0 |1695 0 | 1696 0 | 1697 0 | 3.c. 4. Mortgage-backed | ////////////////// |////////////////// | ////////////////// | ///////////////// | securities (MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// | a. Pass-through securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// | (1) Guaranteed by | ////////////////// |////////////////// | ////////////////// | ///////////////// | GNMA ....................... | 1698 0 |1699 0 | 1701 861,176 | 1702 852,929 | 4.a.(1) (2) Issued by FNMA | ////////////////// |////////////////// | ////////////////// | ///////////////// | and FHLMC ................. | 1703 908 |1705 908 | 1706 4,854,605 | 1707 4,831,023 | 4.a.(2) (3) Other pass-through | ////////////////// |////////////////// | ///////////////////| ///////////////// | secruities ................. | 1709 4 |1710 4 | 1711 0 | 1713 0 | 4.a.(3) b. Other mortgage-backed | ////////////////// |////////////////// | ////////////////// | ///////////////// | securities (include CMO's, | ////////////////// |////////////////// | ////////////////// | ///////////////// | REMICs, and stripped | ////////////////// |////////////////// | ////////////////// | ///////////////// | MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// | (1) Issued or guaranteed | ////////////////// |////////////////// | ////////////////// | ///////////////// | by FNMA, FHLMC, | ////////////////// |////////////////// | ////////////////// | ///////////////// | or GNMA ............... | 1714 0 |1715 0 | 1716 0 | 1717 0 | 4.b.(1) (2) Collateralized | ////////////////// |////////////////// | ////////////////// | ///////////////// | by MBS issued or | ////////////////// |////////////////// | ////////////////// | ///////////////// | guaranteed by FNMA, | ////////////////// |////////////////// | ////////////////// | ///////////////// | FHLMC, or GNMA ........ | 1718 0 |1719 0 | 1731 0 | 1732 0 | 4.b.(2) (3) All other mortgage- | ////////////////// |////////////////// | ////////////////// | //////////////// | backed securities ..... | 1733 0 |1734 0 | 1735 518 | 1736 518 | 4.b.(3) 5. Other debt securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// | a. Other domestic debt | ////////////////// |////////////////// | ////////////////// | ///////////////// | securities.................. | 1737 0 |1738 0 | 1739 817 | 1741 812 | 5.a. b. Foreign debt | ////////////////// |////////////////// | ////////////////// | ///////////////// | securities ................. | 1742 97,035 |1743 78,878 | 1744 0 | 1746 0 | 5.b. 6. Equity securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// | a. Investments in mutual | ////////////////// |////////////////// | ////////////////// | ///////////////// | funds ...................... | ////////////////// |////////////////// | 1747 0 | 1748 0 | 6.a. b. Other equity securities | ////////////////// |////////////////// | ////////////////// | ///////////////// | with readily determin- | ////////////////// |////////////////// | ////////////////// | ///////////////// | able fair values ........... | ////////////////// |////////////////// | 1749 0 | 1751 0 | 6.b. c. All other equity | ////////////////// |////////////////// | ////////////////// | ///////////////// | securities (1) ............. | ////////////////// |////////////////// | 1752 311,734 | 1753 311,734 | 6.c. 7. Total (sum of items 1 | ////////////////// |////////////////// | ////////////////// | ///////////////// | through 6) (total of | ////////////////// |////////////////// | ////////////////// | ///////////////// | column A must equal | ////////////////// |////////////////// | ////////////////// | ///////////////// | Schedule RC, item 2.a) | ////////////////// |////////////////// | ////////////////// | ///////////////// | (total of column D must | ////////////////// |////////////////// | ////////////////// | ///////////////// | equal Schedule RC, | ////////////////// |////////////////// | ////////////////// | ///////////////// | item 2.b) ..................... | 1754 257,441 | 1771 239,171 | 1772 7,303,972 | 1773 7,250,067 | 7. |__________________________________________________________________________________|
____________ 1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D. 14 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-5 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-B--Continued ___________ Memoranda | C412 | <- ___________ _________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | __________________________________________________________________________________________________ ____________________ 1. Pledged securities(2) ......................................................................... | 0416 2,308,912 | M.1. 2. Maturity and repricing data for debt securities(2),(3),(4) (excluding those in | ////////////////// | nonaccrual status): | ////////////////// | a. Fixed rate debt securities with a remaining maturity of: | ////////////////// | (1) Three months or less ................................................................... | 0343 72,490 | M.2.a.(1) (2) Over three months through 12 months .................................................... | 0344 77,125 | M.2.a.(2) (3) Over one year through five years ....................................................... | 0345 2,734,577 | M.2.a.(3) (4) Over five years ........................................................................ | 0346 2,925,207 | M.2.a.(4) (5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4)) ..... | 0347 5,809,399 | M.2.a.(5) b. Floating rate debt securities with a repricing frequency of: | ////////////////// | (1) Quarterly or more frequently ........................................................... | 4544 531,365 | M.2.b.(1) (2) Annually or more frequently, but less frequently than quarterly ........................ | 4545 855,010 | M.2.b.(2) (3) Every five years or more frequently, but less frequently than annually ................. | 4551 0 | M.2.b.(3) (4) Less frequently than every five years .................................................. | 4552 0 | M.2.b.(4) (5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4)) .. | 4553 1,386,375 | M.2.b.(5) c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total debt | ////////////////// | securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus nonaccrual | ////////////////// | debt securities included in Schedule RC-N, item 9, column C) ............................... | 0393 7,195,774 | M.2.c. 3. Not applicable | ////////////////// | 4. Held-to-maturity debt securities restructured and in compliance with modified terms (included | ////////////////// | in Schedule RC-B, items 3 through 5, column A, above) ......................................... | 5365 0 | M.4. 5. Not applicable | ////////////////// | 6. Floating rate debt securities with a remaining maturity of one year or less(2),(4) (included in | ////////////////// | Memorandum items 2.b(1) through 2.b.(4) above)................................................. | 5519 3,700 | M.6. 7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or | ////////////////// | trading securities during the calendar year-to-date (report the amortized cost at date of sale | ////////////////// | or transfer ................................................................................... | 1778 0 | m.7. 8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale | ////////////////// | accounts in Schedule RC-B, item 4.b): | ////////////////// | a. Amortized cost ............................................................................. | 8780 0 | M.8.a. b. Fair Value ................................................................................. | 8781 0 | M.8.b. 9. Structured notes (included in the held-to-maturity and available-for-sale accounts in | ////////////////// | Schedule RC-B, items 2, 3, and 5): | ////////////////// | a. Amortized cost ............................................................................. | 8782 0 | M.9.a. b. Fair Value ................................................................................. | 8783 0 | M.9.b. ----------------------
____________ (2) Includes held-to-maturity securities at amortized cost and available-for-sale securities at fair value. (3) Exclude equity securities, e.g., investments in mutual funds, Federal Reserve stock, common stock, and preferred stock. (4) Memorandum items 2 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J. 15
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-6 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________ Schedule RC-C--Loans and Lease Financing Receivables Part I. Loans and Leases _________ Do not deduct the allowance for loan and lease losses from amounts | C415 | <- reported in this schedule. Report total loans and leases, net of unearned _________________________________|________| income. Exclude assets held for trading. | (Column A) | (Column B) | | Consolidated | Domestic | | Bank | Offices | ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou | _____________________________________________________________________________ ____________________ ____________________ 1. Loans secured by real estate ........................................... | 1410 11,754,916 | ////////////////// | 1. a. Construction and land development ................................... | ////////////////// | 1415 433,880 | 1.a. b. Secured by farmland (including farm residential and other | ////////////////// | ////////////////// | improvements) ....................................................... | ////////////////// | 1420 2,172 | 1.b c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// | (1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// | properties and extended under lines of credit ................... | ////////////////// | 1797 2,022,596 | 1.c.(1) (2) All other loans secured by 1-4 family residential properties: | ////////////////// | ////////////////// | (a) Secured by first liens ...................................... | ////////////////// | 5367 4,418,239 | 1.c.(2)(a) (b) Secured by junior liens ..................................... | ////////////////// | 5368 492,952 | 1.c.(2)(b) d. Secured by multifamily (5 or more) residential properties ........... | ////////////////// | 1460 559,373 | 1.d. e. Secured by nonfarm nonresidential properties ........................ | ////////////////// | 1480 3,825,704 | 1.e. 2. Loans to depository institutions: | ////////////////// | ////////////////// | a. To commercial banks in the U.S. ..................................... | ////////////////// | 1505 143,682 | 2.a. (1) To U.S. branches and agencies of foreign banks .................. | 1506 0 | ////////////////// | 2.a.(1) (2) To other commercial banks in the U.S. ........................... | 1507 143,682 | ////////////////// | 2.a.(2) b. To other depository institutions in the U.S. ........................ | 1517 0 | 1517 12,345 | 2.b. c. To banks in foreign countries ....................................... | ////////////////// | 1510 672 | 2.c. (1) To foreign branches of other U.S. banks ......................... | 1513 149 | ////////////////// | 2.c.(1) (2) To other banks in foreign countries ............................. | 1516 523 | ////////////////// | 2.c.(2) 3. Loans to finance agricultural production and other loans to farmers .... | 1590 5,889 | 1590 5,889 | 3. 4. Commercial and industrial loans: | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ....................................... | 1763 12,446,547 | 1763 12,402,858 | 4.a. b. To non-U.S. addressees (domicile) ................................... | 1764 83,521 | 1764 54,074 | 4.b. 5. Acceptances of other banks: | ////////////////// | ////////////////// | a. Of U.S. banks ....................................................... | 1756 0 | 1756 0 | 5.a. b. Of foreign banks .................................................... | 1757 0 | 1757 0 | 5.b. 6. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// | expenditures (i.e., consumer loans) (includes purchased paper) ......... | ////////////////// | 1975 2,217,352 | 6. a. Credit cards and related plans (includes check credit and other | ////////////////// | ////////////////// | revolving credit plans) ............................................. | 2008 161,652 | ////////////////// | 6.a. b. Other (includes single payment, installment, and all student loans).. | 2011 2,055,700 | ////////////////// | 6.b. 7. Loans to foreign governments and official institutions (including | ////////////////// | ////////////////// | foreign central banks) ................................................. | 2081 0 | 2081 0 | 7. 8. Obligations (other than securities and leases) of states and political | ////////////////// | ////////////////// | subdivisions in the U.S. (includes nonrated industrial development | ////////////////// | ////////////////// | obligations) ........................................................... | 2107 167,100 | 2107 167,100 | 8. 9. Other loans ............................................................ | 1563 2,146,172 | ////////////////// | 9. a. Loans for purchasing or carrying securities (secured and unsecured).. | ////////////////// | 1545 156,275 | 9.a. b. All other loans (exclude consumer loans) ............................ | ////////////////// | 1564 1,989,897 | 9.b. 10. Lease financing receivables (net of unearned income) ................... | ////////////////// | 2165 2,300,055 | 10. a. Of U.S. addressees (domicile) ....................................... | 2182 2,300,055 | ////////////////// | 10.a. b. Of non-U.S. addressees (domicile) ................................... | 2183 0 | ////////////////// | 10.b. 11. LESS: Any unearned income on loans reflected in items 1-9 above ........ | 2123 0 | 2123 0 | 11. 12. Total loans and leases, net of unearned income (sum of items 1 through | ////////////////// | ////////////////// | 10 minus item 11) (total of column A must equal Schedule RC, item 4.a).. | 2122 31,278,251 | 2122 31,205,115 | 12. ___________________________________________
