AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 31, 2003
REGISTRATION NO. 333-108519
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
LEUCADIA NATIONAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-------------------
NEW YORK 6331 13-2615557
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
315 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10010
(212) 460-1900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-------------------
JOSEPH A. ORLANDO
LEUCADIA NATIONAL CORPORATION
315 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10010
(212) 460-1900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
-------------------
COPY TO:
ANDREA A. BERNSTEIN, ESQ.
MALCOLM E. LANDAU, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153-0119
(212) 310-8000
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this registration
statement and satisfaction (or waiver) of the conditions to the offer described
herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, 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, 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(d)
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. [ ]
-------------------
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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
________________________________________________________________________________
THE INFORMATION IN THIS PROSPECTUS MAY CHANGE OR BE AMENDED. WE MAY NOT COMPLETE
THIS OFFER AND ISSUE THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION TO WHICH THIS PROSPECTUS RELATES IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND WE ARE
NOT SOLICITING OFFERS TO BUY THESE SECURITIES, IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
OFFER BY LEUCADIA NATIONAL CORPORATION
TO
EXCHANGE 0.4242 OF A COMMON SHARE
OF
LEUCADIA NATIONAL CORPORATION
AND
ONE CONTINGENT SALE RIGHT
FOR
EACH OUTSTANDING SHARE OF COMMON STOCK
OF
WILTEL COMMUNICATIONS GROUP, INC.
THIS OFFER, AND YOUR RIGHT TO WITHDRAW SHARES OF WILTEL COMMON STOCK YOU
TENDER INTO THIS OFFER, WILL EXPIRE AT 5:00 PM, NEW YORK CITY TIME, ON
WEDNESDAY, NOVEMBER 5, 2003, UNLESS WE EXTEND THIS OFFER.
We are offering to exchange 0.4242 of a common share of Leucadia National
Corporation ('Leucadia') and one contingent sale right (a 'CSR') for each
outstanding share of common stock of WilTel Communications Group, Inc.
('WilTel'), on the terms and conditions contained in this prospectus and in the
related letter of transmittal.
This offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 21, 2003, by and among Leucadia, Wrangler Acquisition Corp.
('Merger Sub') and WilTel (the 'Merger Agreement'). The board of directors of
WilTel, based upon the recommendation of a special committee comprised of
independent directors, has (i) adopted the Merger Agreement and approved the
transactions contemplated thereby, including this offer, and (ii) recommended
that holders of WilTel common stock accept this offer and tender their WilTel
common stock to Leucadia pursuant to this offer.
Leucadia currently beneficially owns 47.4% of the outstanding shares of
WilTel common stock. This offer is conditioned on (1) there being validly
tendered and not properly withdrawn prior to the expiration of the offer at
least a majority of the shares of WilTel common stock not beneficially owned by
Leucadia or its affiliates, calculated as described in this prospectus, and (2)
the other conditions described in this prospectus under 'The Offer -- Conditions
of the Offer'.
After completion of the offer, Leucadia will have WilTel complete a merger
with Merger Sub, in which each outstanding share of WilTel common stock (except
for shares beneficially owned directly or indirectly by Leucadia for its own
account) will be converted into the right to receive Leucadia common shares and
a CSR at the same exchange ratio as used in the offer, subject to dissenters'
rights to the extent applicable under Nevada law. If after the completion of
this offer we beneficially own more than 90% of the outstanding shares of WilTel
common stock, we may effect this merger without the approval of WilTel
stockholders, as permitted under Nevada law.
Leucadia is not asking WilTel stockholders for a proxy at this time and
WilTel stockholders are requested not to send a proxy. Any solicitation of
proxies will be made pursuant to separate proxy solicitation materials complying
with the requirements of Section 14(a) of the Securities Exchange Act of 1934.
SEE 'RISK FACTORS' BEGINNING ON PAGE 18 FOR A DISCUSSION OF ISSUES THAT YOU
SHOULD CONSIDER IN DETERMINING WHETHER TO TENDER YOUR SHARES INTO THIS OFFER.
Leucadia common shares are traded on the New York Stock Exchange and Pacific
Stock Exchange under the symbol 'LUK'. WilTel common stock is traded on NASDAQ
under the symbol 'WTEL'.
-------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN THIS
OFFER AND THE SUBSEQUENT MERGER OR DETERMINED IF THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------
September 3, 2003 (as amended on October 31, 2003)
TABLE OF CONTENTS
PAGE
----
Questions and Answers about the Offer....................... i
Summary..................................................... 1
Introduction............................................ 1
Information about Leucadia and WilTel................... 1
The Offer............................................... 2
Selected Historical Financial Data of Leucadia and WilTel... 6
Unaudited Comparative Per Share Data........................ 9
Comparative Per Share Market Data........................... 10
Unaudited Pro Forma Consolidated Financial Information...... 10
Risk Factors................................................ 18
Risks Related to the Offer and the Subsequent Merger.... 18
Risks Related to Leucadia and Leucadia Common Shares.... 19
Forward-Looking Information................................. 21
Background and Reasons for the Offer and Subsequent
Merger.................................................... 22
Leucadia's Initial Investments in WilTel................ 22
This Offer.............................................. 22
Additional Factors for Consideration by WilTel
Stockholders........................................... 24
Recommendation of WilTel's Board of Directors............... 27
Comparative Per Share Market Price and Dividend
Information............................................... 28
Leucadia................................................ 28
WilTel.................................................. 28
The Offer................................................... 30
Exchange of Shares of WilTel Common Stock............... 30
Timing of the Offer..................................... 30
Extension, Termination and Amendment.................... 30
Procedure for Tendering Shares.......................... 31
Withdrawal Rights....................................... 32
Subsequent Offering Period.............................. 33
Effect of a Tender of Shares............................ 33
Delivery of Leucadia Common Shares...................... 34
Cash Instead of Fractional Leucadia Common Shares....... 34
Conditions of the Offer................................. 35
Minimum Condition................................... 35
Registration Statement Effectiveness Condition...... 35
Antitrust Condition................................. 35
Regulatory Condition................................ 35
NYSE Listing Condition.............................. 35
Tax Opinion Condition............................... 35
Additional Conditions............................... 35
Material U.S. Federal Income Tax Consequences........... 37
Tax Consolidation with WilTel; WilTel Tax Attributes.... 39
Transferability of Leucadia Common Shares............... 40
Approval of the Merger.................................. 40
Appraisal (Dissenters') Rights.......................... 40
Description of the CSRs..................................... 43
Certain Legal Matters and Regulatory Approvals.............. 45
Regulatory Approvals.................................... 45
Non-U.S. Approvals...................................... 46
State Takeover Laws..................................... 46
Stockholder Litigation.................................. 46
PAGE
----
Certain Effects of the Offer................................ 47
Effects on the Market; Exchange Act Registration........ 47
Financing of the Offer.................................. 48
Conduct of WilTel if the Offer is Not Completed......... 48
Plans and Proposals for WilTel Following Completion of
the Merger............................................. 48
Relationships with WilTel............................... 48
Accounting Treatment.................................... 48
Fees and Expenses....................................... 49
Interests of Certain Persons in the Offer and Subsequent
Merger.................................................... 49
Interests of Management and the WilTel Board............ 49
Certain Agreements between Leucadia and WilTel.......... 50
The Merger Agreement........................................ 53
The Offer............................................... 53
The Merger.............................................. 53
Generally........................................... 53
The Completion of the Merger........................ 54
Manner and Basis of Converting Shares of WilTel
Common Stock in the Merger......................... 54
Basis of Converting Shares of Common Stock of Merger
Sub in the Merger.................................. 55
Representations and Warranties.......................... 55
Conduct of WilTel's Business Prior to Completion of the
Merger................................................. 55
Conduct of Leucadia's Business Prior to Completion of
the Merger............................................. 55
Reasonable Best Efforts to Complete the Transaction..... 56
Limitation on WilTel's Ability to Change its
Recommendation and Consider Other Takeover Proposals... 56
Conditions to the Offer................................. 57
Conditions to the Merger................................ 57
Termination of the Merger Agreement..................... 58
Expenses................................................ 59
Amendments or Supplements to the Merger Agreement....... 59
Waivers................................................. 59
Comparison of Rights of Holders of WilTel Common Stock and
Holders of Leucadia Common Shares......................... 59
Where You Can Find More Information......................... 64
Legal Matters............................................... 65
Experts..................................................... 65
Miscellaneous............................................... 66
Annex A -- Agreement and Plan of Merger..................... A-1
Annex B -- Information Concerning the Directors and
Executive Officers of Leucadia and Merger Sub............. B-1
Annex C -- Sections 92A.300 - 92A.500 of the Nevada Revised
Statutes -- Rights of Dissenting Owners, as amended, and
Effective on October 1, 2003.............................. C-1
As permitted under the rules of the Securities and Exchange Commission (the
'SEC'), this prospectus incorporates important business and financial
information about Leucadia and WilTel that is contained in documents filed with
the SEC but that is not included in or delivered with this prospectus. You may
obtain copies of these documents, without charge, from the website maintained by
the SEC at www.sec.gov, as well as other sources. See 'Where You Can Find More
Information'.
You may also obtain copies of these documents, without charge, upon written
or oral request to our information agent, Innisfree M&A Incorporated (banks and
brokers call collect at (212) 750-5833; stockholders call toll-free at (888)
750-5834). To obtain timely delivery of copies of these documents, you should
request them no later than five business days prior to the expiration of this
offer. UNLESS THIS OFFER IS EXTENDED, THE LATEST YOU SHOULD REQUEST COPIES OF
THESE DOCUMENTS IS WEDNESDAY, OCTOBER 29, 2003.
Except as otherwise specifically noted, 'we,' 'our,' 'us' and similar words
in this prospectus refer to Leucadia. 'Merger Sub' refers to Wrangler
Acquisition Corp., a subsidiary of Leucadia. We refer to WilTel Communications
Group, Inc. as 'WilTel'.
In 'Questions and Answers About the Offer' below and in the 'Summary'
beginning on page 1, we highlight selected information from this prospectus but
we have not included all of the information that may be important to you. To
better understand the offer and the subsequent merger, and for a more complete
description of their legal terms, you should carefully read this entire
prospectus, including the section entitled 'Risk Factors' and the annexes
hereto, as well as the documents we have incorporated by reference into this
prospectus. See 'Where You Can Find More Information'.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information different from that contained or incorporated by reference in this
prospectus. The information contained in this prospectus and the documents
incorporated by reference are accurate only as of their respective dates,
regardless of the time of delivery of this prospectus. Our business, financial
condition, results of operations and prospects may have changed since those
dates.
QUESTIONS AND ANSWERS ABOUT THE OFFER
Q. WHO IS OFFERING TO BUY YOUR SHARES?
A. Our name is Leucadia National Corporation. We are a holding company engaged
in a variety of businesses, including telecommunications (principally through
our 47.4% interest in WilTel), banking and lending (principally through
American Investment Bank, N.A.), manufacturing (through our Plastics
Division), real estate activities, winery operations, development of a copper
mine (through our 72.8% interest in MK Gold Company) and property and
casualty reinsurance. We currently have equity interests of more than 5% in
the following domestic public companies: AmeriKing, Inc. (6.8%), Carmike
Cinemas, Inc. (11%), GFSI Holdings, Inc. (6.9%), The FINOVA Group, Inc.
(indirectly 25% through our interest in Berkadia), HomeFed Corporation
(30.3%), Jackson Products, Inc. (8.8%), Jordan Industries, Inc. (10.1%),
ParkerVision, Inc. (7.3%) and WilTel (47.4%).
Q. WHY ARE WE MAKING THE OFFER?
A. We currently own 23,700,000 shares of WilTel common stock, representing 47.4%
of the outstanding shares of WilTel common stock. We are making the offer for
the purpose of acquiring all of the outstanding shares of WilTel common stock
that we do not own.
Q. WHAT WILL YOU RECEIVE IN EXCHANGE FOR THE SHARES OF WILTEL COMMON STOCK THAT
YOU TENDER INTO THE OFFER?
A. If we complete the offer, you will receive 0.4242 of a Leucadia common share
and one contingent sale right, or CSR, in exchange for each share of WilTel
common stock that you validly tender into the offer. We will not issue
fractional Leucadia common shares. Instead, any WilTel stockholder entitled
to receive a fractional Leucadia common share will receive a cash payment in
respect of his fractional interest. See 'The Offer -- Cash Instead of
Fractional Leucadia Common Shares'. In general, CSRs are uncertificated,
non-transferable rights that give WilTel stockholders the opportunity to
receive additional Leucadia common shares if Leucadia completes the sale of
all or substantially all of WilTel's assets or more than 50% of WilTel's
capital stock after the closing of the merger and prior to the maturity of
the CSRs, and the net proceeds to Leucadia from that sale exceed the
valuation accorded to WilTel's equity in this offer. If Leucadia does not
consummate such a sale, the CSRs will become worthless, and Leucadia
currently has no intention to engage in any such sale. See 'Description of
the CSRs'.
Q. WHAT DOES THE BOARD OF DIRECTORS OF WILTEL THINK OF THE OFFER AND THE MERGER?
A. On August 21, 2003, the board of directors of WilTel, based upon the
recommendation of a Special Committee comprised of independent directors,
approved the Merger Agreement, this offer and the merger. The board of
directors of WilTel also has recommended that WilTel stockholders tender
their shares of WilTel common stock in this offer. The board of directors of
WilTel has received a written opinion, dated August 21, 2003, from J.P.
Morgan Securities Inc. ('JPMorgan'), the financial advisor to the Special
Committee, to the effect that, as of the date of the opinion and based on and
subject to the matters described in the opinion, the consideration to be
received by WilTel stockholders (other than Leucadia and its affiliates) in
the offer and merger is fair, from a financial point of view, to such
stockholders. We have been advised that JPMorgan did not assign any monetary
value to the CSRs in rendering its opinion.
A summary of JPMorgan's opinion, including the analyses performed, the bases
and methods of arriving at the opinion, and a description of JPMorgan's
investigation and assumptions, is provided in WilTel's
Solicitation/Recommendation Statement on Schedule 14D-9 (the 'WilTel
Recommendation Statement'). The full text of JPMorgan's written opinion,
which describes the assumptions made, procedures followed, matters considered
and limitations on the review undertaken, is attached to the WilTel
Recommendation Statement. For more information about
i
the position of the board of directors of WilTel on the offer, see the WilTel
Recommendation Statement. Please see 'Where You Can Find More Information' to
learn how to get a copy of the WilTel Recommendation Statement.
Q. WHAT ARE THE POTENTIAL BENEFITS OF THIS OFFER TO WILTEL STOCKHOLDERS?
A. We believe that this offer should be attractive to WilTel stockholders for
the reasons described elsewhere in this prospectus as well as for the
following reasons:
based on the closing prices of Leucadia common shares ($38.65) and shares
of WilTel common stock ($10.60) on May 14, 2003, the last trading day
preceding the date of our first announcement of our intention to acquire
the outstanding shares of WilTel common stock that we do not already own,
the exchange ratio represented a 54.7% premium over the price of shares of
WilTel common stock. On September 2, 2003, the last trading date prior to
the printing of this prospectus for which this information was practicably
available, the closing prices of a Leucadia common share and a share of
WilTel common stock, as reported in the consolidated transaction reporting
system, were $38.21 and $16.11, respectively (based on those share prices,
the exchange ratio represented a 0.61% premium over the price of shares of
WilTel common stock). We urge you to obtain current market quotations;
you will have the opportunity to hold shares in a larger combined company
which we believe will have greater access to capital to pursue strategic
growth opportunities than would WilTel on a stand-alone basis;
you will have the opportunity to continue to share in WilTel's future
performance through your ownership of Leucadia common shares, as well as an
opportunity to similarly share in the performance of our other investments
(which will afford you the benefit of a more diversified investment);
you will have an opportunity to receive any dividends that may be paid on
Leucadia common shares that have a record date after you receive those
shares. In 2002 and 2001, Leucadia paid annual cash dividends of $0.25 per
common share. The payment of dividends in the future is not guaranteed and
the payment and timing thereof will be subject to the discretion of our
board of directors and depend upon general business conditions, legal and
contractual restrictions on the payment of dividends and other factors that
our board of directors may deem to be relevant; and
WilTel and its subsidiaries currently have significant tax loss
carry-forwards and other attractive tax attributes. Leucadia believes that
its greater financial resources will provide greater opportunity for future
investments, unlike WilTel, the cash resources of which are severely
restricted and which is likely to need to raise capital to meet the debt
service requirements of its existing debt in 2005. Moreover, Leucadia
believes that it will be more likely to generate taxable income through its
diversified interests than will WilTel, the operations of which are
concentrated in one industry. Consequently, Leucadia believes that
completion of the offer will increase the likelihood that WilTel's
significant tax attributes will be utilized for the benefit of
shareholders.
Q. WHAT ARE SOME OF THE OTHER FACTORS YOU SHOULD CONSIDER IN DECIDING WHETHER TO
TENDER YOUR SHARES OF WILTEL COMMON STOCK?
A. In addition to the factors described elsewhere in this prospectus, you should
consider the following:
as a Leucadia shareholder, your interest in the performance and prospects
of WilTel would only be indirect and in proportion to your share ownership
in Leucadia. You, therefore, will not realize the same financial benefits
of future appreciation in the value of WilTel, if any, that you may realize
if the offer and the merger were not completed and you remained a WilTel
stockholder;
an investment in a company of WilTel's size may be associated with greater
risk and a greater potential for gain than an investment in a more
diversified company like Leucadia.
ii
On the other hand, as a stockholder in a diversified company like Leucadia,
your investment will be exposed to risks and events that are likely to have
little or no effect on WilTel; and
similar to WilTel's articles of incorporation, Leucadia's certificate of
incorporation contains provisions which generally restrict the ability of a
person or entity from accumulating 5% or more of the outstanding Leucadia
common shares and the ability of persons or entities now owning 5% or more
of the Leucadia common shares from acquiring additional Leucadia common
shares.
We describe various factors WilTel stockholders should consider in deciding
whether to tender their shares under 'Risk Factors' and 'Background and Reasons
for the Offer and Subsequent Merger -- Additional Factors for Consideration by
WilTel Stockholders'.
Q: HOW DO YOU PARTICIPATE IN THE OFFER?
A: You are urged to read this entire prospectus carefully, and to consider how
the offer and the merger affect you. Then, if you wish to tender your shares
of WilTel common stock, you should complete and sign the enclosed letter of
transmittal and return it with your stock certificates to the exchange agent
and depository at its address set forth on the back cover page of this
prospectus, or, if you hold your shares in 'street name' through a broker,
ask your broker to tender your shares. Please read this prospectus carefully
for more information about procedures for tendering your shares, the timing
of the offer, extensions of the offer period and your rights to withdraw your
shares from the offer prior to the expiration date.
Q. WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
A. The offer is conditioned upon, among other things, satisfaction of the
condition that there must be validly tendered, and not properly withdrawn,
prior to the expiration of the offer, at least a majority of the outstanding
shares of WilTel common stock not owned by Leucadia or its affiliates. In
connection with the reorganization of WilTel's predecessor company, 1,000,000
shares of WilTel common stock were issued to a securities holder channeling
fund for purposes of providing for the settlement of certain claims against
WilTel's predecessor company. If none of the shares of WilTel common stock
currently held by such fund are validly tendered in accordance with the terms
of the offer, then the shares of WilTel common stock in such fund will be
deemed not outstanding for purposes of this minimum condition. In addition to
this 'minimum condition', the following conditions must also be met as of the
expiration of the offer:
the registration statement, of which this prospectus is a part, shall have
been declared effective by the SEC;
all required approvals of the Federal Communications Commission and state
regulatory authorities for the change of control of WilTel shall have been
received;
the absence of any events or changes that, individually or in the
aggregate, have had or would reasonably be expected to have a material
adverse effect on WilTel; and
the absence of legal impediments to the offer or the subsequent merger.
These conditions and other conditions to the offer are discussed in this
prospectus under 'The Offer -- Conditions of the Offer'.
Q: IS IT POSSIBLE THAT NO LEUCADIA COMMON SHARES WILL ULTIMATELY BE ISSUED
PURSUANT TO THE CSRS?
A. Yes. The payment of additional Leucadia common shares in connection with the
CSRs will be made only if, and to the extent that, (i) Leucadia sells all or
substantially all of WilTel's assets or more than 50% of WilTel's capital
stock prior to October 15, 2004, or (ii) Leucadia or WilTel enter into a
definitive agreement with an unaffiliated third party providing for a sale of
all or substantially all of the assets of WilTel or more than 50% of WilTel's
capital stock prior to August 21, 2004 (in which case the CSRs will expire
upon the later of October 15, 2004 and the completion or abandonment of such
sale), and in each case, the net proceeds to Leucadia from such sale exceed
the valuation accorded to WilTel's equity in the offer and merger. For a more
detailed description of the CSRs, please see 'Description of the CSRs'. If
Leucadia or
iii
WilTel do not ultimately consummate such a sale of WilTel's assets or capital
stock prior to the maturity of the CSRs, the CSRs will become worthless, and
Leucadia currently has no intention of engaging in any such sale.
Q. IF YOU DECIDE NOT TO TENDER, HOW WILL THIS AFFECT THE OFFER AND YOUR SHARES
OF WILTEL COMMON STOCK?
A. We will not acquire any shares of WilTel common stock in the offer unless the
minimum condition is satisfied. As of the date of this prospectus, 26,300,000
of the outstanding shares of WilTel common stock were not owned by Leucadia
and its affiliates. Your failure to tender your shares of WilTel common stock
will reduce the likelihood that we will receive tenders of a sufficient
number of shares of WilTel common stock to be able to complete the offer.
The offer is the first step in our acquisition of WilTel and is intended to
facilitate the acquisition of all outstanding shares of WilTel common stock.
After completion of the offer we will have WilTel complete a merger with
Merger Sub. The purpose of the merger would be to acquire all outstanding
shares of WilTel common stock not exchanged in the offer. In the merger, each
outstanding share of WilTel common stock (except for shares beneficially
owned directly or indirectly by Leucadia for its own account) would be
converted into the right to receive Leucadia common shares and a CSR at the
same exchange ratio used in the offer, subject to dissenters' rights to the
extent applicable under Nevada law. If the merger takes place, the only
difference to you between tendering your WilTel common stock in the offer and
not tendering your WilTel common stock is that you will receive Leucadia
common shares and CSRs earlier if you tender your shares in the offer and
such earlier receipt may entitle you to receive dividends on Leucadia common
shares if any are declared with a record date after completion of the offer
and prior to the completion of the merger. An earlier tender of your shares
of WilTel common stock may, however, help to ensure the satisfaction of the
minimum condition and the completion of the offer and merger.
Q. HOW LONG WILL IT TAKE TO COMPLETE THE OFFER AND THE SUBSEQUENT MERGER?
A. We hope to complete the offer in the fourth quarter of 2003. The offer is
currently scheduled to expire on November 5, 2003. However, we may extend the
offer (i) if the conditions to the offer have not been satisfied as of the
offer's scheduled expiration or (ii) if we are required to extend the offer
pursuant to the SEC's tender offer rules. After completion of the offer,
Leucadia will have WilTel complete a merger with Merger Sub, in which each
outstanding share of WilTel common stock (except for shares beneficially
owned directly or indirectly by Leucadia for its own account) will be
converted into the right to receive Leucadia common shares and a CSR at the
same exchange ratio as used in the offer, subject to dissenters' rights to
the extent applicable under Nevada law. If after the completion of the offer
we beneficially own more than 90% of the outstanding shares of WilTel common
stock, we may effect this merger without the approval of WilTel stockholders,
as permitted under Nevada law. If we complete the offer but own less than 90%
of the WilTel common stock, then the merger will require WilTel stockholder
approval, and we will complete the merger shortly after a meeting of WilTel
stockholders to approve the merger, which approval will be assured by our
vote as the then majority stockholder of WilTel.
Q. DO YOU HAVE TO VOTE TO APPROVE THE OFFER OR THE MERGER?
A. Because we are extending the offer directly to WilTel stockholders, WilTel
stockholders are not being asked to vote to approve the offer. A vote by
WilTel stockholders, however, may be required to approve the merger following
the successful completion of the offer. If we own less than 90% of the
outstanding shares of WilTel common stock following the completion of the
offer and you hold shares of WilTel common stock as of the record date for
voting on the merger, then you may be entitled to vote on the merger. If a
vote by WilTel stockholders on the merger is required under applicable law,
WilTel stockholders will receive information materials at that time. Please
note that because the offer can only be completed if we acquire a majority of
the outstanding shares of WilTel common stock, once the offer is completed,
iv
approval of the merger can be accomplished by the vote of Leucadia, as the
then majority stockholder of WilTel, without the additional votes of any
other WilTel stockholder. If we own 90% or more of the outstanding common
stock of WilTel following completion of the offer, the merger can be
accomplished without any vote under applicable law.
Q. WHAT PERCENTAGE OF THE LEUCADIA COMMON SHARES WILL CURRENT WILTEL
STOCKHOLDERS OWN AFTER THE COMPLETION OF THE OFFER AND SUBSEQUENT MERGER?
A. We anticipate that the completion of the offer and subsequent merger will
result in the exchange of the outstanding shares of WilTel common stock that
we do not currently own into approximately 15.8% of the Leucadia common
shares outstanding at the conclusion of the transactions, without regard to
Leucadia stock options or warrants to purchase Leucadia common shares, and
15.5% on a fully-diluted basis. In general, this assumes that:
11,156,460 Leucadia common shares would be issued in the offer and the
subsequent merger;
59,636,692 Leucadia common shares are outstanding before giving effect to
the completion of the offer and the subsequent merger;
no Leucadia common shares are issued pursuant to the CSRs; and
no WilTel stockholders exercise appraisal (dissenters') rights.
Q. WILL YOU BE TAXED ON THE LEUCADIA COMMON SHARES THAT YOU RECEIVE?
A. Based on the opinion of Weil, Gotshal & Manges LLP, the offer and merger
should qualify as a reorganization for U.S. federal income tax purposes.
Assuming reorganization treatment, you would not recognize gain or loss upon
the receipt of Leucadia common shares in the offer or merger (including the
receipt of Leucadia common shares under CSRs), other than any gain or loss
recognized on the receipt of cash instead of fractional shares. In addition,
if you receive any Leucadia common shares under CSRs, a portion of those
shares may be treated as interest income to you (depending on certain
factors). Moreover, certain other tax consequences resulting from your right
to the receipt of additional Leucadia common shares pursuant to the CSRs are
unclear. Accordingly, the actual tax consequences to you will depend on your
particular facts and circumstances, other facts and circumstances surrounding
the offer and merger (for example, the timing of any payments under the CSRs)
and the manner in which the Internal Revenue Service, or IRS, applies the law
in this particular situation. See 'The Offer -- Material U.S. Federal Income
Tax Consequences'.
Q. HAVE ANY LAWSUITS BEEN FILED IN CONNECTION WITH THE OFFER?
A. Yes. Individual WilTel stockholders have filed complaints in various courts
purporting to commence class action lawsuits on behalf of WilTel stockholders
against WilTel, the directors of WilTel and Leucadia. Among other remedies,
the complaints seek to enjoin the offer and subsequent merger or,
alternatively, rescission and damages in an unspecified amount. Leucadia
believes the complaints to be without merit but has entered into an agreement
in principle to settle the litigations in order to eliminate the burden and
expense of further litigation, subject to approval from directors and
officers insurance carriers, based upon increased disclosure in this
prospectus and the WilTel Recommendation Statement. See 'Certain Legal
Matters and Regulatory Approvals -- Stockholder Litigation' for a more
detailed discussion of these lawsuits.
Q. DO THE STATEMENTS ON THE COVER PAGE REGARDING THIS PROSPECTUS BEING SUBJECT
TO CHANGE AND THE REGISTRATION STATEMENT FILED WITH THE SEC NOT YET BEING
EFFECTIVE MEAN THAT THE OFFER MAY NOT COMMENCE?
A. No. As permitted under SEC rules, we may commence the offer without the
registration statement, of which this prospectus is a part, having been
declared effective by the SEC. We cannot, however, complete the offer and
accept for exchange any shares of WilTel common stock tendered in the offer
until the registration statement is declared effective by the SEC and the
other conditions to our offer have been satisfied or, where permissible,
waived. The offer
v
will commence when we first mail this prospectus and the related letter of
transmittal to WilTel stockholders.
Q. ARE LEUCADIA'S BUSINESS, PROSPECTS AND FINANCIAL CONDITION RELEVANT TO YOUR
DECISION TO TENDER YOUR SHARES IN THE OFFER?
A. Yes. Shares of WilTel common stock accepted in the offer will be exchanged
for Leucadia common shares and therefore you should consider Leucadia's
business, prospects and financial condition before you decide whether to
tender your shares in the offer. In considering our business, prospects and
financial condition, you should review the documents incorporated by
reference in this prospectus because they contain detailed business,
financial and other information about us. See 'Where You Can Find More
Information'.
Q. WHOM CAN YOU CALL WITH QUESTIONS ABOUT THE OFFER?
A. You can contact our information agent for the offer:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Stockholders Call Toll-Free: (888) 750-5834
Banks and Brokers Call Collect: (212) 750-5833
vi
SUMMARY
INTRODUCTION
We are proposing to acquire all of the outstanding shares of WilTel common
stock that we do not already own. We currently beneficially own 23,700,000
shares of WilTel common stock, representing 47.4% of the outstanding shares of
WilTel common stock.
We are offering to exchange 0.4242 of a Leucadia common share and one CSR
for each outstanding share of WilTel common stock, upon the terms and subject to
the conditions set forth in this prospectus and the related letter of
transmittal. We will not acquire any shares of WilTel common stock in the offer
unless WilTel stockholders (other than Leucadia and its affiliates) have validly
tendered and not properly withdrawn prior to the expiration of the offer a
majority of the shares of WilTel common stock not owned by Leucadia and its
affiliates, calculated as described in this prospectus. As of the date of this
prospectus, 26,300,000 of the outstanding shares of WilTel common stock were not
owned by Leucadia and its affiliates. There are also other conditions to the
offer that are described under 'The Offer -- Conditions of the Offer'.
After completion of the offer, Leucadia will have WilTel complete a merger
with Merger Sub, in which each outstanding share of WilTel common stock (except
for shares beneficially owned directly or indirectly by Leucadia for its own
account) will be converted into the right to receive Leucadia common shares and
a CSR at the same exchange ratio as used in the offer, subject to dissenters'
rights to the extent applicable under Nevada law. If after the completion of
this offer we beneficially own more than 90% of the outstanding shares of WilTel
common stock, we may effect this merger without the approval of WilTel
stockholders, as permitted under Nevada law. See 'The Offer -- Approval of the
Merger'.
INFORMATION ABOUT LEUCADIA AND WILTEL
Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
(212) 460-1900
We are a holding company engaged in a variety of businesses, including
telecommunications (principally through our 47.4% interest in WilTel), banking
and lending (principally through American Investment Bank, N.A.), manufacturing
(through our Plastics Division), real estate activities, winery operations,
development of a copper mine (through our 72.8% interest in MK Gold Company) and
property and casualty reinsurance. We currently have equity interests of more
than 5% in the following domestic public companies: AmeriKing, Inc. (6.8%),
Carmike Cinemas, Inc. (11.0%), GFSI Holdings, Inc. (6.9%), The FINOVA Group,
Inc. (indirectly 25% through our interest in Berkadia LLC), HomeFed Corporation
(30.3%), Jackson Products, Inc. (8.8%), Jordan Industries, Inc. (10.1%),
ParkerVision, Inc. (7.3%) and WilTel (47.4%). We concentrate on return on
investment and cash flow to build long-term shareholder value, rather than
emphasizing volume or market share. We continuously evaluate the retention and
disposition of our existing operations and investigate possible acquisitions of
new businesses in order to maximize shareholder value.
WilTel Communications Group, Inc.
One Technology Center
Tulsa, Oklahoma 74103
(918) 547-6000
WilTel, through its operating subsidiary, WilTel Communications, LLC,
provides data, voice and media transport solutions to carrier-class customers.
Such customers include leading global telecommunications and media and
entertainment companies -- companies where bandwidth is either
1
their primary business or a core component of the products and services they
deliver. WilTel's advanced network infrastructure reaches border-to-border and
coast-to-coast with international connectivity to accommodate global traffic.
THE OFFER
EXCHANGE OF SHARES OF WILTEL COMMON STOCK
Upon the terms and subject to the conditions of the offer, promptly after
the expiration of the offer we will exchange shares of WilTel common stock which
are validly tendered and not properly withdrawn for Leucadia common shares and
CSRs. We are offering to exchange 0.4242 of a Leucadia common share and one CSR
for each outstanding share of WilTel common stock.
The CSRs will be uncertificated rights and will be non-assignable and
non-transferable by any holder thereof, except as required by any applicable
community property laws or laws of descent and distribution. CSRs will not be
represented by any certificate. A CSR will not entitle its holder to any of the
rights of a shareholder in Leucadia (including voting or dividend rights).