16 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page: RC-7 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-C--Continued Part I. Continued ___________________________________________ | (Column A) | (Column B) | | Consolidated | Domestic | Memoranda | Bank | Offices | ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou | _____________________________________________________________________________ ____________________ ____________________ 1. Commercial paper included in Schedule RC-C, part I, above .............. | 1496 0 | 1496 0 | M.1. 2. Loans and leases restructured and in compliance with modified terms | ////////////////// | ////////////////// | (included in Schedule RC-C, part I, above and not reported as past due | ////////////////// | ////////////////// | or nonaccrual in Schedule RC-N, Memorandum item 1): | ////////////////// | ////////////////// | a. Loans secured by real estate: | ////////////////// | ////////////////// | (1) To U.S. addressees (domicile) ................................... | 1687 511 | M.2.a.(1) (2) To non-U.S. addressees (domicile) ............................... | 1689 0 | M.2.a.(2) b. All other loans and all lease financing receivables (exclude loans | ////////////////// | to individuals for household, family, and other personal expenditures)| 8691 0 | M.2.b. c. Commercial and industrial loans to and lease financing receivables | ////////////////// | of non-U.S. addressees (domicile) included in Memorandum item 2.b | ////////////////// | above ............................................................... | 8692 0 | M.2.c. 3. Maturity and repricing data for loans and leases(1) (excluding those | ////////////////// | in nonaccrual status): | ////////////////// | a. Fixed rate loans and leases with a remaining maturity of: | ////////////////// | (1) Three months or less ............................................ | 0348 10,215,575 | M.3.a.(1) (2) Over three months through 12 months ............................. | 0349 369,421 | M.3.a.(2) (3) Over one year through five years ................................ | 0356 3,479,742 | M.3.a.(3) (4) Over five years ................................................. | 0357 5,791,166 | M.3.a.(4) (5) Total fixed rate loans and leases (sum of | ////////////////// | Memorandum items 3.a.(1) through 3.a.(4)) ....................... | 0358 19,855,904 | M.3.a.(5) b. Floating rate loans with a repricing frequency of: | ////////////////// | (1) Quarterly or more frequently .................................... | 4554 8,960,876 | M.3.b.(1) (2) Annually or more frequently, but less frequently than quarterly . | 4555 1,848,295 | M.3.b.(2) (3) Every five years or more frequently, but less frequently than | ////////////////// | annually ........................................................ | 4561 250,031 | M.3.b.(3) (4) Less frequently than every five years ........................... | 4564 12,721 | M.3.b.(4) (5) Total floating rate loans (sum of Memorandum items 3.b.(1) | ////////////////// | through 3.b.(4)) ................................................ | 4567 11,071,923 | M.3.b.(5) c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) | ////////////////// | (must equal the sum of total loans and leases, net, from | ////////////////// | Schedule RC-C, part I, item 12, plus unearned income from | ////////////////// | Schedule RC-C, part I, item 11, minus total nonaccrual loans and | ////////////////// | leases from Schedule RC-N, sum of items 1 through 8, column C) ...... | 1479 30,927,827 | M.3.c. d. FLOATING RATE LOANS WITH A REMAINING MATURITY OF ONE YEAR OR LESS | ////////////////// | (INCLUDED IN MEMORANDUM ITEMS 3.b.(1) THROUGH 3.b.(4) ABOVE)......... | A246 1,543,411 | M.3.d. 4. Loans to finance commercial real estate, construction, and land | ////////////////// | development activities (NOT SECURED BY REAL ESTATE) included in | ////////////////// | Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2) ........... | 2746 271,706 | M.4. 5. Loans and leases held for sale (included in Schedule RC-C, part I, | ////////////////// | above .................................................................. | 5369 0 | M.5. | ////////////////// |_____________________ 6. Adjustable rate closed-end loans secured by first liens on 1-4 family | ////////////////// | RCON Bil Mil Thou | residential properties (included in Schedule RC-C, part I, item | ////////////////// | ___________________| 1.c.(2)(a), column B, page RC-6) ....................................... | ////////////////// | 5370 1.655.898 | M.6. |_________________________________________|
_____________________________ (1) Memorandum item 3 is not applicable to savings banks that must complete supplememtal Schedule RC-J. (2) Exclude loans secured by real estate that are included in Schedule RC-C, part I, item 1, column A. 17 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-7a City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-C--Continued Part II. Loans to Small Businesses and Small Farms Schedule RC-C, Part II is to be reported only with the June Report of Condition. Report the number and amount currently outstanding as of June 30 of business loans with "original amounts" of $1,000,000 or less and farm loans with "original amounts" of $500,000 or less. The following guidelines should be used to determine the "original amount" of a loan: (1) For loans drawn down under lines of credit or loan commitments, the "original amount" of the loan is the size of the line of credit or loan commitment when the line of credit or loan commitment was most recently approved, extended, or renewed prior to the report date. However, if the amount currently outstanding as of the report date exceeds this size, the "original amount" is the amount currently outstanding on the report date. (2) For loan participations and syndications, the "original amount" of the loan participation or syndication is the entire amount of the credit originated by the lead lender. (3) For all other loans, the "original amount" is the total amount of the loan at origination or the amount currently outstanding as of the report date, whichever is larger. Loans to Small Businesses
1. Indicate in the appropriate box at the right whether all or substantially all of the dollar volume of your bank's "Loans secured by nonfarm nonresidential properties" in domestic offices reported in Schedule RC-C, part I, item 1.e, column B, and all or substantially all of the dollar volume of your bank's "Commercial and industrial loans to U.S. addressees" in domestic offices reported in Schedule RC-C, __________ part I, item 4.a, column B, have original amounts of $100,000 or less (If your bank has no loans ________| C415 | <- outstanding in both of these two loan categories, place an "X" in the box marked "NO" and go to | RCON YES NO| Item 5; otherwise, see instructions for further information.).................................. | 6999 | |///| x | 1. ___________________ If YES, complete items 2.a and 2.b below, skip items 3 and 4, and go to item 5. If NO and your bank has loans outstanding in either loan category, skip items 2.a and 2.b, complete items 3 and 4 below, and go to item 5. _____________________ | Number of Loans | 2. Report the total number of loans currently outstanding for each of the |____________________| following Schedule RC-C, part I, loan categories: | RCON |/////////// | a. "Loans secured by nonfarm nonresidential properties" in domestic | ////////////////// | offices reported in Schedule RC-C, part I, item 1.e, column B....... | 5562 N/A | 2.a. b. "Commercial and industrial loans to U.S. addressees" in domestic | ////////////////// | offices reported in Schedule RC-C, part I, item 4.a, column B ...... | 5563 N/A | 2.b. ______________________
___________________________________________ | (Column A) | (Column B) | | | Amount | | | Currently | | Number of Loans | Outstanding | ____________________ ____________________ Dollar Amounts in Thousands | RCON | ///////////| RCON Bil Mil Thou | _____________________________________________________________________________ ____________________ ____________________ 3. Number and amount currently outstanding of "Loans secured by nonfarm | /////////////////////////////////////// | 1. nonresidential properties" in domestic offices reported in Schedule RC-C | /////////////////////////////////////// | 1.a. part I item 1.e, column B (sum of items 3.a through 3.c must be less | /////////////////////////////////////// | or equal to Schedule RC-C, part I, item 1.e, column B): | /////////////////////////////////////// | 1.b a. With original amounts of $100,000 or less ........................... | 5564 1,988 | 5565 76,370 | 3.a. b. With original amounts of more than $100,000 through $250,000 ........ | 5566 2,805 | 5567 332,639 | 3.b. c. With original amounts of more than $250,000 through $1,000,000 ...... | 5568 2,736 | 5569 952,476 | 3.c. 4. Number and amount currently outstanding of "Commercial and industrial | /////////////////////////////////////// | loans to U.S. addressees" in domestic offices reported in Schedule RC-C, | /////////////////////////////////////// | part I, item 4.a, column B (sum of items 4.a through 4.c must be less | /////////////////////////////////////// | than or equal to Schedule RC-C, part I, item 4.a, column B): | /////////////////////////////////////// | a. With original amounts of $100,000 or less ........................... | 5570 11,433 | 5571 337,759 | 4.a. b. With original amounts of more than $100,000 through $250,000 ........ | 5572 2,127 | 5573 228,713 | 4.b. c. With original amounts of more than $250,000 through $1,000,000 ...... | 5574 1,968 | 5575 601,126 | 4.c. ___________________________________________
17a Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-7b City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-C -- Continued Part II. Continued Agricultural Loans to Small Farms 5. Indicate in the appropriate box at the right whether all or substantially all of the dollar volume of your bank's "Loans secured by farmland (including farm residential and other improvements)" in domestic offices reported in Schedule RC-C, part I, item 1.b, column B, and all or substantially all of the dollar volume of your bank's "Loans to finance agricultural production and other loans to farmers" in domestic offices reported in Schedule RC-C, part I, item 3, column B, have original amounts of $100,000 or less (If your bank has no loans outstanding in both of these two YES NO loan categories, place an "X" in the box marked "NO" and do not complete items 7 _______________________ and 8; otherwise, see instructions for further information.)................................... | 6860 | | /// | X | 5. |_____________________| If YES, complete items 6.a and 6.b below and do not complete items 7 and 8. If NO and your bank has loans outstanding in either loan category, skip items 6.a and 6.b and complete items 7 and 8 below.