In general, the CSRs give WilTel stockholders the opportunity to receive
additional Leucadia common shares if Leucadia sells all or substantially all of
WilTel's assets or more than 50% of WilTel's capital stock prior to the
expiration of the CSRs (which Leucadia has no plans to do) and the net proceeds
to Leucadia from such sale exceed the valuation accorded to WilTel's equity in
the offer and merger. If Leucadia does not consummate such a sale prior to the
maturity of the CSRs, the CSRs will become worthless, and Leucadia currently has
no intention to engage in any such sale. The CSRs will expire and be of no
further force and effect on October 15, 2004, unless Leucadia or WilTel enter
into a definitive agreement with an unaffiliated third party providing for a
sale of all or substantially all of the assets of WilTel or more than 50% of
WilTel's capital stock after the completion of the merger and prior to August
21, 2004, in which case the CSRs will expire upon the later of October 15, 2004
and the completion or abandonment of such sale. The maximum number of Leucadia
common shares issuable pursuant to the CSRs is 11,000,000, regardless of the
amount of net proceeds received by Leucadia from any subsequent sale of WilTel.
For a more detailed description of the CSRs, please see 'Description of the
CSRs'.
TIMING OF THE OFFER
We commenced the offer on September 4, 2003. The offer is scheduled to
expire at 5:00 PM, New York City time, on November 5, 2003, unless we extend
the period of the offer. All references to the expiration of the offer mean the
time of expiration, as extended. For more information, see the discussion under
' -- Extension, Termination and Amendment' below.
EXTENSION, TERMINATION AND AMENDMENT
If any condition to the offer is not satisfied or, if permissible, waived,
by any scheduled expiration date of the offer, then we may extend the expiration
date from time to time. Each extension may last for no more than ten business
days, unless WilTel and Leucadia agree in writing to allow for a longer period.
We also have the right to extend the offer for any period of time required by
the applicable rules and regulations of the SEC. Leucadia or WilTel can
terminate the Merger Agreement if the offer is not consummated by January 15,
2004. We can extend the offer by giving oral or written notice of an extension
to American Stock Transfer & Trust Company, the exchange agent and depository
for the offer. If we decide to extend the offer, we will make a public
announcement to that effect no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration. We are not giving
any assurance that we will extend the offer. During any extension, all shares of
WilTel common stock previously tendered and not withdrawn will remain deposited
with the exchange agent and
2
depository, subject to your right to withdraw your shares of WilTel common stock
as described under 'The Offer -- Withdrawal Rights'.
Subject to the SEC's applicable rules and regulations and subject to the
limitations contained in the Merger Agreement, we also reserve the right, in our
discretion:
to terminate the offer and not accept for exchange or exchange any shares
of WilTel common stock not previously accepted for purchase, or purchased,
upon the failure of any of the conditions of the offer to be satisfied
prior to the expiration of the offer; and
to waive any condition or otherwise amend the offer in any respect prior to
the expiration of the offer, by giving oral or written notice of such
delay, termination or amendment to the exchange agent and depository and by
making a public announcement.
We will follow any extension, termination or amendment, as promptly as
practicable, with a public announcement. Subject to the requirements of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and other
applicable law, and without limiting the manner in which we may choose to make
any public announcement, we assume no obligation to publish, advertise or
otherwise communicate any public announcement other than by making a release to
the Dow Jones News Service.
PROCEDURE FOR TENDERING SHARES
For you to validly tender shares of WilTel common stock into the offer, you
must do one of the following:
Deliver certificates of your shares, a properly completed and duly executed
letter of transmittal or a copy thereof that has been manually signed,
along with any other required documents, to the exchange agent and
depository at one of its addresses set forth on the back cover of this
prospectus prior to the expiration of the offer;
Arrange for a book-entry transfer of your shares to be made to the exchange
agent and depository's account at The Depository Trust Company, or DTC, and
receipt by the exchange agent and depository of a confirmation of this
transfer prior to the expiration of the offer, and the delivery of a
properly completed and duly executed letter of transmittal or a copy
thereof that has been manually signed, and any other required documents, to
the exchange agent and depository at one of its addresses set forth on the
back cover of this prospectus prior to the expiration of the offer; or
Arrange for a book-entry transfer of your shares to the exchange agent and
depository's account at DTC and receipt by the exchange agent and
depository of confirmation of this transfer, including an 'agent's
message,' prior to the expiration of the offer.
These deliveries and arrangements must be made before the expiration of the
offer. TENDERS BY NOTICE OF GUARANTEED DELIVERY WILL NOT BE ACCEPTED. See 'The
Offer -- Procedure for Tendering Shares'.
WITHDRAWAL RIGHTS
You may withdraw any shares of WilTel common stock that you previously
tendered into the offer at any time before the expiration of the offer by
following the procedures described under 'The Offer -- Withdrawal Rights'. In
addition, if we have not accepted tendered shares for exchange by November 3,
2003, you may withdraw tendered shares at any time thereafter.
DELIVERY OF LEUCADIA COMMON SHARES
Upon the terms of the offer and subject to the satisfaction (or, where
permissible, waiver) of the conditions to the offer as of the expiration of the
offer, we will, promptly after expiration of the offer, exchange shares of
WilTel common stock validly tendered and not properly withdrawn
3
for Leucadia common shares, CSRs and cash instead of fractional shares. The CSRs
will not be evidenced by any form of certificate. In all cases, exchange of
shares of WilTel common stock tendered and accepted for exchange pursuant to the
offer will be made only if the exchange agent and depository timely receives
(1) certificates for those shares of WilTel common stock, or a timely
confirmation of a book-entry transfer of those shares of WilTel common stock in
the exchange agent and depository's account at DTC, and a properly completed and
duly executed letter of transmittal, or a manually signed copy, and any other
required documents, or (2) a timely confirmation of a book-entry transfer of
those shares of WilTel common stock in the exchange agent and depository's
account at DTC, together with an 'agent's message' as described above under
' -- Procedure for Tendering Shares'.
CASH INSTEAD OF FRACTIONAL LEUCADIA COMMON SHARES
We will not issue any fraction of a Leucadia common share pursuant to the
offer or the merger. Instead, each tendering stockholder who would otherwise be
entitled to a fraction of a Leucadia common share, after the combining of all
fractional shares to which tendering stockholders would otherwise be entitled,
will receive cash in respect of his fractional interests. See 'The Offer -- Cash
Instead of Fractional Leucadia Common Shares'.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
Based on the opinion of Weil, Gotshal & Manges LLP, the offer and merger
should qualify as a reorganization for U.S. federal income tax purposes.
Assuming reorganization treatment, you would not recognize gain or loss upon the
receipt of Leucadia common shares in the offer or merger (including the receipt
of Leucadia common shares under CSRs), other than any gain or loss recognized on
the receipt of cash instead of fractional shares. In addition, if you receive
any Leucadia common shares under CSRs, a portion of those shares may be treated
as interest income to you (depending on certain factors). Moreover, certain
other tax consequences resulting from your right to the receipt of additional
Leucadia common shares pursuant to the CSRs are unclear. Accordingly, the actual
tax consequences to you will depend on your particular facts and circumstances,
other facts and circumstances surrounding the offer and merger (for example, the
timing of any payments under the CSRs) and the manner in which the IRS applies
the law in this particular situation. See 'The Offer -- Material U.S. Federal
Income Tax Consequences'.
REGULATORY APPROVALS
We are not aware of any regulatory license or permit material to the
business of WilTel and its subsidiaries, on a consolidated basis, that may be
materially adversely affected by our acquisition of WilTel common stock, or any
regulatory filing or approval that would be required for our acquisition of
WilTel common stock, other than all required approvals of the Federal
Communications Commission and state regulatory authorities for the change of
control of WilTel and the expiration or termination of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. We intend
to make all required filings to seek such approvals, as well as all required
filings under the Securities Act of 1933, as amended (the 'Securities Act'), and
the Exchange Act, in connection with the offer and merger. We are unaware of any
requirement for the filing of information with, or the obtaining of the approval
of, governmental authorities in any non-U.S. jurisdiction that is applicable to
the offer or the merger.
APPRAISAL (DISSENTERS') RIGHTS
Under Nevada law, you will not have any appraisal (dissenters') rights in
connection with the offer. However, appraisal (dissenters') rights may be
available in connection with a 'short form' merger. For a discussion of these
appraisal (dissenters') rights, see 'The Offer -- Appraisal (Dissenters')
Rights'.
4
ACCOUNTING TREATMENT
Our acquisition of WilTel common stock pursuant to the offer and the merger
will be accounted for under the purchase method of accounting in accordance with
generally accepted accounting principles in the United States. In addition, as a
result of acquiring the additional shares of WilTel common stock, we will
consolidate the financial position and results of operations of WilTel from the
date of this additional acquisition and no longer account for our investment in
WilTel under the equity method of accounting.
COMPARISON OF RIGHTS OF WILTEL STOCKHOLDERS AND LEUCADIA SHAREHOLDERS
WilTel is a Nevada corporation and Leucadia is a New York corporation. If we
complete the offer, holders of WilTel common stock will become Leucadia
shareholders, and their rights as stockholders will be governed by Leucadia's
certificate of incorporation and by-laws, and New York law. There are
differences between the articles of incorporation and by-laws of WilTel and the
certificate of incorporation and by-laws of Leucadia, and between Nevada law and
New York law. For a summary of material differences between the rights of
holders of WilTel common stock and holders of Leucadia common shares, see
'Comparison of Rights of Holders of WilTel Common Stock and Holders of Leucadia
Common Shares'.
5
SELECTED HISTORICAL FINANCIAL DATA OF LEUCADIA AND WILTEL
We are providing the following selected financial information to
assist you in analyzing the financial aspects of the offer and the
subsequent merger. We derived the financial information presented for
Leucadia and for WilTel as of, and for the six-month period ended,
June 30, 2003 and 2002 from the unaudited financial statements contained
in Leucadia's and WilTel's respective Quarterly Reports on Form 10-Q for
the quarterly period ended June 30, 2003. We derived the financial
information presented for Leucadia and for WilTel as of, and for each of
the five years for the period ended, December 31, 2002 from the audited
financial statements and other financial information contained in
Leucadia's and WilTel's respective Annual Reports on Form 10-K for those
years. WilTel is the successor to Williams Communications Group, Inc.
You should read the respective selected historical financial information
of Leucadia and WilTel presented below in conjunction with the
historical consolidated financial statements and related notes and
management's discussion and analysis contained in the annual, quarterly
and other reports filed by Leucadia and WilTel with the SEC, which we
have incorporated by reference into this prospectus. See 'Where You Can
Find More Information'. The selected historical financial information
presented below for the six months ended June 30, 2003 and 2002 have
been derived from unaudited financial statements; however, in the
opinion of Leucadia's and WilTel's management, such financial
information for their respective companies contains all adjustments,
consisting only of normal recurring items, necessary to present fairly
the financial information for such periods. The results of operations
for the six months ended June 30, 2003 may not be indicative of annual
results of operations.
LEUCADIA SELECTED HISTORICAL FINANCIAL DATA
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- -------------------------------------------------
2003 2002 2002 2001 2000 1999 1998
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Selected Income Statement Data:
Revenues(1)....................................... $144,357 $127,884 $241,805 $374,161 $493,408 $460,814 $199,070
Expenses.......................................... 133,618 131,508 283,330 301,079 292,105 226,171 183,968
Income (loss) from continuing operations before
income taxes, minority expense of trust preferred
securities and equity in income (losses) of
associated companies............................. 10,739 (3,624) (41,525) 73,082 201,303 234,643 15,102
Income (loss) from continuing operations before
minority expense of trust preferred securities
and equity in income (losses) of associated
companies(2)..................................... 9,732 (2,637) 103,340 84,423 133,087 195,175 45,814
Minority expense of trust preferred securities,
net of taxes..................................... (2,761) (2,761) (5,521) (5,521) (5,521) (5,521) (8,248)
Equity in income (losses) of associated companies,
net of taxes(3).................................. (7,148) 36,130 54,712 (15,974) 19,040 (1,906) 15,138
Income (loss) from continuing operations.......... (177) 30,732 152,531 62,928 146,606 187,748 52,704
Income (loss) from discontinued operations,
including gain (loss) on disposal, net of
taxes............................................ 1,808 9,092 9,092 (70,847) (30,598) 27,294 1,639
Cumulative effect of a change in accounting
principle........................................ -- -- -- 411 -- -- --
Net income (loss)............................ 1,631 39,824 161,623 (7,508) 116,008 215,042 54,343
Per share:
Basic earnings (loss) per common share:
Income (loss) from continuing operations....... $ -- $ .56 $ 2.74 $ 1.13 $ 2.64 $ 3.16 $ .83
Income (loss) from discontinued operations,
including gain (loss) on disposal............ .03 .16 .16 (1.28) (.55) .46 .03
Cumulative effect of a change in accounting
principle.................................... -- -- -- .01 -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)............................ $ .03 $ .72 $ 2.90 $ (.14) $ 2.09 $ 3.62 $ .86
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Diluted earnings (loss) per common share:
Income (loss) from continuing operations....... $ -- $ .56 $ 2.72 $ 1.13 $ 2.64 $ 3.16 $ .83
Income (loss) from discontinued operations,
including gain (loss) on disposal............ .03 .16 .16 (1.28) (.55) .46 .03
Cumulative effect of a change in accounting
principle.................................... -- -- -- .01 -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)............................ $ .03 $ .72 $ 2.88 $ (.14) $ 2.09 $ 3.62 $ .86
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
(table continued on next page)
6
(table continued from previous page)
AT DECEMBER 31,
AT JUNE 30, ----------------------------------------------------------
2003 2002 2001 2000 1999 1998
----------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Selected Balance Sheet Data:
Cash and investments............................ $1,277,190 $1,043,471 $1,080,271 $ 998,892 $ 759,089 $1,485,107
Total assets.................................... 2,717,414 2,541,778 2,469,087 2,417,783 2,255,239 2,920,916
Debt, including current maturities.............. 448,382 233,073 252,279 190,486 268,736 473,226
Customer banking deposits....................... 253,098 392,904 476,495 526,172 329,301 189,782
Shareholders' equity............................ 1,585,779 1,534,525 1,195,453 1,204,241 1,121,988 1,853,159
Book value per common share..................... $ 26.59 $ 25.74 $ 21.61 $ 21.78 $ 19.75 $ 29.90
Cash dividends per common share................. $ -- $ .25 $ .25 $ .25 $ 13.58 $ --
---------
(1) Includes net securities gains (losses) of $214,000 and
$(12,298,000) for the six month periods ended June 30, 2003 and
2002, respectively, and $(37,066,000), $28,450,000, $124,964,000,
$16,268,000 and $(66,159,000) for the years ended December 31,
2002, 2001, 2000, 1999 and 1998, respectively.
(2) During 2002, the Internal Revenue Service completed the audit of
Leucadia's consolidated federal income tax returns for the years
1996 through 1999, without any material tax payment required from
Leucadia. As a result of this favorable resolution of various
federal income tax contingencies, the income tax provision for
2002 reflects a benefit of approximately $120,000,000.
(3) For the six month period ended June 30, 2003 and for the period from
the acquisition of WilTel through December 31, 2002, Leucadia
recorded $57,100,000 and $13,400,000, respectively, of pre-tax losses
from this investment under the equity method of accounting. The book
value of Leucadia's investment in WilTel was $284,100,000 at June 30,
2003 and was $340,600,000 at December 31, 2002.
7
WILTEL SELECTED HISTORICAL FINANCIAL DATA
WilTel's emergence from chapter 11 proceedings resulted in a new
reporting entity with no retained earnings or accumulated deficit as of
November 1, 2002. Accordingly, WilTel's consolidated financial
statements for periods prior to November 1, 2002 are not comparable to
consolidated financial statements presented on or subsequent to
November 1, 2002. The 2002 financial statements have been separately
presented under the label 'Predecessor Company' for periods prior to
November 1, 2002 and 'Successor Company' for the two-month period ended
December 31, 2002 as required by Statement of Position 90-7 'Financial
Reporting by Entities in Reorganization under the Bankruptcy Code'.
SUCCESSOR PREDECESSOR SUCCESSOR PREDECESSOR
COMPANY COMPANY COMPANY COMPANY
--------- ----------- ------------ ------------
FOR THE TWO FOR THE TEN
FOR THE SIX MONTHS MONTHS MONTHS
ENDED JUNE 30, ENDED ENDED
----------------------- DECEMBER 31, OCTOBER 31,
2003 2002 2002 2002
---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues.............................. $ 611,457 $ 591,704 $ 191,656 $1,000,007
Loss from operations.................. (102,576) (366,905) (55,072) (570,491)
Income (loss) from continuing
operations(1, 2)..................... (119,936) (576,381) (61,049) 1,331,195
Loss from discontinued
operations(3)........................ -- -- -- --
Cumulative effect of change in
accounting principle(4).............. -- -- -- (8,667)
Net income (loss)..................... (119,936) (576,381) (61,049) 1,322,528
Preferred stock dividends and
amortization of preferred stock
issuance costs....................... -- (5,473) -- (5,473)
Net income (loss) attributable to
common stockholders.................. (119,936) (581,854) (61,049) 1,317,055
Basic and diluted earnings (loss) per
share:
Income (loss) from continuing
operations attributable to common
stockholders(1, 2)................ (2.40) (1.17) (1.22) 2.66
Loss from discontinued
operations(3)..................... -- -- -- --
Cumulative effect of change in
accounting principle(4)........... -- -- -- (.01)
Net income (loss) attributable to
common stockholders............... (2.40) (1.17) (1.22) 2.65
Common dividends paid per share....... -- -- -- --
Total assets.......................... 1,921,436 2,062,273
Long-term debt(1, 2).................. 509,149 517,986
Redeemable cumulative convertible
preferred stock(1)................... -- --
Total stockholders' equity
(deficit)............................ 570,532 689,731
PREDECESSOR
COMPANY
-----------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------
2001 2000 1999 1998
---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues.............................. $ 1,185,521 $ 839,077 $ 601,456 $ 375,339
Loss from operations.................. (3,544,366) (448,671) (246,495) (141,164)
Income (loss) from continuing
operations(1, 2)..................... (3,810,357) (277,688) (328,312) (146,579)
Loss from discontinued
operations(3)........................ -- (540,000) (31,389) (39,150)
Cumulative effect of change in
accounting principle(4).............. -- -- -- --
Net income (loss)..................... (3,810,357) (817,688) (359,701) (185,729)
Preferred stock dividends and
amortization of preferred stock
issuance costs....................... (17,568) (4,956) -- --
Net income (loss) attributable to
common stockholders.................. (3,827,925) (822,644) (359,701) (185,729)
Basic and diluted earnings (loss) per
share:
Income (loss) from continuing
operations attributable to common
stockholders(1, 2)................ (7.86) (.61) (.79) (.37)
Loss from discontinued
operations(3)..................... -- (1.16) (.08) (.10)
Cumulative effect of change in
accounting principle(4)........... -- -- -- --
Net income (loss) attributable to
common stockholders............... (7.86) (1.77) (.87) (.47)
Common dividends paid per share....... -- -- -- --
Total assets.......................... 5,992,026 7,409,285 6,057,703 2,022,136
Long-term debt(1, 2).................. 5,838,779 4,526,706 2,965,385 615,352
Redeemable cumulative convertible
preferred stock(1)................... 242,338 240,722 -- --
Total stockholders' equity
(deficit)............................ (1,449,042) 1,213,272 2,112,600 1,007,682
---------
(1) Includes reorganization items, net incurred of $2.1 billion for
the ten months ended October 31, 2002 as a result of commencing
chapter 11 proceedings.
(2) Includes gain related to the purchase of a portion of its senior
redeemable notes in the open market in 2001 totaling $296.9
million. This gain was originally reported as an extraordinary
gain in 2001 and reclassified to continuing operations in 2002
based on the early adoption of Statement of Financial Accounting
Standards No. 145, 'Recission of Financial Accounting Standards
Board Statement No. 4, 44, and 64, Amendment of Financial
Accounting Standards Board No. 13, and Technical Corrections.'
(3) Represents sale of the Solutions segment in first quarter 2001.
The sale was accounted for as a disposal of a business segment
with the associated operating results and financial position of
the segment segregated and reported as discontinued operations
for prior periods.
(4) Relates to the cumulative effect of change in accounting
principle associated with the adoption of Statement of Financial
Accounting Standards No. 143, 'Accounting for Asset Retirement
Obligations.'
8
UNAUDITED COMPARATIVE PER SHARE DATA
In the following table we present unaudited historical per share data for
Leucadia and WilTel, respectively, combined unaudited pro forma per share data
for Leucadia and historical and equivalent unaudited pro forma per share data
for WilTel, as of and for the six months ended June 30, 2003 and as of and for
the year ended December 31, 2002. We present the unaudited pro forma per share
data for comparative purposes only. The data does not purport to be indicative
of (1) the results of operations or financial position which would have been
achieved if the offer and the subsequent merger had been completed at the
beginning of the period or as of the date indicated, or (2) the results of
operations or financial position which may be achieved in the future. The pro
forma per share data does not reflect any payment that may be required to be
made in connection with the exercise of appraisal (dissenters') rights by WilTel
stockholders under Nevada law in connection with a 'short form' merger.
FOR THE SIX MONTHS ENDED JUNE 30, 2003
---------------------------------------------------
LEUCADIA WILTEL
LEUCADIA COMBINED WILTEL EQUIVALENT
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
PER SHARE PER SHARE PER SHARE PER SHARE
DATA DATA DATA DATA(a)
---- ---- ---- -------
Loss from continuing operations per share of
common stock:(b)
Basic........................................ $ -- $ (.56) $(2.40) $ (.24)
Diluted...................................... $ -- $ (.56) $(2.40) $ (.24)
Cash dividends per share of common stock......... $ -- $ -- $ -- $ --
Book value per share of common stock(c).......... $26.59 $28.37 $11.41 $12.04
FOR THE TWO FOR THE TEN
MONTHS MONTHS FOR THE YEAR
FOR THE YEAR ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31,
2002 2002 2002 2002
---------------------- ------------- ------------ ------------
LEUCADIA WILTEL
LEUCADIA COMBINED WILTEL WILTEL EQUIVALENT
HISTORICAL PRO FORMA HISTORICAL HISTORICAL PRO FORMA
PER SHARE PER SHARE PER SHARE PER SHARE PER SHARE
DATA DATA DATA DATA DATA(a)
---- ---- ---- ---- -------
Income (loss) from continuing
operations per share of common
stock:(b)
Basic.......................... $ 2.74 $(5.02) $(1.22) $ 2.66 $(2.13)
Diluted........................ $ 2.72 $(5.02) $(1.22) $ 2.66 $(2.13)
Cash dividends per share of common
stock(d)......................... $ .25 $ .25 $ -- $ -- $ .11
Book value per share of common
stock(c)......................... $25.74 N/A $13.79 N/A N/A
---------
(a) The WilTel equivalent pro forma per share data is computed by multiplying
the Leucadia combined pro forma per share data by the exchange ratio of
0.4242 of a Leucadia common share to be issued for each share of WilTel
common stock.
(b) For the determination of the Leucadia combined pro forma income (loss) from
continuing operations per share data, see the Notes to Unaudited Pro Forma
Consolidated Financial Information contained elsewhere in this prospectus.
(c) The historical book values per common share were computed by dividing
shareholders' equity by the number of shares of common stock outstanding at
the end of the period. The Leucadia combined pro forma book value per share
of common stock is computed by dividing pro forma shareholders' equity by
the pro forma number of shares of common stock outstanding as of June 30,
2003.
(footnotes continued on next page)
9
(footnotes continued from previous page)
(d) The Leucadia combined pro forma cash dividends per share of common stock
assumes that the historical amount paid per share of common stock would
have been paid on each of the pro forma number of shares of common stock.
COMPARATIVE PER SHARE MARKET DATA
In the following table we present:
the prices of a Leucadia common share and a share of WilTel common stock as
of the close of trading on August 11, 2003, the last trading date prior to
the date that Leucadia and WilTel announced an agreement in principle on
the offer and merger, as reported in the consolidated transaction reporting
system, and
the equivalent price of a share of WilTel common stock, based on the
exchange ratio.
LEUCADIA WILTEL WILTEL
HISTORICAL HISTORICAL EQUIVALENT(1)
---------- ---------- -------------
Closing price per share as of August 11, 2003............... $37.56 $14.06 $15.93
---------
(1) We calculated the WilTel equivalent price by multiplying the applicable
Leucadia closing price by the exchange ratio in the offer and the subsequent
merger of 0.4242 of a Leucadia common share for each share of WilTel common
stock.
-------------------
On September 2, 2003, the last trading date prior to the printing of this
prospectus for which this information was practicably available, the closing
prices of a Leucadia common share and a share of WilTel common stock, as
reported in the consolidated transaction reporting system, were $38.21 and
$16.11, respectively.
The market prices of Leucadia common shares and shares of WilTel common
stock are subject to fluctuation. The actual value of the Leucadia common shares
you receive in the offer and the merger will likely differ from the values
illustrated. You are urged to obtain current market quotations. See 'Comparative
Per Share Market Price and Dividend Information'.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial statements have
been prepared under the assumption that all of the outstanding shares of WilTel
common stock not owned by Leucadia are acquired pursuant to the offer and
merger. The offer is subject to a minimum condition that at least half of the
shares not owned by Leucadia or its affiliates are validly tendered. If this
condition is not satisfied, then Leucadia will not acquire any shares. If it is
satisfied, then Leucadia is certain to own a sufficient number of shares (at
least 73.7%) to assure, through its vote as the then majority stockholder of
WilTel, that the merger will be consummated and that Leucadia will own all of
the shares. Accordingly, the pro forma financial information assumes all of the
shares are acquired.
If after completion of the offer we own at least 90% of the outstanding
shares of WilTel common stock, we may complete the acquisition of the shares of
WilTel common stock that we do not own through a 'short-form merger' without a
vote of WilTel stockholders. If we effect a short-form merger, it can generally
be completed within a few days following completion of the offer. If we do not
own at least 90% of the outstanding shares of WilTel common stock after
completion of the offer, we may complete the acquisition of the shares of WilTel
common stock that we do not own by a 'long-form merger' through a vote of WilTel
stockholders. A long-form merger will require the calling of a stockholder
meeting and the preparation of an information or proxy statement in respect of
the merger. We estimate that it may take as long as several months
10
from the completion of the offer for us to complete a long-form merger. See 'The
Offer -- Approval of The Merger'.
The execution of the Merger Agreement on August 21, 2003 created a
measurement date for accounting purposes enabling Leucadia to determine the
value of the Leucadia common shares to be issued. Leucadia averaged the closing
prices of its common shares for the five-business day period commencing two days
before and ending two days after the Merger Agreement was executed. That
average, $37.90 per share, was used to calculate the aggregate value of the
shares issued for purposes of the unaudited pro forma consolidated financial
statements that follow, and will also be used to determine the actual cost of
the acquisition if the offer and merger are consummated pursuant to the terms of
the Merger Agreement.
11
LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2003
(IN THOUSANDS)
PRO FORMA PRO FORMA
LEUCADIA WILTEL ADJUSTMENTS AS ADJUSTED
-------- ------ ----------- -----------
Assets:
Investments.............................. $ 779,876 $ -- $ -- $ 779,876
Cash and cash equivalents................ 497,314 190,977 (1,000)(a) 687,291
Trade, notes and other receivables,
net.................................... 406,241 247,217 -- 653,458
Prepaids, other assets and deferred
charges, net........................... 222,635 128,573 -- 351,208
Property, plant, equipment and leasehold
improvements, net...................... 167,307 1,354,669 94,502 (b) 1,616,478
Investments in associated companies,
net.................................... 644,041 -- (284,121)(c) 359,920
---------- ---------- ---------- ----------
Total................................ $2,717,414 $1,921,436 $ (190,619) $4,448,231
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Liabilities:
Customer banking deposits................ $ 253,098 $ -- $ -- $ 253,098
Trade payables and expense accruals...... 91,220 399,165 -- 490,385
Deferred income.......................... -- 234,949 -- 234,949
Other liabilities........................ 124,193 134,333 -- 258,526
Income taxes payable..................... 62,975 -- -- 62,975
Deferred tax liability................... 42,917 -- (42,917)(d) --
Debt, including current maturities....... 448,382 581,544 -- 1,029,926
---------- ---------- ---------- ----------
Total liabilities.................... 1,022,785 1,349,991 (42,917) 2,329,859
---------- ---------- ---------- ----------
Commitments and contingencies
Minority interest............................ 10,650 913 -- 11,563
---------- ---------- ---------- ----------
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust
holding solely subordinated debt securities
of the Company............................. 98,200 -- -- 98,200
---------- ---------- ---------- ----------
Shareholders' Equity:
Common stock............................. 59,637 500 (500)(e) 70,793
11,156 (f)
Additional paid-in capital............... 200,860 749,500 (749,500)(e) 612,534
411,674 (f)
Accumulated other comprehensive income... 105,187 1,517 (1,517)(e) 105,187
Retained earnings (Accumulated
deficit)............................... 1,220,095 (180,985) 180,985 (e) 1,220,095
---------- ---------- ---------- ----------
Total shareholders' equity........... 1,585,779 570,532 (147,702) 2,008,609
---------- ---------- ---------- ----------
Total................................ $2,717,414 $1,921,436 $ (190,619) $4,448,231
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
12
LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA PRO FORMA
LEUCADIA WILTEL ADJUSTMENTS AS ADJUSTED
-------- ------ ----------- -----------
Revenues:
Manufacturing................................. $ 26,225 $ -- $-- $ 26,225
Wireless messaging revenues................... 20,092 -- -- 20,092
Finance....................................... 31,878 -- -- 31,878
Telecommunications............................ -- 611,457 -- 611,457
Investment and other income................... 65,948 3,374 -- 69,322
Net securities gains (losses)................. 214 -- -- 214
-------- --------- ------- ---------
144,357 614,831 -- 759,188
-------- --------- ------- ---------
Expenses:
Manufacturing cost of sales................... 19,150 -- -- 19,150
Wireless messaging network operating
expenses.................................... 9,964 -- -- 9,964
Telecommunications cost of sales.............. -- 494,386 -- 494,386
Depreciation and amortization................. 8,896 124,938 3,150 (i) 136,984
Asset impairments and restructuring charges... -- -- -- --
Reorganization items, net..................... -- -- -- --
Interest...................................... 14,272 21,450 -- 35,722
Selling, general and other expenses........... 81,336 95,880 -- 177,216
-------- --------- ------- ---------
133,618 736,654 3,150 873,422
-------- --------- ------- ---------
Income (loss) from continuing operations before
income taxes, minority interest and equity in
income (losses) of associated companies......... 10,739 (121,823) (3,150) (114,234)
Income tax (benefit) provision.................... 1,007 16 (943)(l) 80
-------- --------- ------- ---------
Income (loss) from continuing operations before
minority interest and equity in income (losses)
of associated companies......................... 9,732 (121,839) (2,207) (114,314)
Minority expense of trust preferred securities,
net of taxes.................................... (2,761) -- (1,487)(l) (4,248)
Minority interest in loss of consolidated
subsidiary...................................... -- 1,903 -- 1,903
Equity in income (losses) of associated companies,
net of taxes.................................... (7,148) -- 26,745 (l) 76,746
57,149 (m)
-------- --------- ------- ---------
Income (loss) from continuing operations.......... $ (177) $(119,936) $80,200 $ (39,913)
-------- --------- ------- ---------
-------- --------- ------- ---------
Basic loss per common share....................... $ (0.56)
Number of shares used in calculation.............. 59,624 11,156 (n) 70,780
Diluted loss per common share..................... $ (0.56)
Number of shares used in calculation.............. 59,624 11,156 (n) 70,780
13
LEUCADIA NATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
WILTEL WILTEL
LEUCADIA TEN MONTHS TWO MONTHS
YEAR ENDED ENDED ENDED
DECEMBER 31, OCTOBER 31, DECEMBER 31, PRO FORMA PRO FORMA
2002 2002 2002 ADJUSTMENTS AS ADJUSTED
---- ---- ---- ----------- -----------
Revenues:
Manufacturing................. $ 50,744 $ -- $ -- $ -- $ 50,744
Finance....................... 87,812 -- -- -- 87,812
Telecommunications............ -- 1,000,007 191,656 (6,664)(g) 1,184,999
Investment and other income... 140,315 19,756 445 160,516
Net securities losses......... (37,066) -- -- -- (37,066)
--------- ----------- -------- ----------- ----------
241,805 1,019,763 192,101 (6,664) 1,447,005
--------- ----------- -------- ----------- ----------
Expenses:
Manufacturing cost of sales... 33,963 -- -- -- 33,963
Telecommunications cost of
sales....................... -- 862,405 171,605 (6,614)(h) 1,027,396
Depreciation and
amortization................ 17,266 460,989 44,294 (231,853)(i) 290,696
Asset impairments and
restructuring charges....... -- 28,483 8,572 (8,572)(h) 28,483
Reorganization items, net..... -- (2,066,032) -- 2,156,330 (j) 90,298
Interest...................... 33,547 195,602 7,221 (136,481)(k) 99,889
Selling, general and other
expenses.................... 198,554 218,621 22,257 -- 439,432
--------- ----------- -------- ----------- ----------
283,330 (299,932) 253,949 1,772,810 2,010,157
--------- ----------- -------- ----------- ----------
Income (loss) from continuing
operations before income taxes,
minority interest and equity in
income (losses) of associated
companies....................... (41,525) 1,319,695 (61,848) (1,779,474) (563,152)
Income tax (benefit) provision.... (144,865) 1,030 3 25,837 (l) (117,995)
--------- ----------- -------- ----------- ----------
Income (loss) from continuing
operations before minority
interest and equity in income
(losses) of associated
companies....................... 103,340 1,318,665 (61,851) (1,805,311) (445,157)
Minority expense of trust
preferred securities, net of
taxes........................... (5,521) -- -- (2,973)(l) (8,494)
Minority interest in loss of
consolidated subsidiary......... -- 12,530 802 -- 13,332
Equity in income (losses) of
associated companies, net of
taxes........................... 54,712 -- -- 36,700 (l) 104,812
13,400 (m)
--------- ----------- -------- ----------- ----------
Income (loss) from continuing
operations...................... $ 152,531 $ 1,331,195 $(61,049) $(1,758,184) $ (335,507)
--------- ----------- -------- ----------- ----------
--------- ----------- -------- ----------- ----------
Basic earnings (loss) per common
share........................... $ 2.74 $ (5.02)
Number of shares used in
calculation..................... 55,667 11,156 (n) 66,823
Diluted earnings (loss) per common
share........................... $ 2.72 $ (5.02)
Number of shares used in
calculation..................... 56,016 10,807 (n) 66,823
14
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma consolidated balance sheet as of June 30, 2003
assumes that all of the shares of WilTel common stock not owned by Leucadia are
acquired and reflects the adjustments necessary to record the acquisition as
though it had occurred on June 30, 2003. The aggregate purchase price of
$423,800,000 for the shares of WilTel common stock not already owned by Leucadia
consists of $422,800,000 of Leucadia common shares and estimated cash expenses
of $1,000,000, as described in the notes below.