______________________ | Number of Loans | 6. Report the total number of loans currently outstanding for each of the |____________________| following Schedule RC-C, part I, loan categories: | RCON |//////////// | a. "Loans secured by farmland (including farm residential and other |______| | improvements)" in domestic offices reported in Schedule RC-C, part I, | ////////////////// | item 1.b, column B........................................................ | 5576 N/A | 6.a. b. "Loans to finance agricultural production and other loans to farmers" in | ////////////////// | domestic offices reported in Schedule RC-C, part I, item 3, column B...... | 5577 N/A | 6.b. |____________________|
_____________________________________________ | (Column A) | (Column B) | | | Amount | | | Currently | | Number of Loans | Outstanding | |_____________________|______________________| Dollar Amounts in Thousands | RCON |/////////////| RCON Bil Mil Thou | ________________________________________________________________________________| ______| |_____________________ | 7. Number and amount currently outstanding of "Loans secured by farmland | ////////////////////////////////////////// | (including farm residential and other improvements)" in domestic offices | ////////////////////////////////////////// | reported in Schedule RC-C, part I, item 1.b, column B (sum of items 7.a | ////////////////////////////////////////// | through 7.c must be less than or equal to Schedule RC-C, part I, item 1.b, | ////////////////////////////////////////// | column B): | ////////////////////////////////////////// | a. With original amounts of $100,000 or less............................... | 5578 18 | 5579 292 | 7.a. b. With original amounts of more than $100,000 through $250,000............ | 5580 8 | 5581 850 | 7.b. c. With original amounts of more than $250,000 through $500,000............ | 5582 4 | 5583 1,030 | 7.c. 8. Number and amount currently outstanding of "Loans to finance agricultural | ////////////////////////////////////////// | production and other loans to farmers" in domestic offices reported in | ////////////////////////////////////////// | Schedule RC-C, part I, item 3, column B (sum of items 8.a through 8.c | ////////////////////////////////////////// | must be less than or equal to Schedule RC-C, part I, item 3, column B): | ////////////////////////////////////////// | a. With original amounts of $100,000 or less............................... | 5584 46 | 5585 992 | 8.a. b. With original amounts of more than $100,000 through $250,000............ | 5586 17 | 5587 1,877 | 8.b. c. With original amounts of more than $250,000 through $500,000............ | 5588 4 | 5589 1,054 | 8.c. |_____________________|______________________|
17b
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-8 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________ Schedule RC-D--Trading Assets and Liabilities Schedule RC-D is to be completed only by banks with $1 billion or more in total assets or with $2 billion or more in par/notional amount of off-balance sheet derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e, columns A through D). __________ | C420 | __________________________ Dollar Amounts in Thousands | ////////// Bil Mil Thou| __________________________________________________________________________________________________| ________________________| ASSETS | /////////////////////// | 1. U.S. Treasury securities in domestic offices ................................................ | RCON 3531 0 | 1. 2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage- | /////////////////////// | backed securities) .......................................................................... | RCON 3532 0 | 2. 3. Securities issued by states and political subdivisions in the U.S. in domestic offices ...... | RCON 3533 0 | 3. 4. Mortgage-backed securities (MBS) in domestic offices: | /////////////////////// | a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA ..................... | RCON 3534 0 | 4.a. b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA | /////////////////////// | (include CMOs, REMICs, and stripped MBS) ................................................. | RCON 3535 0 | 4.b. c. All other mortgage-backed securities ......................................................| RCON 3536 0 | 4.c. 5. Other debt securities in domestic offices ................................................... | RCON 3537 0 | 5. 6. Certificates of deposit in domestic offices ................................................. | RCON 3538 0 | 6. 7. Commercial paper in domestic offices ........................................................ | RCON 3539 0 | 7. 8. Bankers acceptances in domestic offices ..................................................... | RCON 3540 0 | 8. 9. Other trading assets in domestic offices .................................................... | RCON 3541 0 | 9. 10. Trading assets in foreign offices ........................................................... | RCFN 3542 0 | 10. 11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// | contracts: | /////////////////////// | a. In domestic offices ...................................................................... | RCON 3543 66,696 | 11.a. b. In foreign offices ....................................................................... | RCFN 3544 4,658 | 11.b. 12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) ........... | RCFD 3545 71,354 | 12. ___________________________ ___________________________ | ///////// Bil Mil Thou | LIABILITIES | ________________________|_ 13. Liability for short positions ............................................................... | RCFD 3546 0 | 13. 14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// | contracts ................................................................................... | RCFD 3547 57,446 | 14. 15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) ...... | RCFD 3548 57,446 | 15. ___________________________
18 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-9 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-E--Deposit Liabilities Part I. Deposits in Domestic Offices __________ | C425 | <- ______________________________________________________ ________ | | Nontransaction | | Transaction Accounts | Accounts | _________________________________________ ____________________ | (Column A) | (Column B) | (Column C) | | Total transaction | Memo: Total | Total | | accounts (including| demand deposits | nontransaction | | total demand | (included in | accounts | | deposits) | column A) | (including MMDAs) | ____________________ ____________________ ____________________ Dollar Amounts in Thousands | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou | __________________________________________________________ ____________________ ____________________ ____________________ Deposits of: | ////////////////// | ////////////////// | ////////////////// | 1. Individuals, partnerships, and corporations .......... | 2201 8,615,650 | 2240 8,158,203 | 2346 22,594,478 | 1. 2. U.S. Government ...................................... | 2202 58,650 | 2280 58,605 | 2520 42,512 | 2. 3. States and political subdivisions in the U.S. ........ | 2203 818,151 | 2290 706,072 | 2530 702,686 | 3. 4. Commercial banks in the U.S. ......................... | 2206 836,005 | 2310 836,005 | 2550 771 | 4. 5. Other depository institutions in the U.S. ............ | 2207 221,571 | 2312 221,571 | 2349 2,968 | 5. 6. Banks in foreign countries ........................... | 2213 18,445 | 2320 18,445 | 2236 0 | 6. 7. Foreign governments and official institutions | ////////////////// | ////////////////// | ////////////////// | (including foreign central banks) .................... | 2216 108 | 2300 108 | 2377 0 | 7. 8. Certified and official checks ........................ | 2330 198,585 | 2330 198,585 | ////////////////// | 8. 9. Total (sum of items 1 through 8) (sum of | ////////////////// | ////////////////// | ////////////////// | columns A and C must equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// | item 13.a) ........................................... | 2215 10,767,165 | 2210 10,197,594 | 2385 23,343,415 | 9. ________________________________________________________________
______________________ Memoranda Dollar Amounts in Thousands | RCON Bil Mil Thou | ____________________________________________________________________________________________________ ____________________ 1. Selected components of total deposits (i.e., sum of item 9, columns A and C): | ////////////////// | a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ......................... | 6835 2,735,425 | M.1.a. b. Total brokered deposits ..................................................................... | 2365 1,636,611 | M.1.b. c. Fully insured brokered deposits (included in Memorandum item 1.b above): | ////////////////// | (1) Issued in denominations of less than $100,000 ........................................... | 2343 2,350 | M.1.c.(1) (2) Issued EITHER in denominations of $100,000 OR in denominations greater than $100,000 | ////////////////// | and participated out by the broker in shares of $100,000 or less ........................ | 2344 1,634,261 | M.1.c.(2) d. MATURITY DATA FOR BROKERED DEPOSITS: | ////////////////// | (1) BROKERED DEPOSITS ISSUED IN DENOMINATIONS OF LESS THAN $100,000 WITH A REMAINING | ////////////////// | MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEM 1.c.(1) ABOVE)................. | A243 171 | M.1.d.(1) (2) BROKERED DEPOSITS ISSUED IN DENOMINATIONS OF $100,000 OR MORE WITH A REMAINING | ////////////////// | MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEM 1.b ABOVE)..................... | A244 509,265 | M.1.d.(2) e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. | ////////////////// | reported in item 3 above which are secured or collateralized as required under state law) ... | 5590 457,587 | M.1.e. 2. Components of total nontransaction accounts (sum of Memoranda items 2.a through 2.d must | ////////////////// | equal item 9, column C above): | ////////////////// | a. Savings deposits: | ////////////////// | (1) Money market deposit accounts (MMDAs) ................................................... | 6810 10,738,339 | M.2.a.(1) (2) Other savings deposits (excludes MMDAs) ................................................. | 0352 2,655,659 | M.2.a.(2) b. Total time deposits of less than $100,000 ................................................... | 6648 7,247,099 | M.2.b. c. Time certificates of deposit of $100,000 or more ............................................ | 6645 2,702,318 | M.2.c. d. Open-account time deposits of $100,000 or more .............................................. | 6646 0 | M.2.d. 3. All NOW accounts (included in column A above) .................................................. | 2398 569,571 | M.3. 4. Not applicable ______________________
19 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-10 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________ Schedule RC-E--Continued Part I. Continued Memoranda (continued) _________________________________________________________________________________________________________________________________
______________________ Dollar Amounts in Thousands | RCON Bil Mil Thou | ___________________________________________________________________________________________________ ____________________ 5. Maturity and repricing data for time deposits of less than $100,000 (sum of | ////////////////// | Memorandum items 5.a.(1) through 5.b.(3) must equal Memorandum item 2.b above):(1) | ////////////////// | a. Fixed rate time deposits of less than $100,000 with a remaining maturity of: | ////////////////// | (1) Three months or less.................................................................... | A225 1,684,248 | M.5.a.(1) (2) Over three months through 12 months..................................................... | A226 3,493,722 | M.5.a.(2) (3) Over one year........................................................................... | A227 2,002,999 | M.5.a.(3) b. Floating rate time deposits of less than $100,000 with a repricing frequency of: | ////////////////// | (1) Quarterly or more frequently............................................................ | A228 66,130 | M.5.b.(1) (2) Annually or more frequently, but less frequently than quarterly......................... | A229 0 | M.5.b.(2) (3) Less frequently than annually........................................................... | A230 0 | M.5.b.(3) c. Floating rate time deposits of less than $100,000 with a remaining maturity of | ////////////////// | one year or less (included in Memorandum items 5.b.(1) through 5.b.(3) above)............... | A231 45,084 | M.5.c. 6. Maturity and repricing data for time deposits of $100,000 or more (i.e., time certificates | ////////////////// | of deposit of $100,000 or more and open-account time deposits of $100,000 or more) | ////////////////// | (sum of Memorandum items 6.a.(1) through 6.b.(4) must equal the sum of Memorandum | ////////////////// | items 2.c and 2.d above):(1) | ////////////////// | a. Fixed rate time deposits of $100,000 or more with a remaining maturity of: | ////////////////// | (1) Three months or less ................................................................... | A232 534,657 | M.6.a.(1) (2) Over three months through 12 months .................................................... | A233 754,429 | M.6.a.(2) (3) Over one year through five years ....................................................... | A234 1,282,541 | M.6.a.(3) (4) Over five years ........................................................................ | A235 36,761 | M.6.a.(4) b. Floating rate time deposits of $100,000 or more with a repricing frequency of: | ////////////////// | (1) Quarterly or more frequently ........................................................... | A236 31,182 | M.6.b.(1) (2) Annually or more frequently, but less frequently than quarterly ........................ | A237 37,950 | M.6.b.(2) (3) Every five years or more frequently, but less frequently than annually ................. | A238 24,798 | M.6.b.