The unaudited pro forma consolidated statement of operations for the year
ended December 31, 2002 and the unaudited pro forma consolidated statement of
operations for the six months ended June 30, 2003 have been prepared assuming
the acquisition of WilTel common stock occurred on January 1, 2002 and reflect
the effects of certain adjustments to the historical consolidated financial
statements that result from the acquisition of WilTel common stock. WilTel
emerged from bankruptcy in October 2002 and adopted the provisions of fresh
start accounting on October 31, 2002. WilTel's emergence from bankruptcy
resulted in a new reporting entity for accounting purposes and, as such, its
financial results for periods before and after its emergence are presented
separately.
At acquisition, under generally accepted accounting principles, Leucadia is
required to allocate the purchase price to specific tangible and intangible
assets and liabilities based upon their relative fair values. Leucadia will
employ independent appraisals and other techniques to determine these fair
values. For purposes of the pro forma balance sheet, Leucadia principally
utilized the independent appraisals, market quotes, discounted cash flow
techniques and comparable sales information utilized by WilTel to prepare their
fresh start balance sheet upon emergence from bankruptcy as of October 31, 2002.
Leucadia reviewed this information in light of the passage of time since its
preparation and the changes in the telecommunications industry to determine
whether the information was still in a range of reasonable estimates of fair
values for use in the pro forma balance sheet, and concluded that it was. At
acquisition, the determination of the actual relative fair values may result in
a different allocation than was assumed for the pro forma financial statements.
Any such differences are expected to result in an increase or decrease to
property, plant and equipment and deferred income, could also result in a
different weighted average life used for depreciation and amortization purposes
and, as a result, could either increase or decrease the annual amount of actual
depreciation and amortization recorded. Accordingly, except for the effects of
the pro forma adjustments to property, plant and equipment, the June 30, 2003
historical WilTel balances were assumed to be reasonable estimates of fair
values for purposes of the allocation of the purchase price in the pro forma
balance sheet.
The 'Pro Forma Adjustments' column combines the accounting effects of
Leucadia's actual purchases in 2002 with the pro forma accounting effect of the
offer to purchase the remaining shares. The principal accounting differences
between the actual 2002 purchases and the pro forma 2003 purchase are the amount
of excess purchase price over WilTel's historical book value of assets acquired
for each transaction, and the related depreciation and amortization expenses
reflected, on a pro forma basis, for each transaction. As of June 30, 2003, the
amount of the excess was $13,689,000 for the 2002 purchases and $80,813,000, on
a pro forma basis, for the 2003 offer to acquire the remaining shares. Each of
these amounts is assumed to be amortized as depreciation and amortization
expense over an average life of 15 years. In addition, the 2003 offer to
purchase the remaining shares will allow Leucadia to recognize WilTel's deferred
tax assets in an amount equal to Leucadia's deferred tax liability.
The following notes pertain to the unaudited pro forma consolidated
financial statements:
(a) Represents estimated expenses incurred in connection with the
acquisition of WilTel common stock in the offer.
(b) Represents the preliminary adjustment to fair value of the assets
acquired. The excess of the amount paid to acquire WilTel common stock
in the offer over the historical carrying amounts of net assets
acquired is assumed allocated to property, plant and equipment.
15
(c) Represents the elimination of the carrying amount of Leucadia's 47.4%
interest in WilTel prior to the acquisition.
(d) Represents the recognition of net deferred tax assets of WilTel in an
amount equal to Leucadia's deferred tax liabilities. Additional
deferred tax assets have not been recognized as they are not deemed
more likely than not to be realizable.
(e) Represents the elimination of the historical stockholders' equity of
WilTel.
(f) Reflects the issuance of 11,156,460 Leucadia common shares, based on a
valuation of $37.90 per share, the average of the closing share prices
for the five business day period commencing two days before and ending
two days after the Merger Agreement was executed.
(g) Represents an adjustment to the historical amortization of WilTel's
deferred revenue as a result of the adjustment to the carrying amount
of deferred revenue to reflect its fair value as of the date of
acquisition.
(h) The adjustment to reduce telecommunications cost of sales by $6,614,000
results from the recognition of a liability for the fair value of
unfavorable contracts as of the date of the acquisition assumed in the
pro forma financial statements. Cost of sales has been reduced for
actual amounts expensed for these contracts during the ten month period
ended October 31, 2002; no other amounts were expensed for these
contracts for any other period presented. The adjustment to reduce
asset impairments and restructuring charges by $8,572,000 substantially
reflects the reversal of severance expense recorded by WilTel, which
was recognized by Leucadia as a liability in its allocation of the
purchase price to the fair value of the acquired liabilities.
(i) For both periods presented, represents an increase to depreciation
expense ($3,150,000 for 2003 and $6,300,000 for 2002) related to the
adjustment to fair value of property, plant and equipment at June 30,
2003, which fair value adjustment is assumed amortized over an average
life of 15 years. Property, plant and equipment primarily consists of
network equipment (fiber, optronics and capacity IRUs) with depreciable
lives of 3-20 years, rights-of-way with depreciable lives of 20 years,
buildings and leasehold improvements with depreciable lives of 10-30
years, computer equipment and software with depreciable lives of 2-3
years, general office furniture and fixtures of 5-8 years, and
construction in progress. Depreciation expense is computed using the
straight-line method.
The 2002 period also includes a reduction of $238,153,000 to WilTel's
historical depreciation expense, as the historical carrying amount of
WilTel's property, plant and equipment as of January 1, 2002 is nearly
$3 billion more than the preliminary amount allocated to property,
plant and equipment assumed in the pro forma financial statements.
Accordingly, depreciation expense was substantially reduced on a pro
forma basis since the actual depreciation expense recorded on a much
larger asset would not have been recorded on a pro forma basis.
(j) Represents the reversal of the gain recognized upon the discharge of
WilTel's indebtedness in bankruptcy ($4.3 billion) and the reversal of
the net charge recognized upon WilTel's application of fresh start
accounting adjustments to the historical carrying amounts of its asset
and liabilities ($2.1 billion).
(k) Represents the reversal of historical interest expense related to all
debt that was converted to equity under WilTel's bankruptcy plan.
(l) Represents the reversal of Leucadia's historical federal income tax
provision as losses generated by WilTel exceed Leucadia's historical
income. Leucadia did not record in its historical financial statements
a deferred tax benefit for its share of WilTel's losses, as its ability
to utilize these unrealized capital losses to reduce taxes due on
capital gains in the future was uncertain. Therefore, no amount of
adjustment (l) relates to Leucadia's share of WilTel's losses. The 'Pro
Forma As Adjusted' amounts for the line item 'income tax (benefit)
provision' for all periods includes amounts for state income and
franchise taxes
16
and, for the 2002 period, a reversal of Leucadia tax reserves as a
result of the resolution of certain federal income tax contingencies
unrelated to the WilTel acquisition.
(m) Represents the reversal of Leucadia's recognition of its share of
WilTel's losses under the equity method of accounting as a result of the
pro forma consolidation.
(n) For basic and diluted earnings (loss) per common share, represents the
number of shares issued in connection with the acquisition of WilTel
common stock pursuant to the offer. In addition, for the year ended
December 31, 2002, the pro forma adjustment for diluted earnings (loss)
per common share includes a reduction of approximately 349,000 shares
issuable pursuant to outstanding Leucadia options, that are included in
the historical calculation but not in the pro forma calculation as the
result is antidilutive.
17
RISK FACTORS
In deciding whether to tender your shares pursuant to the offer, you should
read this prospectus (including the discussion under 'Background and Reasons for
the Offer and Subsequent Merger -- Additional Factors for Consideration by
WilTel Stockholders -- Other Factors You Should Consider' and 'Certain Effects
of the Offer') and the documents which we incorporate by reference into this
prospectus carefully. You should also carefully consider the following factors:
RISKS RELATED TO THE OFFER AND THE SUBSEQUENT MERGER
THE NUMBER OF LEUCADIA COMMON SHARES THAT YOU WILL RECEIVE IN THE OFFER
AND/OR THE SUBSEQUENT MERGER WILL BE BASED UPON A FIXED EXCHANGE RATIO. THE
VALUE OF THE LEUCADIA COMMON SHARES AT THE TIME YOU RECEIVE THEM COULD BE LESS
THAN AT THE TIME YOU TENDER YOUR SHARES OF WILTEL COMMON STOCK.
In the offer and the subsequent merger, each share of WilTel common stock
will be exchanged for 0.4242 of a Leucadia common share and one CSR. This is a
fixed exchange ratio. We will not adjust the exchange ratio as a result of any
change in the market price of Leucadia common shares or WilTel common stock
between the date of this prospectus and the date you receive Leucadia common
shares. The market price of the Leucadia common shares may be lower on the date
you receive such shares than it is today or on the date you tender shares of
WilTel common stock or on the date the offer expires or the date a subsequent
merger is completed, because of changes in the business, operations or prospects
of Leucadia, market reactions to our offer, general market and economic
conditions, and other factors. You are urged to obtain current market quotations
for Leucadia common shares and WilTel common stock. See 'Comparative Per Share
Market Price and Dividend Information'.
THE TRADING PRICE OF LEUCADIA COMMON SHARES MAY BE AFFECTED BY FACTORS IN
ADDITION TO THOSE FACTORS AFFECTING THE PRICE OF WILTEL COMMON STOCK. THE PRICE
OF LEUCADIA COMMON SHARES COULD DECLINE FOLLOWING THE OFFER.
If we complete the offer, holders of WilTel common stock will become holders
of Leucadia common shares. Although we currently own 47.4% of the outstanding
shares of WilTel common stock, we also own and operate other businesses and have
significant interests in other companies. Accordingly, our results of operations
and business, as well as the trading price of Leucadia common shares, will be
affected by factors in addition to those affecting WilTel's results of
operations and business and the price of WilTel common stock. The price of
Leucadia common shares may decrease after we accept shares of WilTel common
stock for exchange in the offer and complete the subsequent merger. For a
discussion of some of the factors that could affect our results of operations or
business, or the trading price of our common shares, see pages 24-25 of our 2002
Annual Report on Form 10-K and pages 16-17 of our Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 2003.
DIRECTORS OF WILTEL HAVE POTENTIAL CONFLICTS OF INTERESTS WITH RESPECT TO
THE OFFER.
You should be aware that potential conflicts of interest exist with respect
to the offer and subsequent merger among members of WilTel's board of directors
in that two of the nine members of the WilTel board of directors (Ian M. Cumming
and Joseph S. Steinberg) are the Chairman and President, respectively, directors
and principal shareholders of Leucadia. In addition, Leucadia has designated two
other members (Messrs. Alan J. Hirschfield and Jeffrey C. Keil) to the WilTel
board of directors. For additional information on the interests that WilTel's
board members may have in the offer and subsequent merger, see 'Interests of
Certain Persons in the Offer and Subsequent Merger'.
THE OFFER AND MERGER MAY NOT QUALIFY AS A TAX-FREE REORGANIZATION FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES.
Although WilTel has received an opinion from Weil, Gotshal & Manges LLP that
the offer and merger should qualify as a reorganization for U.S. federal income
tax purposes, you should be
18
aware that the tax consequences are not entirely free from doubt and the opinion
is not binding on the IRS. In the event that the IRS successfully challenges the
tax-free characterization of the offer and merger, you would be taxed on any
gain recognized as a result of the offer and merger. Please consult your tax
advisor for a full understanding of the tax consequences to you and see 'The
Offer -- Material U.S. Federal Income Tax Consequences'.
RISKS RELATED TO LEUCADIA AND LEUCADIA COMMON SHARES
LEUCADIA IS DEPENDENT ON CERTAIN KEY PERSONNEL. THESE INDIVIDUALS ARE ALSO
SIGNIFICANT SHAREHOLDERS OF LEUCADIA AND HAVE SIGNIFICANT INFLUENCE OVER
LEUCADIA'S AFFAIRS.
Leucadia is dependent on the services of its senior management, including
Ian M. Cumming and Joseph S. Steinberg, Leucadia's Chairman of the Board and
President, respectively. Messrs. Cumming's and Steinberg's employment agreements
with Leucadia expire June 30, 2005. As of June 30, 2003, Messrs. Cumming and
Steinberg and their respective families (excluding certain private charitable
foundations) beneficially owned approximately 15.7% and 15.4% of the outstanding
Leucadia common shares, respectively. Accordingly, Messrs. Cumming and Steinberg
could exert significant influence over all matters requiring approval by
Leucadia shareholders, including the election or removal of directors and the
approval of mergers or other business combination transactions. Certain of
Leucadia's public debt instruments ($339,464,000 outstanding at June 30, 2003)
contain provisions granting the holders thereof the right, subject to certain
exceptions, to require Leucadia to repurchase such debt at 101% of principal
amount plus accrued but unpaid interest upon a change of control (as defined in
such instruments) of Leucadia. None of these change of control provisions would
be triggered by consummation of the offer or subsequent merger addressed in this
prospectus.
LEUCADIA COMMON SHARES ARE SUBJECT TO TRANSFER RESTRICTIONS.
Leucadia and certain of its subsidiaries have or have had tax loss
carryforwards and other tax attributes, the amount and availability of which are
subject to certain qualifications, limitations and uncertainties. In order to
reduce the possibility that certain changes in ownership could impose
limitations on the use of the tax loss carryforwards, Leucadia's certificate of
incorporation contains provisions which generally restrict the ability of a
person or entity from accumulating 5% or more of the Leucadia common shares and
the ability of persons or entities now owning 5% or more of the Leucadia common
shares from acquiring additional Leucadia common shares. The restrictions will
remain in effect until the earliest of (a) December 31, 2005, (b) the repeal of
Section 382 of the Internal Revenue Code (or any comparable successor provision)
and (c) the beginning of a taxable year of Leucadia to which certain tax
benefits may no longer be carried forward. Such restrictions may be waived by
Leucadia's board of directors. Leucadia shareholders are advised to carefully
monitor their ownership of Leucadia common shares and consult their own legal
advisors and/or Leucadia to determine whether their ownership of Leucadia common
shares approaches the proscribed level. All certificates representing the
Leucadia common shares offered by this prospectus will bear a legend indicating
that such shares are subject to such transfer restrictions.