(3) (4) Less frequently than every five years .................................................. | A239 0 | M.6.b.(4) c. Floating rate time deposits of $100,000 or more with a remaining maturity of | ////////////////// | one year or less (included in Memorandum items 6.b.(1) through 6.b.(4) above)............... | A240 19,186 | M.6.c. ______________________
_______________ (1) Memorandum items 5 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J. 20 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-11 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-E--Continued Part II. Deposits in Foreign Offices (including Edge and Agreement subsidiaries and IBFs) ______________________ Dollar Amounts in Thousands | RCFN Bil Mil Thou | ___________________________________________________________________________________________________ ____________________ Deposits of: | ////////////////// | 1. Individuals, partnerships, and corporations ................................................... | 2621 1,730,162 | 1. 2. U.S. banks (including IBFs and foreign branches of U.S. banks) ................................ | 2623 0 | 2. 3. Foreign banks (including U.S. branches and agencies of foreign banks, including their IBFs).... | 2625 0 | 3. 4. Foreign governments and official institutions (including foreign central banks) ............... | 2650 0 | 4. 5. Certified and official checks ................................................................. | 2330 0 | 5. 6. All other deposits ............................................................................ | 2668 15,501 | 6. 7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) .......................... | 2200 1,745,663 | 7. Memorandum Dollar Amounts in Thousands |RCFN Bil Mil Thou | ________________________________________________________________________________________________________________________ 1. Time deposits with a remaining maturity of one year or less (included in Part II, item 7 above) |A245 1,745,263 | M.1. ______________________
Schedule RC-F--Other Assets __________ | C430 | <- _________________ ________ Dollar Amounts in Thousands | ////////// Bil Mil Thou | __________________________________________________________________________________________________ _________________________ 1. Income earned, not collected on loans ........................................................ | RCFD 2164 167,538 | 1. 2. Net deferred tax assets(1) ................................................................... | RCFD 2148 0 | 2. 3. Excess residential mortgage servicing fees receivable ........................................ | RCFD 5371 134,288 | 3. 4. Other (itemize and describe amounts that exceed 25% of this item)............................. | RCFD 2168 3,676,812 | 4. _____________ ___________________________ a. | TEXT 3549 | Mortgages held for Resale | RCFD 3549 | 1,858,683 | /////////////////////// | 4.a. _________________________________________________________________| | | | ___________ b. | TEXT 3550 |____________________________________________________| RCFD 3550 | | /////////////////////// | 4.b. ___________ c. | TEXT 3551 |____________________________________________________| RCFD 3551 | | /////////////////////// | 4.c. _____________ ___________________________ 5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) ........................... | RCFD 2160 3,978,638 | 5. ___________________________ Memorandum ___________________________ Dollar Amounts in Thousands | ////////// Bil Mil Thou | __________________________________________________________________________________________________ _________________________ 1. Deferred tax assets disallowed for regulatory capital purposes ............................... | RCFD 5610 0 | M.1. ___________________________
Schedule RC-G--Other Liabilities __________ | C435 | <- _________________ ________ Dollar Amounts in Thousands | ////////// Bil Mil Thou | __________________________________________________________________________________________________ _________________________ 1. a. Interest accrued and unpaid on deposits in domestic offices(2) ............................ | RCON 3645 58,011 | 1.a. b. Other expenses accrued and unpaid (includes accrued income taxes payable) ................. | RCFD 3646 594,954 | 1.b. 2. Net deferred tax liabilities(1) .............................................................. | RCFD 3049 119,644 | 2. 3. Minority interest in consolidated subsidiaries ............................................... | RCFD 3000 0 | 3. 4. Other (itemize and describe amounts that exceed 25% of this item)............................. | RCFD 2938 478,843 | 4. _____________ ___________________________ a. | TEXT 3552 |____________________________________________________| RCFD 3552 | | /////////////////////// | 4.a. ___________ b. | TEXT 3553 |____________________________________________________| RCFD 3553 | | /////////////////////// | 4.b. ___________ c. | TEXT 3554 |____________________________________________________| RCFD 3554 | | /////////////////////// | 4.c. _____________ ___________________________ 5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) ........................... | RCFD 2930 1,251,452 | 5.
____________ (1) See discussion of deferred income taxes in Glossary entry on "income taxes." (2) For savings banks, include "dividends" accrued and unpaid on deposits. 21 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-12 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-H--Selected Balance Sheet Items for Domestic Offices __________ | C440 | <- ____________ ________ | Domestic Offices | ____________________ Dollar Amounts in Thousands | RCON Bil Mil Thou | _____________________________________________________________________________________________________ ____________________ 1. Customers' liability to this bank on acceptances outstanding .................................... | 2155 16,634 | 1. 2. Bank's liability on acceptances executed and outstanding ........................................ | 2920 16,634 | 2. 3. Federal funds sold and securities purchased under agreements to resell .......................... | 1350 17,428 | 3. 4. Federal funds purchased and securities sold under agreements to repurchase ...................... | 2800 4,868,836 | 4. 5. Other borrowed money ............................................................................ | 3190 1,380,694 | 5. EITHER | ////////////////// | 6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 2163 N/A | 6. OR | ////////////////// | 7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs ....................... | 2941 1,669,058 | 7. | ////////////////// | 8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and IBFs) . | 2192 48,946,123 | 8. | ////////////////// | 9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and IBFs)| 3129 42,919,946 | 9. ______________________
Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices. ______________________ | RCON Bil Mil Thou | ____________________ 10. U.S. Treasury securities ....................................................................... | 1779 1,252,796 | 10. 11. U.S. Government agency and corporation obligations (exclude mortgage-backed | ////////////////// | securities) .................................................................................... | 1785 505 | 11. 12. Securities issued by states and political subdivisions in the U.S. ............................. | 1786 159,244 | 12. 13. Mortgage-backed securities (MBS): | ////////////////// | a. Pass-through securities: | ////////////////// | (1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1787 5,684,860 | 13.a.(1) (2) Other pass-through securities ........................................................... | 1869 4 | 13.a.(2) b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): | ////////////////// | (1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1877 0 | 13.b.(1) (2) All other mortgage-backed securities..................................................... | 2253 518 | 13.b.(2) 14. Other domestic debt securities ................................................................. | 3159 812 | 14. 15. Foreign debt securities ........................................................................ | 3160 97,035 | 15. 16. Equity securities: | ////////////////// | a. Investments in mutual funds ................................................................. | 3161 0 | 16.a. b. Other equity securities with readily determinable fair values ............................... | 3162 0 | 16.b. c. All other equity securities ................................................................. | 3169 311,734 | 16.c. 17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) .......... | 3170 7,507,508 | 17. ______________________
Memorandum (to be completed only by banks with IBFs and other "foreign" offices) ______________________ Dollar Amounts in Thousands | RCON Bil Mil Thou | _____________________________________________________________________________________________________ ____________________ EITHER | ////////////////// | 1. Net due from the IBF of the domestic offices of the reporting bank .............................. | 3051 0 | M.1. OR | ////////////////// | 2. Net due to the IBF of the domestic offices of the reporting bank ................................ | 3059 N/A | M.2. ______________________
22
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-13 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-I--Selected Assets and Liabilities of IBFs To be completed only by banks with IBFs and other "foreign" offices. __________ | C445 | <- ____________ ________ Dollar Amounts in Thousands | RCFN Bil Mil Thou | _____________________________________________________________________________________________________ ____________________ 1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) ................. | 2133 0 | 1. 2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, | ////////////////// | column A) ..................................................................................... | 2076 0 | 2. 3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A) .... | 2077 0 | 3. 4. Total IBF liabilities (component of Schedule RC, item 21) ..................................... | 2898 0 | 4. 5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, | ////////////////// | part II, items 2 and 3) ....................................................................... | 2379 0 | 5. 6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) ..... | 2381 0 | 6. ______________________
Schedule RC-K--Quarterly Averages (1) __________ | C455 | <- _________________ ________ Dollar Amounts in Thousands | ///////// Bil Mil Thou | _______________________________________________________________________________________________ _________________________ ASSETS | /////////////////////// | 1. Interest-bearing balances due from depository institutions .............................. | RCFD 3381 10,737 | 1. 2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2) ...... | RCFD 3382 6,349,267 | 2. 3. Securities issued by states and political subdivisions in the U.S.(2) ................... | RCFD 3383 155,938 | 3. 4. a. Other debt securities(2) ............................................................. | RCFD 3647 98,458 | 4.a. b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock). | RCFD 3648 347,675 | 4.b. 5. Federal funds sold and securities purchased under agreements to resell in domestic | /////////////////////// | offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs ............. | RCFD 3365 812,114 | 5. 6. Loans: | ///////////////////// // | a. Loans in domestic offices: | /////////////////////// | (1) Total loans ...................................................................... | RCON 3360 31,884,320 | 6.a.(1) (2) Loans secured by real estate ..................................................... | RCON 3385 14,940,513 | 6.a.(2) (3) Loans to finance agricultural production and other loans to farmers .............. | RCON 3386 5,935 | 6.a.(3) (4) Commercial and industrial loans .................................................. | RCON 3387 12,923,362 | 6.a.(4) (5) Loans to individuals for household, family, and other personal expenditures ...... | RCON 3388 2,224,980 | 6.a.(5) b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs ............ | RCFN 3360 70,458 | 6.b. 7. Trading assets .......................................................................... | RCFD 3401 105,824 | 7. 8. Lease financing receivables (net of unearned income) .................................... | RCFD 3484 2,231,479 | 8. 9. Total assets (4) ........................................................................ | RCFD 3368 52,282,230 | 9. LIABILITIES | /////////////////////// | 10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, | /////////////////////// | and telephone and preauthorized transfer accounts) (exclude demand deposits) ............ | RCON 3485 965,535 | 10. 11. Nontransaction accounts in domestic offices: | /////////////////////// | a. Money market deposit accounts (MMDAs) ................................................ | RCON 3486 9,210,475 | 11.a. b. Other savings deposits ............................................................... | RCON 3487 3,907,216 | 11.b. c. Time certificates of deposit of $100,000 or more ..................................... | RCON 3345 2,653,452 | 11.c. d. All other time deposits .............................................................. | RCON 3469 7,513,443 | 11.d. 12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs.. | RCFN 3404 1,765,593 | 12. 13. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// | offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs ............. | RCFD 3353 6,363,286 | 13. 14. Other borrowed money .................................................................... | RCFD 3355 2,670,145 | 14. ___________________________
_______________ (1) For all items, banks have the option of reporting either (1) an average of daily figures for the quarter, or (2) an average of weekly figures (i.e., the Wednesday of each week of the quarter). (2) Quarterly averages for all debt securities should be based on amortized cost. (3) Quarterly averages for all equity securities should be based on historical cost. (4) The quarterly average for total assets should reflect all debt securities (not held for trading) at amortized cost, equity securities with readily determinable fair values at the lower of cost or fair value, and equity securities without readily determinable fair values at historical cost. 23 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-14 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-L--Off-Balance Sheet Items Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk. __________ | C460 | <- ____________ ________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | ____________________________________________________________________________________________________ ____________________ 1. Unused commitments: | ////////////////// | a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home | ////////////////// | equity lines ............................................................................... | 3814 1,637,875 | 1.a. b. Credit card lines .......................................................................... | 3815 32,940 | 1.b. c. Commercial real estate, construction, and land development: | ////////////////// | (1) Commitments to fund loans secured by real estate ....................................... | 3816 648,369 | 1.c.(1) (2) Commitments to fund loans not secured by real estate ................................... | 6550 383,022 | 1.c.(2) d. Securities underwriting .................................................................... | 3817 0 | 1.d. e. Other unused commitments ................................................................... | 3818 18,626,522 | 1.e. 2. Financial standby letters of credit and foreign office guarantees ............................. | 3819 2,337,268 | 2. ___________________________ a. Amount of financial standby letters of credit conveyed to others | RCFD 3820 | 158,029 | ////////////////// | 2.a. ___________________________ 3. Performance standby letters of credit and foreign office guarantees ........................... | 3821 175,703 | 3. a. Amount of performance standby letters of credit conveyed to | ////////////////// | ___________________________ others .......................................................... | RCFD 3822 | 12,580 | ////////////////// | 3.a. ___________________________ 4. Commercial and similar letters of credit ...................................................... | 3411 176,335 | 4. 5. Participations in acceptances (as described in the instructions) conveyed to others by | ////////////////// | the reporting bank ............................................................................ | 3428 16,524 | 5. 6. Participations in acceptances (as described in the instructions) acquired by the reporting | ////////////////// | (nonaccepting) bank ........................................................................... | 3429 7,409 | 6. 7. Securities borrowed ........................................................................... | 3432 0 | 7. 8. Securities lent (including customers' securities lent where the customer is indemnified | ////////////////// | against loss by the reporting bank) ........................................................... | 3433 0 | 8. 9. Loans transferred (i.e., sold or swapped) with recourse that have been treated as sold for | ////////////////// | Call Report purposes: | ////////////////// | a. FNMA and FHLMC residential mortgage loan pools: | ////////////////// | (1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3650 246,244 | 9.a.(1) (2) Amount of recourse exposure on these mortgages as of the report date ................... | 3651 246,244 | 9.a.(2) b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: | ////////////////// | (1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3652 33,550 | 9.b.(1) (2) Amount of recourse exposure on these mortgages as of the report date ................... | 3653 33,550 | 9.b.(2) c. Farmer Mac agricultural mortgage loan pools: | ////////////////// | (1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3654 0 | 9.c.(1) (2) Amount of recourse exposure on these mortgages as of the report date ................... | 3655 0 | 9.c.(2) d. Small business obligations transferred with recourse under Section 208 of the | ////////////////// | Riegle Community Development and Regulatory Improvement Act of 1994: | ////////////////// | (1) Outstanding principal balance of small business obligations transferred | ////////////////// | as of the report date................................................................... | A249 0 | 9.d.(1) (2) Amount of retained recourse on these obligations as of the report date.................. | A250 0 | 9.d.(2) 10. When-issued securities: | ////////////////// | a. Gross commitments to purchase .............................................................. | 3434 0 | 10.a. b. Gross commitments to sell .................................................................. | 3435 0 | 10.b. 11. Spot foreign exchange contracts ............................................................... | 8765 622,366 | 11. 12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives) (itemize and | ////////////////// | describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") | 3430 0 | 12. a. | TEXT 3555 |______________________________________________________| RCFD 3555 | | ////////////////// | 12.a. b. | TEXT 3556 |______________________________________________________| RCFD 3556 | | ////////////////// | 12.b. ___________ c. | TEXT 3557 |______________________________________________________| RCFD 3557 | | ////////////////// | 12.c. _____________ d. | TEXT 3558 |______________________________________________________| RCFD 3558 | | ////////////////// | 12.d. _____________ _______________________________________________ Dollar Amounts in Thousands RCFD Bil Mil Thou _________________________________________________________________________________________________________________________ 13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and | ////////////////// | describe each component of this item over 25% of Schedule RC,item 28,"Total equity capital") | 5591 0 | 13. _____________ __________________________ a. | TEXT 5592 |______________________________________________________| RCFD 5592 | | ////////////////// | 13.a. ___________ b. | TEXT 5593 |______________________________________________________| RCFD 5593 | | ////////////////// | 13.b. ___________ c. | TEXT 5594 |______________________________________________________| RCFD 5594 | | ////////////////// | 13.c. _____________ d. | TEXT 5595 |______________________________________________________| RCFD 5595 | | ////////////////// | 13.d. _____________ ________________________________________________
24
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-15 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| Schedule RC-L -- Continued _____________ | C461 | <- _________________________________________ ____________________________|___________| | (Column A) | (Column B) | (Column C) | (Column D) | | Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other| | Contracts | Contracts | Contracts | Contracts | |___________________|____________________|____________________|____________________| Dollar Amounts in Thousands |Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou | _______________________________________________________________________________________________________________________| | Off-balance Sheet Derivatives | ///////////////// | ////////////////// | ////////////////// | ////////////////// | | Position Indicators | ///////////////// | ////////////////// | ////////////////// | ////////////////// | ____________________________________| ///////////////// | ////////////////// | ////////////////// | ////////////////// | 14. Gross amounts (e.g., notional | ///////////////// | ////////////////// | ////////////////// | ////////////////// | amounts) (for each column, sum of | ///////////////// | ////////////////// | ////////////////// | ////////////////// | items 14.a through 14.e must equal | ///////////////// | ////////////////// | ////////////////// | ////////////////// | sum of items 15, 16.a, and 16.b): |___________________|____________________|___________________ |____________________| a. Futures contracts ............. | 1,229,392 | 0 | 0 | 36,486 | 14.a. |___________________|____________________|____________________|____________________| | RCFD 8693 | RCFD 8694 | RCFD 8695 | RCFD 8696 | |___________________|____________________|____________________|____________________| b. Forward contracts ............. | 2,576,500 | 1,931,682 | 0 | 21,832 | 14.b. |___________________|____________________|____________________|____________________| | RCFD 8697 | RCFD 8698 | RCFD 8699 | RCFD 8700 | |___________________|____________________|____________________|____________________| c. Exchange-traded option contracts:| ///////////////// | ////////////////// | ////////////////// | ////////////////// | |___________________|____________________|____________________|____________________| (1) Written options .......... | 0 | 0 | 0 | 0 | 14.c.(1) |___________________|____________________|____________________|____________________| | RCFD 8701 | RCFD 8702 | RCFD 8703 | RCFD 8704 | |___________________|____________________|____________________|____________________| (2) Purchased options ........ | 450,000 | 0 | 0 | 2,206 | 14.c.(2) |___________________|____________________|____________________|____________________| | RCFD 8705 | RCFD 8706 | RCFD 8707 | RCFD 8708 | |___________________|____________________|____________________|____________________| d. Over-the-counter option contracts: | //////////////////| ///////////////// | ///////////////// | //////////////// | (1) Written options .......... | 1,324,980 | 3,887 | 0 | 0 | 14.d.(1) |___________________|____________________|____________________|____________________| | RCFD 8709 | RCFD 8710 | RCFD 8711 | RCFD 8712 | |___________________|____________________|____________________|____________________| (2) Purchased options ........ | 10,131,934 | 3,887 | 0 | 0 | 14.d.(2) |___________________|____________________|____________________|____________________| | RCFD 8713 | RCFD 8714 | RCFD 8715 | RCFD 8716 | |___________________|____________________|____________________|____________________| e. Swaps ............................ | 19,502,262 | 0 | 0 | 0 | 14.e. |___________________|____________________|____________________|____________________| | RCFD 3450 | RCFD 3826 | RCFD 8719 | RCFD 8720 | |___________________|____________________|____________________|____________________| 15. Total gross notional amount of | ///////////////// | ////////////////// | ////////////////// | ////////////////// | derivative contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// | trading ......................... | 3,386,305 | 1,939,456 | 0 | 2,206 | 15. |___________________|____________________|____________________|____________________| | RCFD A126 | RFD A127 | RCFD 8723 | RCFD 8724 | |___________________|____________________|____________________|____________________| 16. Total gross notional amount of | ///////////////// | //////////////// | ///////////////// | ////////////////// | derivative contracts held for | ///////////////// | ///////////////// | ///////////////// | ////////////////// | purposes other than trading: | ///////////////// | ///////////////// | ///////////////// | ////////////////// | |___________________|____________________|____________________|____________________| a. Contracts marked to market ... | 4,202,500 | 0 | 0 | 36,486 | 16.a. |___________________|____________________|____________________|____________________| | RCFD 8725 | RCFD 8726 | RCF 8727 | RCFD 8728 | |___________________|____________________|____________________|____________________| b. Contracts not marked to market | 27,626,263 | 0 | 0 | 21,832 | 16.b. |___________________|____________________|____________________|____________________| | RCFD 8729 | RCFD 8730 | RFD 8731 | RCFD 8732 | |___________________|____________________|____________________|____________________|
25
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-16 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| Schedule RC-L -- Continued _________________________________________ _________________________________________ | (Column A) | (Column B) | (Column C) | (Column D) | Dollar Amounts in Thousands | Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other| ___________________________________| Contracts | Contracts | Contracts | Contracts | | Off-balance Sheet Derivatives |___________________|____________________|____________________|____________________| | Position Indicators |RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | |_____________________________________________________________________________________________________________________| 17. Gross fair values of | ///////////////// | ////////////////// | ////////////////// | ////////////////// | derivative contracts: | ///////////////// | ////////////////// | ////////////////// | ////////////////// | a. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// | trading: | ///////////////// | ////////////////// | ////////////////// | ////////////////// | (1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// | fair value ................... | 8733 29,782 | 8734 41,523 | 8735 0 | 8736 58 | 17.a.(1) (2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// | fair value ................... | 8737 20,932 | 8738 36,511 | 8739 0 | 8740 0 | 17.a.(2) b. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// | purposes other than | ///////////////// | ////////////////// | ////////////////// | ////////////////// | trading that are marked | ///////////////// | ////////////////// | ////////////////// | ////////////////// | to market: | ///////////////// | ////////////////// | ////////////////// | ////////////////// | (1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// | fair value ................... | 8741 524 | 8742 0 | 8743 0 | 8744 1,452 | 17.b.(1) (2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// | fair value ................... | 8745 2,834 | 8746 0 | 8747 0 | 8748 0 | 17.b.(2) c. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// | purposes other than | ///////////////// | ////////////////// | ////////////////// | ////////////////// | trading that are not | ///////////////// | ////////////////// | ////////////////// | ////////////////// | marked to market: | ///////////////// | ////////////////// | ////////////////// | ////////////////// | (1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// | fair value .................. | 8749 64,085 | 8750 0 | 8751 0 | 8752 100 | 17.c.(1) (2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// | fair value ................... | 8753 111,703 | 8754 0 | 8755 0 | 8756 0 | 17.c.(2) |__________________________________________________________________________________|