If we continue to have loss carryforwards and attributes whether or not the
offer is consummated, we may seek to amend our certificate of incorporation to
extend the December 31, 2005 expiration date for the restrictions on the
accumulation on our common shares described in the preceding paragraph. Assuming
we complete the offer but our certificate of incorporation is not amended to
extend the December 31, 2005 expiration date, transfers of our stock can have a
significant impact on the utilization of Leucadia's existing tax losses and
other tax attributes, including those of WilTel.
LEUCADIA MAY REDUCE OR CEASE TO PAY DIVIDENDS ON ITS COMMON SHARES.
In 2002 and 2001, Leucadia paid annual cash dividends of $0.25 per common
share. However, we can provide no assurance that Leucadia will pay dividends on
its common shares in the future (or, if Leucadia does pay dividends, as to the
amount thereof). The payment of dividends on Leucadia common shares in the
future is subject to the discretion of Leucadia's board of directors
19
and will depend upon general business conditions, legal and contractual
restrictions on the payment of dividends and other factors that our board of
directors may deem to be relevant. In connection with the declaration of
dividends or the making of distributions on, or the purchase, redemption or
other acquisition of Leucadia common shares, Leucadia is required to comply with
certain restrictions contained in certain of its debt instruments. In addition,
Leucadia's regulated subsidiaries are restricted in the amount of distributions
that can be made to Leucadia without regulatory approval. Leucadia may consider
the recent changes in U.S. tax laws lowering the tax rate on dividends in
determining its dividend policy.
20
FORWARD-LOOKING INFORMATION
Some of the statements contained or incorporated by reference in this
prospectus discuss our plans and strategies, or make other forward-looking
statements, as this term is defined in the Private Securities Litigation Reform
Act of 1995, or PSLRA (we acknowledge that the safe harbor for forward-looking
statements under Section 27A of the Securities Act and Section 21E of the
Exchange Act and added by the PSLRA does not apply to forward-looking statements
made in connection with a tender offer). All statements, other than statements
of historical facts, that address activities, events, developments or results
that we intend, expect, project, believe or anticipate will or may occur in the
future are forward-looking statements. The words 'believes,' 'anticipates,'
'estimates,' 'expects,' 'plans,' 'intends' and similar expressions are intended
to identify these forward-looking statements, but are not the exclusive means of
identifying them. These statements are based on assumptions and assessments made
by our management in light of its experience and its perception of historical
trends, current conditions, expected future developments and other factors our
management believes to be appropriate. These forward-looking statements are
subject to a number of risks and uncertainties, some of which our management has
not yet identified. Any such forward-looking statements are not guarantees of
future performances and actual results, developments and business decisions may
differ materially from those envisaged by such forward-looking statements as the
result of various important factors, certain (but not all) of which are
discussed at pages 24-25 of our 2002 Annual Report on Form 10-K, at pages 16-17
of our Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2003 and in other documents incorporated by reference in this prospectus.
The factors described in the documents we have incorporated by reference and
in the 'Risk Factors' section of this prospectus are not necessarily all of the
important factors that could cause actual results, performance or achievements
to differ materially from those expressed in, or implied by, our forward-looking
statements. Other unknown or unpredictable factors also could have material
adverse effects on our future results, performance or achievements. Accordingly,
our actual results may differ materially from those expressed in, or implied by,
our forward-looking statements. We undertake no obligation to publicly update
any forward-looking statements, whether as a result of new information, future
events or circumstances or otherwise.
21
BACKGROUND AND REASONS FOR THE OFFER AND SUBSEQUENT MERGER
The following discussion presents background information concerning the
offer and subsequent merger and describes our reasons for undertaking the
proposed transaction. Please see ' -- Additional Factors for Consideration by
WilTel Stockholders' for further information relating to the proposed
transactions.
LEUCADIA'S INITIAL INVESTMENTS IN WILTEL
On October 15, 2002 (the 'Effective Date'), WilTel emerged as the successor
to Williams Communications Group, Inc. ('WCG') pursuant to a plan of
reorganization approved by the bankruptcy court (the 'Plan'). The Plan was
proposed by WCG, the Official Committee of Unsecured Creditors of WCG, and
Leucadia.
Leucadia acquired an aggregate of 22,000,000 shares (44%) of WilTel common
stock on the Effective Date pursuant to two transactions provided for under the
Plan. First, pursuant to an agreement with The Williams Companies Inc. ('TWC'),
Leucadia acquired from TWC, for a purchase price of $180,000,000, certain claims
that TWC had against WCG. In accordance with the Plan, WilTel issued 11,775,000
shares of its common stock to Leucadia in satisfaction of such claims. Second,
on the Effective Date Leucadia invested $150,000,000 in WilTel in exchange for
10,225,000 shares of WilTel common stock. On October 28, 2002, Leucadia
purchased an additional 1,700,000 shares of WilTel common stock for an aggregate
purchase price of $20,400,000 in a private transaction. As a result of those
acquisitions, Leucadia is currently the beneficial owner of a total of
23,700,000 shares of WilTel common stock, representing 47.4% of the outstanding
shares of WilTel common stock.
Pursuant to the Plan, 1,000,000 shares of WilTel common stock were issued on
the Effective Date to a securities holder channeling fund for purposes of
providing for the settlement of certain claims against WCG. To the extent that
these shares are not distributed to satisfy such claims, one-half of such unused
shares will be distributed to Leucadia and the other one-half will be
distributed to the holders of unsecured claims against WCG.
In addition, pursuant to the Plan, on the Effective Date Leucadia and WilTel
entered into the Stockholders Agreement, the Registration Rights Agreement and
the Stockholder Rights and Co-Sale Agreement described under 'Interests of
Certain Persons in the Offer and Subsequent Merger -- Certain Agreements Between
Leucadia and WilTel'. Pursuant to the Stockholders Agreement and the Plan,
Leucadia designated four directors (including two independent directors) of
WilTel's nine-member board of directors (the other directors are the chief
executive officer of WilTel and four individuals designated by the Official
Committee of Unsecured Creditors of WCG).
THIS OFFER
On May 15, 2003, Leucadia sent a letter (the 'May 2003 Letter') to the
WilTel Board of Directors (the 'WilTel Board') requesting that the WilTel Board
take action under WilTel's articles of incorporation and the Stockholders
Agreement to permit Leucadia to offer WilTel stockholders the opportunity to
exchange each share of WilTel common stock they hold for 0.3565 of a Leucadia
common share (this exchange ratio represented a 30% premium to WilTel's stock
price based on the respective per share closing prices of Leucadia ($38.65) and
WilTel ($10.60) on May 14, 2003). Leucadia did not request that the WilTel Board
recommend Leucadia's offer, only that the WilTel Board permit WilTel
stockholders the opportunity to decide whether or not they wished to accept
Leucadia's offer. The May 2003 Letter requested the WilTel Board to take action
under the Stockholders Agreement to permit Leucadia's offer to be presented to
WilTel stockholders because, as described under 'Interests of Certain Persons in
the Offer and Subsequent Merger -- Certain Agreements Between Leucadia and
WilTel', in the Stockholders Agreement, Leucadia agreed not to commence a tender
or exchange offer for WilTel shares prior to October 15, 2004 unless that
restriction was amended or waived by a majority of the independent directors of
WilTel (or by the holders of a majority of the WilTel shares not owned by
Leucadia). As described in greater detail below under ' -- Additional Factors
for Consideration
22
by WilTel Stockholders -- Our Reasons for Making the Offer', our reason for
making the offer at this time was to acquire all of the WilTel common stock that
we do not own, and thereby (a) eliminate the potential for conflicts of interest
between Leucadia and WilTel, (b) eliminate the administrative, compliance and
other costs associated with maintaining WilTel's status as a public company and
(c) be able to consolidate WilTel in our federal income tax return and increase
the likelihood that WilTel's significant tax attributes will be utilized for the
benefit of shareholders.
On May 27, 2003, the WilTel Board established a Special Committee comprised
of the six independent directors on the nine member WilTel Board. The Special
Committee interviewed a number of investment banking firms and law firms to aid
it in considering Leucadia's proposal before selecting JPMorgan as its financial
advisor and Gibson, Dunn & Crutcher LLP as its legal advisor. Leucadia had no
involvement in the selection or retention of the Special Committee's financial
and legal advisors.
On July 11, 2003, Leucadia sent a letter to the Special Committee confirming
Leucadia's position mentioned at the May 27, 2003 WilTel Board meeting that
Leucadia 'has no interest in entertaining any offers to reduce its ownership
interest in WilTel'. On July 17, 2003, representatives of the Special Committee
met with representatives of Leucadia to commence the Special Committee's
financial due diligence review of Leucadia. On July 21, 2003, Leucadia executed
a confidentiality agreement with the Special Committee to facilitate the
provision of information about Leucadia.
On July 25, 2003, Leucadia notified the Special Committee that 'shopping'
WilTel would be dangerous for the stability of WilTel's business because it
would create the impression that Leucadia was interested in selling its interest
in WilTel (which was not the case) after Leucadia had gone to considerable
effort to assure WilTel's customers, suppliers and employees that WilTel was a
long-term investment for Leucadia. Leucadia believed that market rumors of an
impending sale by Leucadia would undermine the stability and progress achieved
by WilTel following the turmoil of the bankruptcy process. Leucadia further
advised the Special Committee that its May 2003 proposal would be withdrawn if
the Special Committee or its advisors solicited offers for WilTel. On July 29,
2003, Leucadia withdrew its proposal and request set forth in the May 2003
Letter due to its concern that certain members of the Special Committee
expressed the view that WilTel needed to be 'shopped' for the Special Committee
to evaluate Leucadia's proposal by a market survey, even though Leucadia, as the
owner of 47.4% of the outstanding WilTel shares, had advised the Special
Committee that Leucadia had no intention of selling its shares and that,
therefore, a sale of WilTel to a third party was not realistic. Leucadia's
position that the Special Committee did not need to 'shop' WilTel in advance of
acting on Leucadia's proposal was based, among other things, on (i) the fact
that Leucadia's proposal for WilTel had been publicly disclosed since mid-May
2003 and, to Leucadia's knowledge, no competing transactions had been proposed,
(ii) the fact that WilTel would be able, at any time prior to the consummation
of Leucadia's offer, to respond to any unsolicited, bona fide superior proposal
that may be made by a third party for the acquisition of WilTel, and the WilTel
Board would be able to change its recommendation in respect of Leucadia's offer
if the Board determines that such action is necessary in order for the Board to
comply with its fiduciary duties under applicable law, (iii) Leucadia's belief
that, with the assistance of an experienced investment banking firm of the
caliber of JPMorgan, the Special Committee would be able to evaluate Leucadia's
offer through means other than a market check, and (iv) Leucadia's belief that
many acquisition transactions, particularly those where the subject company has
a significant stockholder, are conducted without a prior market check.
On July 31, 2003, following Leucadia's withdrawal of its May 2003 proposal,
the Chairman of the WilTel Board sent a letter to the Special Committee
notifying its members that a special meeting of the WilTel Board was being
called to vote upon formally disbanding the Special Committee in light of the
fact that the Special Committee's mandate was predicated on Leucadia's May 2003
proposal, which had been withdrawn, as well as to take action with respect to
the return of non-public WilTel information that may have been disclosed to
third parties, and to confirm that no one is to 'shop' WilTel without
authorization of the WilTel Board. On August 1, 2003, members of the WilTel
Board communicated by telephone and reached a consensus to postpone the special
meeting of the WilTel Board to allow time for negotiations with respect to a
possible
23
mutually-acceptable proposal to develop. No action to disband the Special
Committee was ever taken by the WilTel Board.
Subsequent to Leucadia's withdrawal of its offer, the financial advisor to
the independent directors of WilTel contacted Leucadia to encourage Leucadia to
propose another offer. In response, on August 7, 2003 Leucadia sent a letter
(the 'August 2003 Letter') to the independent directors of WilTel relating to
alternative proposals to acquire the shares of WilTel not already owned by
Leucadia. The August 2003 Letter proposed either of the following transactions:
(A) an offer of 0.3672 of a Leucadia common share in exchange for each share of
WilTel common stock, if the independent directors of WilTel would agree to let
the offer go forward and not oppose the offer; or (B) a higher offer of 0.3934
of a Leucadia common share in exchange for each share of WilTel common stock, if
WilTel would enter into a mutually acceptable merger agreement with Leucadia
which provided for (i) a first-step exchange offer to be followed by a back-end
merger for the same consideration as offered in the exchange offer and (ii) a
recommendation in favor of the transaction by the independent directors of
WilTel. The August 2003 Letter fixed August 12 as the deadline for WilTel to
accept one of the proposals. These proposals were formulated by Leucadia without
negotiation with the Special Committee or their advisors. Representatives of
Leucadia and the independent directors' financial advisor held numerous
discussions over the next few days, during which they negotiated price, the
structure of the exchange ratio (i.e., floating vs. fixed rate and the
possibility of a 'collar') and, in response to a proposal by the independent
directors' financial advisor that the transaction consideration include the
possibility of contingent consideration for WilTel stockholders in the event
Leucadia were to sell all or substantially all of the business and assets of
WilTel within a short time after completing the proposed transaction for net
proceeds in excess of the valuation accorded to WilTel's equity in the proposed
transaction, the concept of CSRs.
On August 12, 2003, following meetings between Leucadia and the Special
Committee's financial advisor, Leucadia and WilTel issued a joint press release
announcing that Leucadia and the Special Committee reached an agreement in
principle with respect to the offer and merger described in this prospectus. On
August 13, 2003, Weil, Gotshal & Manges LLP, our outside legal counsel, sent a
draft merger agreement to the Special Committee's outside legal counsel, Gibson,
Dunn & Crutcher LLP. Leucadia, the Special Committee and their respective
outside legal counsels began negotiating the merger agreement on August 18,
2003. Negotiations continued until the Merger Agreement was executed, following
its approval by the Special Committee and the WilTel Board, on August 21, 2003.
ADDITIONAL FACTORS FOR CONSIDERATION BY WILTEL STOCKHOLDERS
OUR REASONS FOR MAKING THE OFFER
We are making the offer for the purpose of acquiring all of the shares of
WilTel common stock that we do not own. Below are some of the key benefits we
hope to derive from the transactions:
We believe that our ownership of 100% of WilTel would eliminate the
potential for conflicts of interest between Leucadia and WilTel and would
consequently allow us greater flexibility to focus resources on maximizing
our investment in WilTel for the benefit of all shareholders. For example,
we believe that WilTel may need additional financing in the future and that
we might be a good source for that financing. Although in certain cases we
might consider providing some of this financing for WilTel, the terms of
such financing would need to be negotiated with WilTel's board of
directors, and corporate governance concerns with respect to related-party
transactions and concerns related to exploitation of corporate
opportunities would factor into our decisions as to whether to propose or
provide such financing. We believe that by eliminating those concerns
through owning 100% of WilTel, we would be better able to focus our
resources on maximizing for all shareholders the value of our investment in
WilTel.
If WilTel ceases to be a publicly held company, we would benefit from the
elimination of administrative, compliance and other costs associated with
maintaining WilTel's status as a public company. We estimate that these
costs are approximately $6 million a year (including
24
the costs of directors and officers liability insurance for a public
company). If WilTel remains a public company, we expect that some of these
costs would increase in the future as a result of new regulations adopted
under the Sarbanes-Oxley Act.
WilTel and its subsidiaries currently have significant tax loss
carry-forwards and other attractive tax attributes. As disclosed in
WilTel's Annual Report on Form 10-K for the fiscal year ended December 31,
2002, WilTel has reported $2.4 billion of federal net operating losses, of
which $859.9 million, $1.4 billion and $126.2 million will expire in 2020,
2021 and 2022, respectively; $297.7 million of estimated capital loss
carryforwards, which will expire in 2005; and both foreign and state net
operating losses that expire at various dates. Additionally, as at
December 31, 2002, WilTel's reported tax basis in its property, plant and
equipment was approximately $3.5 billion, which is significantly higher
than the book value of those assets reflected in its financial statements;
this tax basis is expected to generate substantial depreciation and
amortization deductions for U.S. federal income tax purposes. Generally, by
way of illustration only, assuming unlimited usability of tax losses and
deductions and assuming an effective tax rate of 35%, a combination of $2.4
billion of tax loss carryforwards and $3.5 billion of depreciable or
amortizable tax basis could reduce tax liability over the years by as much
as $2.065 billion. Portions of these attributes are or will be subject to
reduction or limitation, and we do not believe, particularly given the many
unknowns as to future income, events and tax law developments, that we can
ascribe a true and accurate value to these tax attributes. However,
Leucadia believes that its greater financial resources will provide greater
opportunity for future investments, unlike WilTel, the cash resources of
which are severely restricted and which is likely to need to raise capital
to meet the debt service requirements of its existing debt in 2005.
Moreover, Leucadia believes that it will be more likely to generate taxable
income through its diversified interests than will WilTel, the operations
of which are concentrated in one industry. Consequently, Leucadia believes
that completion of the offer will increase the likelihood that WilTel's
significant tax attributes will be utilized for the benefit of
shareholders. See 'The Offer -- Tax Consolidation with WilTel'.
IF YOU BECOME A SHAREHOLDER OF LEUCADIA AS A RESULT OF THE OFFER OR MERGER,
YOUR INVESTMENT SHOULD INDIRECTLY BENEFIT FROM ANY OF THE FOREGOING AS WELL AS
OTHER BENEFITS LEUCADIA MAY OBTAIN AS A RESULT OF THE TRANSACTIONS.
OTHER FACTORS YOU SHOULD CONSIDER
In deciding whether or not to tender your shares of WilTel common stock, you
should consider the factors described above under ' -- Our Reasons for Making
the Offer', as well as the factors set forth under 'Risk Factors' and the other
factors set forth in this prospectus. While we believe the offer should be
attractive to you as a WilTel stockholder, you should also consider the
following matters:
As a stockholder of Leucadia, your interest in the performance and
prospects of WilTel would only be indirect and in proportion to your share
ownership in Leucadia. You therefore will not realize the same financial
benefits of future appreciation in the value of WilTel, if any, that you
may realize if the offer and the subsequent merger were not completed and
you were to remain a WilTel stockholder.
An investment in a company like WilTel, which concentrates in one industry,
may be associated with greater risk and a greater potential for gain than
an investment in a more diversified company like Leucadia. On the other
hand, as a shareholder in a diversified company like Leucadia, your
investment will be exposed to risks and events that are likely to have
little or no effect on WilTel. You therefore would experience the impact of
developments (both positive and negative) in the communications industry to
a lesser extent, but would also experience the impact of developments (both
positive and negative) in a variety of industries.
The payment of additional Leucadia common shares in connection with the
CSRs will be made only if and to the extent that Leucadia sells all or
substantially all of WilTel's assets or more than 50% of WilTel's capital
stock prior to the maturity date of the CSRs and the
25
net proceeds to Leucadia from such sale exceed the valuation accorded to
WilTel's equity in the offer and merger. If Leucadia and WilTel do not
ultimately consummate such a sale of WilTel's assets or capital stock prior
to the maturity of the CSRs, the CSRs will become worthless, and Leucadia
currently has no intention of engaging in any such sale.
In addition to the foregoing, we are aware that individual stockholders of
WilTel have filed complaints in various courts purporting to commence class
action lawsuits on behalf of WilTel stockholders against WilTel, directors of
WilTel and Leucadia. Among other remedies, the complaints seek to enjoin the
offer and merger or, alternatively, rescission and damages in an unspecified
amount. Leucadia believes the complaints to be without merit but has entered
into an agreement in principle to settle the litigations in order to eliminate
the burden and expense of further litigation, subject to approval from directors
and officers insurance carriers, based upon increased disclosure in this
prospectus and the WilTtel Recommendation Statement. See 'Certain Legal Matters
and Regulatory Approvals -- Stockholder Litigation' for a more detailed
discussion of these lawsuits.
CERTAIN INFORMATION PROVIDED
It is our understanding that WilTel does not as a matter of course make
public any projections as to future performance, and the projections set forth
below are included in this prospectus only because this information was obtained
by Leucadia in connection with its existing stockholdings in WilTel. To
Leucadia's knowledge, the projections were not prepared with a view to public
disclosure or compliance with the published guidelines of the SEC or the
guidelines established by the American Institute of Certified Public Accountants
regarding projections or forecasts. It is Leucadia's belief that the projections
do not purport to present financial condition in accordance with accounting
principles generally accepted in the United States. WilTel's independent
accountants have not examined, compiled or otherwise applied procedures to the
projections and, accordingly, do not express an opinion or any other form of
assurance with respect to the projections. It is Leucadia's belief that the
projections were prepared for internal use and capital budgeting and other
management decisions and are subjective in many respects and thus susceptible to
interpretations and periodic revision based on actual experience and business
developments. It is also Leucadia's belief that the projections reflect numerous
assumptions made by management of WilTel with respect to industry performance,
general business, economic, market and financial conditions and other matters,
all of which are difficult to predict, many of which are beyond WilTel's
control. Accordingly, there can be no assurance that the assumptions made in
preparing the projections will prove accurate. It is expected that there will be
differences between actual and projected results, and actual results may be
materially greater or less than those contained in the projections. The
inclusion of the projections herein should not be regarded as an indication that
Leucadia or its affiliates or representatives considered or consider the
projections to be a reliable prediction of future events, and the projections
should not be relied upon as such.
WilTel's projections, which were provided to the WilTel Board in June 2003
and do not reflect the offer and merger contemplated by this prospectus,
forecast total revenues of $1.28 billion, $1.50 billion and $1.72 billion for
2003, 2004 and 2005, respectively; net losses of ($198 million), ($133 million)
and ($3 million) for 2003, 2004 and 2005, respectively; and that during the
three year period ending December 31, 2005, WilTel would consume aggregate cash
resources of approximately $230 million, including scheduled principal
amortization of debt of $157 million.
Neither Leucadia nor any of its affiliates or representatives has made or
makes any representation to any person regarding the ultimate performance of
WilTel or Leucadia compared to the projections, and (except as otherwise
required by applicable law) none of them undertakes any obligation to publicly
update the projections to reflect circumstances existing after the date when
made or to reflect the occurrence of future events, even in the event that any
or all of the assumptions underlying the projections are shown to be in error.
26
RECOMMENDATION OF WILTEL'S BOARD OF DIRECTORS
On August 21, 2003, WilTel's board of directors, based upon the
recommendation of the Special Committee comprised of independent directors,
approved the Merger Agreement, this offer and the proposed merger. WilTel's
board of directors also has recommended that WilTel stockholders tender their
shares of WilTel common stock in this offer. For more information about the
WilTel board of directors' recommendation and the reasons for its
recommendation, please see WilTel's Solicitation/Recommendation Statement on
Schedule 14D-9 (the 'WilTel Recommendation Statement'). Please see 'Where You
Can Find More Information' to learn how to get a copy of the WilTel
Recommendation Statement.
WilTel's board of directors has received a written opinion, dated
August 21, 2003, from JPMorgan to the effect that, as of the date of the opinion
and based on and subject to the matters described in the opinion, the
consideration to be received by the holders of WilTel common stock (other than
Leucadia and its affiliates) in the offer and merger is fair, from a financial
point of view, to such holders. We have been advised that JPMorgan did not
assign any monetary value to the CSRs in rendering its opinion. A summary of
JPMorgan's opinion and of the analysis performed, the bases and methods of
arriving at the opinion, and a description of JPMorgan's investigation and
assumptions, is included in the WilTel Recommendation Statement. The full text
of JPMorgan's written opinion, which sets forth, among other things, the
assumptions made, procedures followed, matters considered and limitations on the
review undertaken by JPMorgan in rendering its opinion, is attached to the
WilTel Recommendation Statement.
27
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
LEUCADIA
Leucadia common shares are traded on the New York Stock Exchange and the
Pacific Stock Exchange under the symbol 'LUK'. The following table sets forth,
for the calendar periods indicated, the high and low sales price per Leucadia
common share on the consolidated transaction reporting system, as reported by
the Bloomberg Professional Service provided by Bloomberg L.P.
2003 HIGH LOW
---- ---- ---
Third Quarter (through September 2, 2003)................... $39.40 $36.33
Second Quarter.............................................. 39.44 35.79
First Quarter............................................... 38.60 32.59
2002 HIGH LOW
---- ---- ---
Fourth Quarter.............................................. $40.27 $32.85
Third Quarter............................................... 36.37 27.62
Second Quarter.............................................. 38.16 30.95
First Quarter............................................... 36.04 28.00
2001 HIGH LOW
---- ---- ---
Fourth Quarter.............................................. $31.96 $26.31
Third Quarter............................................... 33.65 28.25
Second Quarter.............................................. 34.90 30.58
First Quarter............................................... 35.70 30.50
The closing sale price for a Leucadia common share on May 14, 2003, the last
trading date prior to the date of Leucadia's announcement of its May 15 offer,
was $38.65. The closing sale price on September 2, 2003, the last trading date
prior to the printing of this prospectus for which this information was
practicably available, was $38.21. You are urged to obtain current market
quotations.
As of August 5, 2003, there were 59,636,692 Leucadia common shares
outstanding and approximately 2,940 holders of record of Leucadia common shares.
In 2002 and 2001, Leucadia paid annual cash dividends of $0.25 per common
share. The payment of dividends in the future is subject to the discretion of
Leucadia's board of directors and will depend upon general business conditions,
legal and contractual restrictions on the payment of dividends and other factors
that our board of directors may deem to be relevant. In connection with the
declaration of dividends or the making of distributions on, or the purchase,
redemption or other acquisition of Leucadia common shares, Leucadia is required
to comply with certain restrictions contained in certain of its debt
instruments. Leucadia's regulated subsidiaries are restricted in the amount of
distributions that can be made to Leucadia without regulatory approval. Leucadia
may consider the recent changes in U.S. tax laws lowering the tax rate on
dividends in determining its dividend policy.
WILTEL
WilTel common stock is traded on NASDAQ under the symbol 'WTEL'. WilTel
common stock began trading on NASDAQ effective December 5, 2002. The following
table sets forth, for the calendar periods indicated, the high and low sales
price per share of WilTel common stock on NASDAQ, as reported by the Bloomberg
Professional Service provided by Bloomberg L.P.
2003 HIGH LOW
---- ---- ---
Third Quarter (through September 2, 2003)................... $16.30 $11.47
Second Quarter.............................................. 15.45 9.88
First Quarter............................................... 16.30 11.64
2002 HIGH LOW
---- ---- ---
Fourth Quarter (commencing December 5, 2002)................ $16.77 $11.65
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WilTel common stock traded on the over-the-counter bulletin board under the
symbol 'WTELV' or 'WTEL' from October 2, 2002 to December 4, 2002. The following
table sets forth the high and low sales price per share of WilTel common stock
as reported by the Bloomberg Professional Service provided by Bloomberg L.P. for
such period.
HIGH LOW
---- ---
October 2, 2002 to December 4, 2002......................... $15.75 $ 6.85
The closing sale price for shares of WilTel common stock on May 14, 2003,
the last trading date prior to the date of Leucadia's announcement of its
May 15 offer, was $10.60. The closing sale price on September 2, 2003, the last
trading date prior to the printing of this prospectus for which this information
was practicably available, was $16.11. You are urged to obtain current market
quotations.
As of July 31, 2003, there were 50,000,000 shares of WilTel common stock
outstanding and approximately 25 holders of record of WilTel common stock.
The following dividend information concerning WilTel was obtained from
WilTel's Annual Report on Form 10-K for the fiscal year ended December 31, 2002.
WilTel's current debt agreements prohibit WilTel from paying cash dividends on
WilTel common stock. No common stock cash dividends were paid in 2002 and WilTel
management does not expect to pay cash dividends on the common stock in the
foreseeable future. It is WilTel management's intention to retain future
earnings, if any, to finance the operation and development of WilTel's business.
Future dividends, if any, will be determined by WilTel's board of directors and
will depend on the success of operations, capital needs, financial conditions,
restrictions on the payment of dividends contained in WilTel's debt agreements
and other such factors as WilTel's board of directors may consider.
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THE OFFER
We are proposing to acquire all of the outstanding shares of WilTel common
stock that we do not already own. We currently beneficially own 23,700,000
shares of WilTel common stock, representing 47.4% of the outstanding shares of
WilTel common stock.
EXCHANGE OF SHARES OF WILTEL COMMON STOCK
We are offering to exchange 0.4242 of a Leucadia common share and one CSR
for each outstanding share of WilTel common stock validly tendered and not
properly withdrawn prior to the expiration of the offer, upon the terms and
subject to the conditions set forth in this prospectus and the related letter of
transmittal. For a description of the CSRs, please see 'Description of the
CSRs'. We will not acquire any shares of WilTel common stock in the offer unless
WilTel stockholders (other than Leucadia and its affiliates) have validly
tendered and not properly withdrawn prior to the expiration of the offer a
majority of the outstanding shares of WilTel common stock not owned by Leucadia
and its affiliates. If none of the shares of WilTel common stock currently held
by the securities holder channeling fund established in connection with the
reorganization of WilTel's predecessor company are validly tendered in
accordance with the terms of the offer, then the shares of WilTel common stock
in such fund will be deemed not outstanding for purposes of this minimum
condition. As of the date of this prospectus, 26,300,000 of the outstanding
shares of WilTel common stock were not owned by Leucadia and its affiliates.
There are also other conditions to the offer that are described under
'--Conditions of the Offer'.
After completion of the offer, Leucadia will have WilTel complete a merger
with Merger Sub, in which each outstanding share of WilTel common stock (except
for shares beneficially owned directly or indirectly by Leucadia for its own
account) will be converted into the right to receive Leucadia common shares and
a CSR at the same exchange ratio as used in the offer, subject to dissenters'
rights to the extent applicable under Nevada law. If after the completion of
this offer we beneficially own more than 90% of the outstanding shares of WilTel
common stock, we may effect this merger without the approval of WilTel
stockholders, as permitted under Nevada law. See '--Approval of the Merger'.
When we refer to the expiration of the offer we mean 5:00 PM, New York City
time, on Wednesday, November 5, 2003, unless we extend the period of time for
which the offer is open, in which case the offer will expire, and references to
the expiration of the offer will mean, the latest time and date on which the
offer is open.
If you are the record owner of your shares and you tender your shares
directly to the exchange agent and depository, you will not be obligated to pay
any charges or expenses of the exchange agent and depository or any brokerage
commissions. If you own your shares through a broker or other nominee, and your
broker or nominee tenders the shares on your behalf, your broker or nominee may
charge you a fee for doing so. You should consult your broker or nominee to
determine whether any charges will apply.
TIMING OF THE OFFER
We commenced the offer on September 4, 2003. The offer is scheduled to
expire at 5:00 PM, New York City time, on Wednesday, November 5, 2003, unless
we extend the period of the offer. All references to the expiration of the offer
mean the time of expiration, as extended. For more information, see the
discussion under '--Extension, Termination and Amendment' immediately below.
EXTENSION, TERMINATION AND AMENDMENT
If any condition to the offer is not satisfied or, if permissible, waived,
on any scheduled expiration date of the offer, then we may extend the expiration
date from time to time. Each extension may last for no more than ten business
days, unless WilTel and Leucadia agree in writing to allow for a longer period.
We also have the right to extend the offer for any period of
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time required by the applicable rules and regulations of the SEC. Leucadia or
WilTel can terminate the Merger Agreement if the offer is not consummated by
January 15, 2004. We can extend the offer by giving oral or written notice of
extension to American Stock Transfer & Trust Company, the exchange agent and
depository for the offer. If we decide to extend the offer, we will make an
announcement to that effect no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration. We are not giving
any assurance that we will extend the offer. During any extension, all shares of
WilTel common stock previously tendered and not withdrawn will remain deposited
with the exchange agent and depository, subject to your right to withdraw your
shares of WilTel common stock as described under '--Withdrawal Rights'.
We reserve the right to make any changes in the terms and conditions of the
offer by giving oral or written notice of the change to the exchange agent and
depository and by making a public announcement. However, without the prior
written consent of WilTel, we cannot:
decrease the exchange ratio or decrease the number of Leucadia common
shares issuable pursuant to the CSRs;
make any changes to the form or consideration to be paid for shares of
WilTel common stock in the offer;
impose any additional conditions on the offer other than those already
described in the Merger Agreement;
amend or waive the minimum condition or the tax opinion condition as
described in the Merger Agreement; or
make any other change to the terms and conditions of the offer which is
adverse to the holders of shares of WilTel common stock.
We are required to follow any extension, termination, amendment or delay, as
promptly as practicable, with a public announcement. In the case of an
extension, the announcement is required to be issued no later than 9:00 a.m.,
New York time, on the next business day after the previously scheduled
expiration date. Subject to applicable law, and without limiting the manner in
which we may choose to make any public announcement, we assume no obligation to
publish, advertise or otherwise communicate any public announcement other than
by making a release to the Dow Jones News Service.