______________________ Memoranda Dollar Amounts in Thousands | RCFD Bil Mil Thou | _________________________________________________________________________________________________________________________ 1. -2. Not applicable | ////////////////// | 3. Unused commitments with an original maturity exceeding one year that are reported in | ////////////////// | Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments | ////////////////// | that are fee paid or otherwise legally binding) ................................................ | 3833 16,829,602 | M.3. a. Participations in commitments with an original maturity | ////////////////// | exceeding one year conveyed to others ................................|RCFD 3834 | 1,310,691 | ////////////////// | M.3.a. ________________________ 4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// | Standby letters of credit and foreign office guarantees (both financial and performance) issued | ////////////////// | to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above .............. | 3377 341,139 | M.4. 5. Installment loans to individuals for household, family, and other personal expenditures that | ////////////////// | have been securitized and sold without recourse (with servicing retained), amounts outstanding | ////////////////// | by type of loan: | ////////////////// | a. Loans to purchase private passenger automobiles (to be completed for the | ////////////////// | September report only)....................................................................... | 2741 N/A | M.5.a. b. Credit cards and related plans (TO BE COMPLETED QUARTERLY)................................... | 2742 0 | M.5.b. c. All other consumer installment credit (including mobile home loans)(to be completed for the | ////////////////// | September report only........................................................................ | 2743 N/A | M.5.c |____________________|
26
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-17 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| _____________ | C465 | _________|___________| Schedule RC-M--Memoranda | | Dollar Amounts in Thousands | RCFD Bil Mil Thou | ______________________________________________________________________________________________________|____________________| 1. Extensions of credit by the reporting bank to its executive officers, directors, principal | ////////////////// | shareholders, and their related interests as of the report date: | ////////////////// | a. Aggregate amount of all extensions of credit to all executive officers, directors, principal | ////////////////// | shareholders and their related interests ..................................................... | 6164 605,294 | 1.a. b. Number of executive officers, directors, and principal shareholders to whom the amount of all | ////////////////// | extensions of credit by the reporting bank (including extensions of credit to | ////////////////// | related interests) equals or exceeds the lesser of $500,000 or 5 percent Number | ////////////////// | ___________________________| ////////////////// | of total capital as defined for this purpose in agency regulations. | RCFD 6165 | 24 | ////////////////// | ___________________________| ////////////////// | 1.b. 2. Federal funds sold and securities purchased under agreements to resell with U.S. branches | ////////////////// | and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b) .................... | 3405 0 | 2. 3. Not applicable. | ////////////////// | 4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others | ////////////////// | (include both retained servicing and purchased servicing): | ////////////////// | a. Mortgages serviced under a GNMA contract ...................................................... | 5500 28,855,729 | 4.a. b. Mortgages serviced under a FHLMC contract: | ////////////////// | (1) Serviced with recourse to servicer ........................................................ | 5501 55,604 | 4.b.(1) (2) Serviced without recourse to servicer ..................................................... | 5502 32,340,522 | 4.b.(2) c. Mortgages serviced under a FNMA contract: | ////////////////// | (1) Serviced under a regular option contract .................................................. | 5503 190,640 | 4.c.(1) (2) Serviced under a special option contract .................................................. | 5504 38,282,672 | 4.c.(2) d. Mortgages serviced under other servicing contracts ............................................ | 5505 8,508,320 | 4.d. 5. To be completed only by banks with $1 billion or more in total assets: | ////////////////// | Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must | ////////////////// | equal Schedule RC, item 9): | ////////////////// | a. U.S. addressees (domicile) .................................................................... | 2103 16,297 | 5.a. b. Non-U.S. addressees (domicile) ................................................................ | 2104 337 | 5.b. 6. Intangible assets: | ////////////////// | a. Mortgage servicing rights ..................................................................... | 3164 1,483,959 | 6.a. b. Other identifiable intangible assets: | ////////////////// | (1) Purchased credit card relationships ....................................................... | 5506 0 | 6.b.(1) (2) All other identifiable intangible assets .................................................. | 5507 126,463 | 6.b.(2) c. Goodwill ...................................................................................... | 3163 672,992 | 6.c. d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) ........................ | 2143 2,283,414 | 6.d. e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or | ////////////////// | are otherwise qualifying for regulatory capital purposes ...................................... | 6442 0 | 6.e. 7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to | ////////////////// | redeem the debt ...................................................................................| 3295 75,000 | 7. ______________________
- ------------ (1) Do not report federal funds sold and securities purchased under agreements to resell with other commercial banks in the U.S. in this item. 27
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-18 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| Schedule RC-M--Continued ________________________ Dollar Amounts in Thousands | Bil Mil Thou| _____________________________________________________________________________________________ |_______________________| 8. a. Other real estate owned: | /////////////////////// | (1) Direct and indirect investments in real estate ventures ......................... | RCFD 5372 0 | 8.a.(1) (2) All other real estate owned: | /////////////////////// | (a) Construction and land development in domestic offices ....................... | RCON 5508 4,537 | 8.a.(2)(a) (b) Farmland in domestic offices ................................................ | RCON 5509 0 | 8.a.(2)(b) (c) 1-4 family residential properties in domestic offices ....................... | RCON 5510 8,067 | 8.a.(2)(c) (d) Multifamily (5 or more) residential properties in domestic offices .......... | RCON 5511 740 | 8.a.(2)(d) (e) Nonfarm nonresidential properties in domestic offices ....................... | RCON 5512 21,202 | 8.a.(2)(e) (f) In foreign offices .......................................................... | RCFN 5513 0 | 8.a.(2)(f) (3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) ....... | RCFD 2150 34,546 | 8.a.(3) b. Investments in unconsolidated subsidiaries and associated companies: | /////////////////////// | (1) Direct and indirect investments in real estate ventures ......................... | RCFD 5374 0 | 8.b.(1) (2) All other investments in unconsolidated subsidiaries and associated companies ... | RCFD 5375 0 | 8.b.(2) (3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) ....... | RCFD 2130 0 | 8.b.(3) c. Total assets of unconsolidated subsidiaries and associated companies ................ | RCFD 5376 0 | 8.c. 9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, | /////////////////////// | item 23, "Perpetual preferred stock and related surplus" ............................... | RCFD 3778 125,000 | 9. 10. Mutual fund and annuity sales in domestic offices during the quarter (include | /////////////////////// | proprietary, private label, and third party products): | /////////////////////// | a. Money market funds .................................................................. | RCON 6441 55,245 | 10.a. b. Equity securities funds ............................................................. | RCON 8427 108,359 | 10.b. c. Debt securities funds ............................................................... | RCON 8428 13,250 | 10.c. d. Other mutual funds .................................................................. | RCON 8429 0 | 10.d. e. Annuities ........................................................................... | RCON 8430 102,292 | 10.e. f. Sales of proprietary mutual funds and annuities (included in items 10.a through | /////////////////////// | 10.e. above) ........................................................................... | RCON 8784 150,100 | 10.f. _________________________
_________________________________________________________________________________________________________________________________ | | ______________________ |Memorandum Dollar Amounts in Thousands | RCFD Bil Mil Thou | | _________________________________________________________________________________________________ ____________________ |1. Interbank holdings of capital instruments (to be completed for the December report only): | ////////////////// | | | a. Reciprocal holdings of banking organizations' capital instruments ........................ | 3836 N/A | M.1.a. | | b. Nonreciprocal holdings of banking organizations' capital instruments ..................... | 3837 N/A | M.1.b. | ______________________ | | _________________________________________________________________________________________________________________________________
28 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-19 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-N--Past Due and Nonaccrual Loans, Leases, and Other Assets The FFIEC regards the information reported in __________ all of Memorandum item 1, in items 1 through 10, | C470 | <- column A, and in Memorandum items 2 through 4, ______________________________________________________ ________ column A, as confidential. | (Column A) | (Column B) | (Column C) | | Past due | Past due 90 | Nonaccrual | | 30 through 89 | days or more | | | days and still | and still | | | accruing | accruing | | ____________________ ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ______________________________________________________ ____________________ ____________________ ____________________ 1. Loans secured by real estate: | ////////////////// | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ................ | 1245 | 1246 71,390 | 1247 223,962 | 1.a. b. To non-U.S. addressees (domicile) ............ | 1248 | 1249 0 | 1250 0 | 1.b. 2. Loans to depository institutions and | ///// | ////////////////// | ////////////////// | acceptances of other banks: | ///// | ////////////////// | ////////////////// | a. To U.S. banks and other U.S. depository | ///// | ////////////////// | ////////////////// | institutions ................................. | 5377 | 5378 0 | 5379 0 | 2.a. b. To foreign banks ............................. | 5380 | 5381 0 | 5382 0 | 2.b. 3. Loans to finance agricultural production and | ///// | ////////////////// | ////////////////// | other loans to farmers .......................... | 1594 | 1597 385 | 1583 531 | 3. 4. Commercial and industrial loans: | ///// | ////////////////// | ////////////////// | a. To U.S. addressees (domicile) ................ | 1251 | 1252 11,945 | 1253 108,334 | 4.a. b. To non-U.S. addressees (domicile) ............ | 1254 | 1255 0 | 1256 0 | 4.b. 5. Loans to individuals for household, family, and | ///// | ////////////////// | ////////////////// | other personal expenditures: | ///// | ////////////////// | ///////////////// | a. Credit cards and related plans ............... | 5383 | 5384 1,187 | 5385 669 | 5.a. b. Other (includes single payment, installment, | ///// | ////////////////// | ////////////////// | and all student loans) ....................... | 5386 | 5387 22,600 | 5388 8,465 | 5.b. 6. Loans to foreign governments and official | ///// | ////////////////// | ////////////////// | institutions .................................... | 5389 | 5390 0 | 5391 0 | 6. 7. All other loans ................................. | 5459 | 5460 14,909 | 5461 1,919 | 7. 8. Lease financing receivables: | ///// | ////////////////// | ////////////////// | a. Of U.S. addressees (domicile) ................ | 1257 | 1258 95 | 1259 6,544 | 8.a. b. Of non-U.S. addressees (domicile) ............ | 1271 | 1272 0 | 1791 0 | 8.b. 9. Debt securities and other assets (exclude other | ///// | ////////////////// | ////////////////// | real estate owned and other repossessed assets) . | 3505 | 3506 0 | 3507 85,778 | 9. ________________________________________________________________
==================================================================================================================================== Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in items 1 through 8. ________________________________________________________________ | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ____________________ ____________________ ____________________ 10. Loans and leases reported in items 1 | | | | through 8 above which are wholly or partially | ///// | ////////////////// | ////////////////// | guaranteed by the U.S. Government ............... | 5612 | 5613 18,447 | 5614 21,415 | 10. a. Guaranteed portion of loans and leases | ///// | ////////////////// | ////////////////// | included in item 10 above .................... | 5615 | 5616 18,250 | 5617 16,952 | 10.a. ________________________________________________________________
29 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-20 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-N--Continued __________ | C473 | <- ______________________________________________________ ________ | (Column A) | (Column B) | (Column C) | | Past due | Past due 90 | Nonaccrual | | 30 through 89 | days or more | | | days and still | and still | | Memoranda | accruing | accruing | | ____________________ ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ______________________________________________________ ____________________ ____________________ ____________________ 1. Restructured loans and leases included in | ///// | /////////////////// | ///////////////// | Schedule RC-N, items 1 through 8, above (and not | ///// | //// | | reported in Schedule RC-C, part I, Memorandum | ///// | //// | | item 2) ......................................... | 1658 | 1659 | | M.1. 2. Loans to finance commercial real estate, | ///// | //// | | construction, and land development activities | ///// | //// | | (not secured by real estate) included in | ///// | /////////////////// | ///////////////// | Schedule RC-N, items 4 and 7, above ............. | 6558 | 6559 826 | 6560 7,043 | M.2. |____________________|____________________ |___________________ 3. Loans secured by real estate in domestic offices | RCON | RCON Bil Mil Thou | RCON Bil Mil Thou| |___________________ |____________________ ____________________ (included in Schedule RC-N, item 1, above): | ///// | ////////////////// | ////////////////// | a. Construction and land development ............ | 2759 | 2769 1,100 | 3492 26,422 | M.3.a. b. Secured by farmland .......................... | 3493 | 3494 161 | 3495 0 | M.3.b. c. Secured by 1-4 family residential properties: | ///// | ////////////////// | ////////////////// | (1) Revolving, open-end loans secured by | ///// | ////////////////// | ////////////////// | 1-4 family residential properties and | ///// | ////////////////// | ////////////////// | extended under lines of credit ........... | 5398 | 5399 5,114 | 5400 17,374 | M.3.c.(1) (2) All other loans secured by 1-4 family | ///// | ////////////////// | ////////////////// | residential properties ................... | 5401 | 5402 58,079 | 5403 75,430 | M.3.c.(2) d. Secured by multifamily (5 or more) | ///// | ////////////////// | ////////////////// | residential properties ....................... | 3499 | 3500 521 | 3501 12,491 | M.3.d. e. Secured by nonfarm nonresidential properties . | 3502 | 3503 6,415 | 3504 92,245 | M.3.e. ________________________________________________________________
___________________________________________ | (Column A) | (Column B) | | Past due 30 | Past due 90 | | through 89 days | days or more | ____________________ ____________________ | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ____________________ ____________________ 4. Interest rate, foreign exchange rate, and other | ///// | ////////////////// | commodity and equity contracts: | ///// | ////////////////// | a. Book value of amounts carried as assets ...... | 3522 | 3528 0 | M.4.a. b. Replacement cost of contracts with a | ///// | ////////////////// | positive replacement cost .................... | 3529 | 3530 0 | M.4.b. ___________________________________________
30 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-21 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
______________________ Schedule RC-O--Other Data for Deposit Insurance Assessments | C475 | |____________________| Dollar Amounts in Thousands | RCON Bil Mil Thou | ___________________________________________________________________________________________________ ____________________ 1. Unposted debits (see instructions): | ////////////////// | a. Actual amount of all unposted debits ...................................................... | 0030 216 | 1.a. OR | ////////////////// | b. Separate amount of unposted debits: | ////////////////// | (1) Actual amount of unposted debits to demand deposits ................................... | 0031 N/A | 1.b.(1) (2) Actual amount of unposted debits to time and savings deposits(1) ...................... | 0032 N/A | 1.b.(2) 2. Unposted credits (see instructions): | ////////////////// | a. Actual amount of all unposted credits ..................................................... | 3510 216 | 2.a. OR | ////////////////// | b. Separate amount of unposted credits: | ////////////////// | (1) Actual amount of unposted credits to demand deposits .................................. | 3512 N/A | 2.b.(1) (2) Actual amount of unposted credits to time and savings deposits(1) ..................... | 3514 N/A | 2.b.(2) 3. Uninvested trust funds (cash) held in bank's own trust department (not included in total | ////////////////// | deposits in domestic offices) ................................................................ | 3520 101,763 | 3. 4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in | ////////////////// | Puerto Rico and U.S. territories and possessions (not included in total deposits): | ////////////////// | a. Demand deposits of consolidated subsidiaries .............................................. | 2211 206,111 | 4.a. b. Time and savings deposits(1) of consolidated subsidiaries ................................. | 2351 20,089 | 4.b. c. Interest accrued and unpaid on deposits of consolidated subsidiaries ...................... | 5514 8 | 4.c. 5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: | ////////////////// | a. Demand deposits in insured branches (included in Schedule RC-E, Part II) .................. | 2229 0 | 5.a. b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II) ..... | 2383 0 | 5.b. c. Interest accrued and unpaid on deposits in insured branches | ////////////////// | (included in Schedule RC-G, item 1.b) ..................................................... | 5515 0 | 5.c. ______________________ ______________________ Item 6 is not applicable to state nonmember banks that have not been authorized by the | ////////////////// | Federal Reserve to act as pass-through correspondents. | ////////////////// | 6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on | ////////////////// | behalf of its respondent depository institutions that are also reflected as deposit liabilities| ////////////////// | of the reporting bank: | ////////////////// | a. Amount reflected in demand deposits (included in Schedule RC-E, item 4 or 5, column B)..... | 2314 0 | 6.a. b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, | ////////////////// | item 4 or 5, column A or C, but not column B).............................................. | 2315 0 | 6.b. 7. Unamortized premiums and discounts on time and savings deposits:(1) | ////////////////// | a. Unamortized premiums ...................................................................... | 5516 769 | 7.a. b. Unamortized discounts ..................................................................... | 5517 0 | 7.b. ______________________ _______________________________________________________________________________________________________________________________ | | |8. To be completed by banks with "Oakar deposits." | ______________________ | Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) of | ////////////////// | | | the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s)) .... | 5518 2,188,589 | 8. | ______________________ | | _______________________________________________________________________________________________________________________________ ______________________ 9. Deposits in lifeline accounts ................................................................ | 5596 ///////////// | 9. 10. Benefit-responsive "Depository Institution Investment Contracts" (included in total | ////////////////// | deposits in domestic offices) ................................................................ | 8432 0 | 10. ______________________ ______________ (1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction accounts and all transaction accounts other than demand deposits.
31 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-22 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-O--Continued Dollar Amounts in Thousands | RCON Bil Mil Thou | __________________________________________________________________________________________________ ____________________ 11. Adjustments to demand deposits in domestic offices reported in Schedule RC-E for | ////////////////// | certain reciprocal demand balances: | ////////////////// | a. Amount by which demand deposits would be reduced if reciprocal demand balances | ////////////////// | between the reporting bank and savings associations were reported on a net basis | ////////////////// | rather than a gross basis in Schedule RC-E .................................................. | 8785 0 | 11.a. b. Amount by which demand deposits would be increased if reciprocal demand balances | ////////////////// | between the reporting bank and U.S. branches and agencies of foreign banks were | ////////////////// | reported on a gross basis rather than a net basis in Schedule RC-E .......................... | A181 0 | 11.b. c. Amount by which demand deposits would be reduced if cash items in process of | ////////////////// | collection were included in the calculation of net reciprocal demand balances between | ////////////////// | the reporting bank and the domestic offices of U.S. banks and savings associations | ////////////////// | in Schedule RC-E ............................................................................ | A182 0 | 11.c. ____________________ Memoranda (to be completed each quarter except as noted) Dollar Amounts in Thousands | RCON Bil Mil Thou | _____________________________________________________________________ ___________________________|____________________| 1. Total deposits in domestic offices of the bank (sum of Memorandum it ems 1.a. (1) and | ////////////////// | 1.b.(1) must equal Schedule RC, item 13.a): | ////////////////// | a. Deposits accounts of $100,000 or less: | ////////////////// | (1) amount of deposit accounts of $100,000 or less ....................................... | 2702 19,755,631 | M.1.a.(1) (2) Number of deposit accounts of $100,000 or less (to be Number | ////////////////// | completed for the June report only) .............................|RCON 3779 3,742,107 | ////////////////// | M.1.a.(2) b. Deposit accounts of more than $100,000: | ////////////////// | (1) Amount of deposit accounts of more than $100,000 ..................................... | 2710 14,354,949 | M.1.b.(1) Number | ////////////////// | (2) Number of deposit accounts of more than $100,000 ................|RCON 2722 27,062 | ////////////////// | M.1.b.(2) 2. Estimated amount of uninsured deposits in domestic offices of the bank: a. An estimate of your bank's uninsured deposits can be determined by mutiplying the number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2) above by $100,000 and subtracting the result from the amount of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(1) above. Indicate in the appropriate box at the right whether your bank has a method or procedure for determining a better estimate of uninsured deposits than the ____________YES_______NO__ estimated described above .................................................................. | 6861| |///| x | M.2.a. ____________________ b. If the box marked YES has been checked, report the estimate of uninsured deposits |RCON Bil Mil Thou| determined by using your bank's method or procedure .................................... | 5597 N/A | M.2.b. _____________________________________________________________________________________________________________________________ | C477 | <- Person to whom questions about the Reports of Condition and Income should be directed: __________ PAMELA S. FLYNN, VICE PRESIDENT (401) 278-5194 ___________________________________________________________________________________ ______________________________________ Name and Title (TEXT 8901) Area code and phone number (TEXT 8902)
32 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-23 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-R--Regulatory Capital This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC, item 12, for June 30, 1995, must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets of less than $1 billion must complete items 1 through 3 below or Schedule RC-R in its entirety, depending on their response to item 1 below. ____________ | C480 | <- 1. Test for determining the extent to which Schedule RC-R must be completed. To be completed _____|__________| only by banks with total assets of less than $1 billion. Indicate in the appropriate | YES NO | box at the right whether the bank has total capital greater than or equal to eight percent___________ _______________ of adjusted total assets ............................................................... | RCFD 6056 | |////| | 1. _____________________________ For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions). If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked NO has been checked, the bank must complete the remainder of this schedule. A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight percent or that the bank is not in compliance with the risk-based capital guidelines.
___________________________________________ | (Column A) | (Column B) | |Subordinated Debt(1)| Other | _________________________________________________________________ | and Intermediate | Limited- | | NOTE: All banks are required to complete items 2 and 3 below | | Term Preferred | Life Capital | | See optional worksheet for items 3.a through 3.f. | | Stock | Instruments | |________________________________________________________________| ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ______________________________________________________________________________ ____________________ ____________________ 2. Subordinated debt(1) and other limited-life capital instruments (original | | | weighted average maturity of at least five years) with a remaining | | | maturity of: | | | a. One year or less ...................................................... | 3780 25,737 | 3786 0 | 2.a. b. Over one year through two years ....................................... | 3781 737 | 3787 0 | 2.b. c. Over two years through three years .................................... | 3782 10,745 | 3788 0 | 2.c. d. Over three years through four years ................................... | 3783 0 | 3789 0 | 2.d. e. Over four years through five years .................................... | 3784 0 | 3790 0 | 2.e. f. Over five years ....................................................... | 3785 1,101,000 | 3791 0 | 2.f. 3. Amounts used in calculating regulatory capital ratios (report amounts | ////////////////// | ////////////////// | determined by the bank for its own internal regulatory capital analyses): | ////////////////// | RCFD Bil Mil Thou | a. Tier 1 capital......................................................... | ////////////////// | 8274 3,590,367 | 3.a. b. Tier 2 capital......................................................... | ////////////////// | 8275 1,755,646 | 3.b. c. Total risk-based capital............................................... | ////////////////// | 3792 5,346,013 | 3.c. d. Excess allowance for loan and lease losses............................. | ////////////////// | A222 297,250 | 3.d. e. Risk-weighted assets................................................... | ////////////////// | A223 45,718,856 | 3.e. f. "Average total assets"................................................. | ////////////////// | A224 51,482,775 | 3.f. ___________________________________________ | (Column A) | (Column B) | Items 4-9 and Memoranda items 1 and 2 are to be completed | Assets | Credit Equiv- | by banks that answered NO to item 1 above and | Recorded | alent Amount | by banks with total assets of $1 billion or more. | on the | of Off-Balance | | Balance Sheet | Sheet Items(2) | ____________________ ____________________ | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ____________________ ____________________ 4. Assets and credit equivalent amounts of off-balance sheet items assigned | | | to the Zero percent risk category: | ////////////////// | ////////////////// | a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// | (1) Securities issued by, other claims on, and claims unconditionally | ////////////////// | ////////////////// | guaranteed by, the U.S. Government and its agencies and other | ////////////////// | ////////////////// | OECD central governments .......................................... | 3794 2,147,648 | ////////////////// | 4.a.(1) (2) All other ......................................................... | 3795 1,115,265 | ////////////////// | 4.a.(2) b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3796 101,488 | 4.b. ___________________________________________
_____ (1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7. (2) Do not report in column B the risk-weighted amount of assets reported in column A. 33 Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 Address: ONE MONARCH PLACE Page RC-24 City, State Zip: SPRINGFIELD, MA 01102 FDIC Certificate No.: |0|2|4|9|9| ___________
Schedule RC-R--Continued ___________________________________________ | (Column A) | (Column B) | | Assets | Credit Equiv- | | Recorded | alent Amount | | on the | of Off-Balance | | Balance Sheet | Sheet Items(1) | ____________________ ____________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | ______________________________________________________________________________ ____________________ ____________________ 5. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// | assigned to the 20 percent risk category: | ////////////////// | ////////////////// | a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// | (1) Claims conditionally guaranteed by the U.S. Government and its | ////////////////// | ////////////////// | agencies and other OECD central governments ....................... | 3798 714,375 | ////////////////// | 5.a.(1) (2) Claims collateralized by securities issued by the U.S. Govern- | ////////////////// | ////////////////// | ment and its agencies and other OECD central governments; by | ////////////////// | ////////////////// | securities issued by U.S. Government-sponsored agencies; and | ////////////////// | ////////////////// | by cash on deposit ................................................ | 3799 0 | ////////////////// | 5.a.(2) (3) All other ......................................................... | 3800 8,774,345 | ////////////////// | 5.a.(3) b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3801 791,065 | 5.b. 6. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// | assigned to the 50 percent risk category: | ////////////////// | ////////////////// | a. Assets recorded on the balance sheet .................................. | 3802 5,265,173 | ////////////////// | 6.a. b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3803 409,680 | 6.b. 7. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// | assigned to the 100 percent risk category: | ////////////////// | ////////////////// | a. Assets recorded on the balance sheet .................................. | 3804 31,799,547 | ////////////////// | 7.a. b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3805 10,122,631 | 7.b. 8. On-balance sheet asset values excluded from the calculation of the | ////////////////// | ////////////////// | risk-based capital ratio(2) .............................................. | 3806 83,713 | ////////////////// | 8. 9. Total assets recorded on the balance sheet (sum of | ////////////////// | ////////////////// | items 4.a, 5.a, 6.a, 7.a, and 8, column A)(must equal Schedule RC, | ////////////////// | ////////////////// | item 12 plus items 4.b and 4.c) .......................................... | 3807 49,900,066 | ////////////////// | 9. ___________________________________________ Memoranda ______________________ Dollar Amounts in Thousands | RCFD Bil Mil Thou | __________________________________________________________________________________________________ ____________________ 1.Current credit exposure across all off-balance sheet derivative contracts covered by the | ///////////////// | risked-based capital standards .................................................................| 8764 135,825| M.1. |___________________| _____________________________________________________________________ | With a remaining maturity of | |____________________________________________________________________| | (Column A) | (Column B) | (Column C) | | | | | | One year or less | Over one year | Over five years | | | through five years | | |______________________|______________________|______________________| |RCFD Tril Bil Mil Thou|RCFD Tril Bil Mil Thou|RCFD Tril Bil Mil Thou| |______________________|______________________|______________________| 2. Notional principal amounts of | | | | off-balance sheet derivative contracts(3):| | | | a. Interest rate contracts ................. | 3809 8,320,956 | 8766 18,597,686 | 8767 801,055 | M.2.a. b. Foreign exchange contracts .............. | 3812 1,578,420 | 8769 101,907 | 8770 0 | M.2.b. c. Gold contracts .......................... | 8771 15,291 | 8772 0 | 8773 0 | M.2.c. d. Other precious metals contracts ......... | 8774 8,748 | 8775 0 | 8776 0 | M.2.d. e. Other commodity contracts ............... | 8777 0 | 8778 0 | 8779 0 | M.2.e. f. Equity derivative contracts ............. | A000 0 | A001 0 | A002 0 | M.2.f. |____________________________________________________________________|
_________________ 1) Do not report in column B the risk-weighted amount of assets reported in column A. 2) Include the difference between the fair value and the amortized cost of available-for-sale securities in item 8 and report the amortized cost of these securities in items 4 through 7 above. Item 8 also includes on-balance sheet asset values (or portions thereof) of off-balance sheet interest rate, foreign exchange rate, and commodity contracts and those contracts (e.g., futures contracts) not subject to risk-based capital. Exclude from item 8 margin accounts and accrued receivables as well as any portion of the allowance for loan and lease losses in excess of the amount that may be included in Tier 2 capital. 3) Exclude foreign exchange contracts with an original maturity of 14 days or less and all futures contracts. 34 Legal Title of Bank: FLEET NATIONAL BANK Address: ONE MONARCH PLACE Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031 City, State, Zip: SPRINGFIELD, MA 01102 Page RC-25 FDIC Certificate No.: 02499
Optional Narrative Statement Concerning the Amounts Reported in the Reports of Condition and Income at close of business on June 30, 1996 FLEET NATIONAL BANK SPRINGFIELD , MASSACHUSETTS - ------------------- ----------------- ------------- Legal Title of Bank City State The management of the reporting bank may, if it wishes, submit a brief narrative statement on the amounts reported in the Reports of Condition and Income. This optional statement will be made available to the public, along with the publicly available data in the Reports of Condition and Income, in response to any request for individual bank report data. However, the information reported in column A and in all of Memorandum item 1 of Schedule RC-N is regarded as confidential and will not be released to the public. BANKS CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks choosing not to make a statement may check the "No comment" box below and should make no entries of any kind in the space provided for the narrative statement; i.e., DO NOT enter in this space such phrases as "No statement," "Not applicable," "N/A," "No comment," and "None." The optional statement must be entered on this sheet. The statement should not exceed 100 words. Further, regardless of the number of words, the statement must not exceed 750 characters, including punctuation, indentation, and standard spacing between words and sentences. If any submission should exceed 750 characters, as defined, it will be truncated at 750 characters with no notice to the submitting bank and the truncated statement will appear as the bank's statement both on agency computerized records and in computer-file releases to the public. All information furnished by the bank in the narrative statement must be accurate and not misleading. Appropriate efforts shall be taken by the submitting bank to ensure the statement's accuracy. The statement must be signed, in the space provided below, by a senior officer of the bank who thereby attests to its accuracy. If, subsequent to the original submission, material changes are submitted for the data reported in the Reports of Condition and Income, the existing narrative statement will be deleted from the files, and from disclosure; the bank, at its option, may replace it with a statement, under signature, appropriate to the amended data. The optional narrative statement will appear in agency records and in release to the public exactly as submitted (or amended as described in the preceding paragraph) by the management of the bank (except for the truncation of statements exceeding the 750-character limit described above). THE STATEMENT WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE REPORTING BANK. __________________________________________________________________________ No comment |X| (RCON 6979) | c471 | C472 |<- BANK MANAGEMENT STATEMENT (please type or print clearly): (TEXT 6980) /s/__Gero DeRosa_______________________________ ___7/25/96________ Signature of Executive Officer of Bank Date of Signature 35 -----END PRIVACY-ENHANCED MESSAGE-----