If we make a material change in the terms of the offer or the information
concerning the offer, or if we waive a material condition of the offer, we will
extend the offer to the extent required under the Exchange Act.
PROCEDURE FOR TENDERING SHARES
For you to validly tender shares of WilTel common stock into the offer, you
must do one of the following:
Deliver certificates for your shares, a properly completed and duly
executed letter of transmittal or a duly executed copy thereof, along with
any other required documents, to the exchange agent and depository at one
of its addresses set forth on the back cover of this prospectus prior to
the expiration of the offer;
Arrange for a book-entry transfer of your shares to be made to the exchange
agent and depository's account at DTC and receipt by the exchange agent and
depository of a confirmation of this transfer prior to the expiration of
the offer, and the delivery of a properly completed and duly executed
letter of transmittal or a duly executed copy thereof, and any other
required documents, to the exchange agent at one of its addresses set forth
on the back cover of this prospectus prior to the expiration of the offer;
or
Arrange for a book-entry transfer of your shares to the exchange agent and
depository's account at DTC and receipt by the exchange agent and
depository of confirmation of this transfer, including an 'agent's
message,' prior to the expiration of the offer.
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These deliveries and arrangements must be made before the expiration of the
offer. TENDERS BY NOTICE OF GUARANTEED DELIVERY WILL NOT BE ACCEPTED. The term
'agent's message' means a message, transmitted by DTC to, and received by, the
exchange agent and depository and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the shares of WilTel common stock which are the
subject of the book-entry confirmation, that the participant has received and
agrees to be bound by the terms of the letter of transmittal and that we may
enforce that agreement against the participant.
The exchange agent and depository will establish an account with respect to
the shares of WilTel common stock at DTC for purposes of the offer within two
business days after the date of the distribution of this prospectus, and any
financial institution that is a participant in DTC may make book-entry delivery
of the shares of WilTel common stock by causing DTC to transfer these shares of
WilTel common stock into the exchange agent and depository's account in
accordance with DTC's procedure for the transfer. For a tender made by transfer
of shares of WilTel common stock through book-entry delivery at DTC to be valid,
the exchange agent and depository must receive, prior to the expiration of the
offer, a book-entry confirmation of transfer and either a duly executed letter
of transmittal or a duly executed copy thereof, along with any other required
documents, at one of its addresses set forth on the back cover of this
prospectus, or an agent's message as part of the book-entry confirmation.
Signatures on all letters of transmittal must be guaranteed by an eligible
institution, except in cases in which shares of WilTel common stock are tendered
either by a registered holder of shares of WilTel common stock who has not
completed the box entitled 'Special Delivery Instructions' on the letter of
transmittal or for the account of an eligible institution. By 'eligible
institution' we mean a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of a recognized Medallion
Program approved by the Securities Transfer Association Inc., including the
Securities Transfer Agent's Medallion Program (STAMP), the Stock Exchange
Medallion Program (SEMP) and the New York Stock Exchange Medallion Signature
Program (MSP), or any other 'eligible guarantor institution,' as that term is
defined in Rule 17Ad-15 under the Exchange Act.
If the certificates for shares of WilTel common stock are registered in the
name of a person other than the person who signs the letter of transmittal, the
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered owner or
owners appear on the certificates, with the signature(s) on the certificates or
stock powers guaranteed in the manner described above.
The method of delivery of certificates representing shares of WilTel common
stock and all other required documents, including delivery through DTC, is at
your option and risk, and the delivery will be deemed made only when actually
received by the exchange agent and depository. If delivery is by mail, we
recommend registered mail with return receipt requested, properly insured. In
all cases, you should allow sufficient time to ensure timely delivery before
expiration of the offer.
WITHDRAWAL RIGHTS
You may withdraw shares of WilTel common stock that you tender pursuant to
the offer at any time before the expiration of the offer. After the expiration
of the offer, tenders are irrevocable. However, if we have not accepted tendered
shares for exchange by November 3, 2003, you may withdraw tendered shares at any
time thereafter.
For your withdrawal to be effective, the exchange agent and depository must
receive from you, prior to the expiration of the offer, a written or facsimile
transmission notice of withdrawal at one of its addresses set forth on the back
cover of this prospectus, and your notice must include your name, address,
social security number, the certificate number(s) and the number of shares of
WilTel common stock to be withdrawn, as well as the name of the registered
holder, if it is different from that of the person who tendered those shares of
WilTel common stock. If shares of WilTel common stock have been tendered
pursuant to the procedures for book-entry tender discussed above under
'--Procedure for Tendering Shares,' any notice of withdrawal must specify
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the name and number of the account at DTC to be credited with the withdrawn
shares of WilTel common stock and must otherwise comply with DTC's procedures.
If certificates have been delivered or otherwise identified to the exchange
agent and depository, the name of the registered holder and the serial numbers
of the particular certificates evidencing the shares of WilTel common stock
withdrawn must also be furnished to the exchange agent and depository, as stated
above, prior to the physical release of the certificates. We will decide all
questions as to the form and validity (including time of receipt) of any notice
of withdrawal, in our sole discretion, and our decision will be final and
binding.
An eligible institution must guarantee all signatures on the notice of
withdrawal unless the shares of WilTel common stock have been tendered for the
account of an eligible institution.
None of Leucadia, the exchange agent and depository, the information agent
or any other person will be under any duty to give notification of any defects
or irregularities in any notice of withdrawal or will incur any liability for
failure to give any notification. Any shares of WilTel common stock that you
properly withdraw will be deemed not to have been validly tendered for purposes
of the offer. However, you may retender withdrawn shares of WilTel common stock
by following one of the procedures discussed under '--Procedure for Tendering
Shares' at any time before the expiration of the offer.
SUBSEQUENT OFFERING PERIOD
We may elect to provide a subsequent offering period of up to 20 business
days after the acceptance of shares of WilTel common stock in the offer if the
requirements of Rule 14d-11 under the Exchange Act have been met. You will not
have the right to withdraw any shares of WilTel common stock that you tender
during the subsequent offering period. We are required to accept for exchange,
and to deliver Leucadia common shares in exchange for, shares of WilTel common
stock that are validly tendered, promptly after they are tendered during any
subsequent offering period. If we elect to provide a subsequent offering period,
we are required to make a public announcement to that effect no later than 9:00
a.m., New York time, on the next business day after the previously scheduled
expiration date.
EFFECT OF A TENDER OF SHARES
By executing a letter of transmittal, you will agree and acknowledge that
our acceptance for exchange of shares of WilTel common stock you tender in the
offer will, without any further action, revoke any prior powers of attorney and
proxies that you may have granted in respect of those shares and you will not
grant any subsequent proxies and, if any are granted, they will not be deemed
effective. We reserve the right to require that, in order for shares of WilTel
common stock to be validly tendered, we must be able to exercise full voting,
consent and other rights with respect to those shares of WilTel common stock
immediately upon our acceptance of those shares of WilTel common stock for
exchange.
We will determine questions as to the validity, form, eligibility (including
time of receipt) and acceptance for exchange of any tender of shares of WilTel
common stock, in our sole discretion, and our determination will be final and
binding. We reserve the absolute right to reject any and all tenders of shares
of WilTel common stock that we determine are not in proper form or the
acceptance of or exchange for which may, in the opinion of our counsel, be
unlawful. No tender of shares of WilTel common stock will be deemed to have been
validly made until all defects and irregularities in tenders of those shares
have been cured or waived. None of Leucadia, the exchange agent and depository,
the information agent, nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any shares of
WilTel common stock or will incur any liability for failure to give any such
notification. Our interpretation of the terms and conditions of our offer,
including the letter of transmittal and instructions, will be final and binding.
33
The tender of shares of WilTel common stock pursuant to any of the
procedures described above will constitute a binding agreement between you and
us upon the terms and subject to the conditions of the offer.
DELIVERY OF LEUCADIA COMMON SHARES
Upon the terms and subject to the conditions of the offer, including, if the
offer is extended or amended, the terms and conditions of the extension or
amendment, we will, promptly after expiration of the offer, exchange shares of
WilTel common stock validly tendered and not properly withdrawn for Leucadia
common shares, CSRs and cash instead of fractional shares. CSRs will not be
evidenced by any form of certificate. In all cases, exchange of shares of WilTel
common stock tendered and accepted for exchange pursuant to the offer will be
made only if the exchange agent and depository timely receives (1) certificates
for those shares of WilTel common stock, or a timely confirmation of a
book-entry transfer of those shares of WilTel common stock in the exchange agent
and depository's account at DTC, and a properly completed and duly executed
letter of transmittal or a duly executed copy thereof, and any other required
documents; or (2) a timely confirmation of a book-entry transfer of those shares
of WilTel common stock in the exchange agent and depository's account at DTC,
together with an 'agent's message' as described under '--Procedure for
Tendering Shares'.
For purposes of the offer, we will be deemed to have accepted for exchange
shares of WilTel common stock validly tendered and not properly withdrawn when,
as and if we notify the exchange agent and depository of our acceptance of the
tender of those shares of WilTel common stock pursuant to the offer. The
exchange agent and depository will deliver Leucadia common shares in exchange
for shares of WilTel common stock pursuant to the offer and cash instead of a
fraction of a Leucadia common share promptly after receipt of our notice. The
exchange agent and depository will act as agent for tendering WilTel
stockholders for the purpose of receiving Leucadia common shares and cash
instead of a fraction of a Leucadia common share and transmitting the shares and
cash to you. You will not receive any interest on any cash that you are entitled
to receive, even if there is a delay in making the exchange.
If we do not accept shares of WilTel common stock for exchange pursuant to
the offer or if certificates are submitted for more shares of WilTel common
stock than are tendered into the offer, we will return certificates for these
unexchanged shares of WilTel common stock without expense to the tendering
stockholder. If we do not accept shares of WilTel common stock for exchange
pursuant to the offer, shares of WilTel common stock tendered by book-entry
transfer into the exchange agent and depository's account at DTC pursuant to the
procedures set forth under '--Procedure for Tendering Shares' will be credited
to the account maintained with DTC from which those shares were originally
transferred, promptly following expiration or termination of the offer.
CASH INSTEAD OF FRACTIONAL LEUCADIA COMMON SHARES
We will not issue any fraction of a Leucadia common share pursuant to the
offer or the merger. In lieu thereof, Leucadia will arrange for the exchange
agent and depository to act on behalf of WilTel stockholders who would otherwise
be entitled to fractional shares to promptly after completion of the offer
aggregate these fractional interests and sell the Leucadia common shares in
respect thereof at the then prevailing prices on the open market. Sales will be
executed in round lots to the extent practicable. There can be no assurance as
to the sales price that the exchange agent and depository will receive for such
shares. Promptly after completing the sale of all of such shares, the exchange
agent and depository will make a cash payment (without interest) equal to the
proportionate interest in the net proceeds from the sale of such shares
attributable to each WilTel stockholder otherwise entitled to fractional shares.
34
CONDITIONS OF THE OFFER
The offer is subject to a number of conditions, which we describe below.
Notwithstanding any other provision of the offer, Leucadia shall not be required
to accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-l(c) under the Exchange Act (relating to Leucadia's
obligation to pay for or return tendered shares of WilTel common stock promptly
after termination or withdrawal of the offer), pay for, and may delay the
acceptance for payment of or, subject to the restriction referred to above, the
payment for, any tendered shares of WilTel common stock, and (subject to the
provisions of the Merger Agreement) may terminate the offer and not accept for
payment any tendered shares if any of these conditions are not satisfied or,
where permissible, waived as of the expiration of the offer.
MINIMUM CONDITION
There must be validly tendered and not properly withdrawn prior to the
expiration of the offer a majority of the shares of WilTel common stock not
owned by Leucadia and its affiliates. As of the date of this prospectus, there
were 26,300,000 shares of WilTel common stock outstanding that are not owned by
Leucadia and its affiliates. If none of the 1,000,000 shares of WilTel common
stock currently held by the securities holder channeling fund established in
connection with the reorganization of WilTel's predecessor company are validly
tendered in accordance with the terms of the offer, then the shares of WilTel
common stock in such fund will be deemed not outstanding for purposes of this
minimum condition. We will not waive this condition without the consent of
WilTel.
REGISTRATION STATEMENT EFFECTIVENESS CONDITION
The registration statement on Form S-4 of which this prospectus is a part
must have become effective under the Securities Act and not be the subject of
any stop order or proceedings seeking a stop order.
ANTITRUST CONDITION
Any applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the 'HSR Act'), must have expired or been
terminated.
REGULATORY CONDITION
Leucadia shall have received all required approvals from the Federal
Communications Commission and state regulatory authorities for the change of
control of WilTel.
NYSE LISTING CONDITION
The Leucadia common shares issuable in exchange for shares of WilTel common
stock in the offer and the merger shall have been approved (if such approval is
necessary) for listing on the New York Stock Exchange.
TAX OPINION CONDITION
WilTel shall have received a written opinion from Weil, Gotshal & Manges LLP
(or, if not Weil, Gotshal & Manges LLP, Gibson, Dunn & Crutcher LLP) to the
effect that the offer and the merger should constitute a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code (which opinion may
rely on such assumptions and representations as such counsel reasonably deems
appropriate). We will not waive this condition without the consent of WilTel.
ADDITIONAL CONDITIONS
In addition, Leucadia shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including
Rule 14e-l(c) under the Exchange Act (relating to
35
Leucadia's obligation to pay for or return tendered shares of WilTel common
stock promptly after termination or withdrawal of the offer), pay for, and may
delay the acceptance for payment of or, subject to the restriction referred to
above, the payment for, any tendered shares of WilTel common stock, and (subject
to the provisions of the Merger Agreement) may terminate the offer and not
accept for payment any tendered shares if at any time prior to the expiration of
the offer, any of the following conditions exist:
(a) there shall be any injunction, judgment, ruling, order or decree
issued or entered by any governmental entity that (i) restrains, enjoins,
prevents, prohibits or makes illegal the acceptance for payment, payment for
or purchase of some or all of the shares of WilTel common stock by Leucadia
or the consummation of the transactions contemplated by the Merger
Agreement, including the offer and the merger (collectively, the
'Transactions'), (ii) imposes material limitations on the ability of
Leucadia or any of its affiliates effectively to exercise full rights of
ownership of 100% of the shares of WilTel common stock, including, without
limitation, the right to vote the shares of WilTel common stock purchased by
them on all matters properly presented to WilTel's stockholders on an equal
basis with all other stockholders (including, without limitation, the
adoption of the Merger Agreement and approval of the Transactions),
(iii) restrains, enjoins, prevents, prohibits or makes illegal, or imposes
material limitations on, Leucadia's or any of its affiliates' ownership or
operation of all or any portion of the businesses and assets of WilTel and
its subsidiaries, or, as a result of the Transactions, of Leucadia and its
subsidiaries, (iv) compels Leucadia or any of its affiliates to dispose of
any shares of WilTel common stock or, as a result of the Transactions,
compels Leucadia or any of its affiliates to hold separate any portion of
the businesses or assets of WilTel and its subsidiaries, or of Leucadia and
its subsidiaries, or (v) imposes damages on Leucadia, WilTel or any of their
respective affiliates as a result of the Transactions in amounts that are
material with respect to the Transactions;
(b) there shall be any law enacted, issued, promulgated, amended or
enforced by any governmental entity applicable to (i) Leucadia, WilTel or
any of their respective affiliates or (ii) the Transactions (other than the
routine application of the waiting period provisions of the HSR Act) that
results, or is reasonably likely to result, directly or indirectly, in any
of the consequences referred to in paragraph (a) above;
(c) (i) there shall have occurred any events or changes that,
individually or in the aggregate, have had or would reasonably be expected
to have a Company Material Adverse Effect (as defined in the Merger
Agreement) or (ii) (A) the representations and warranties of WilTel set
forth in the Merger Agreement that are qualified as to 'materiality' or
'Material Adverse Effect' shall not be true and correct, or the
representations and warranties of WilTel set forth in the Merger Agreement
that are not so qualified shall not be true and correct in all material
respects, in each case, at and as of the date of such determination as if
made on such date (other than those representations and warranties that
address matters only as of a particular date which are true and correct as
of such date), or (B) WilTel shall have breached or failed in any material
respect to perform or comply with any obligation, agreement or covenant
required by the Merger Agreement to be performed or complied with by it;
(d) the Board of Directors of WilTel shall have withdrawn or modified,
in a manner adverse to Leucadia, its approval or recommendation of any of
the Transactions;
(e) there shall have occurred (1) any general suspension of trading in
securities on the New York Stock Exchange, the American Stock Exchange or in
the Nasdaq National Market System, for a period in excess of three hours
(excluding suspensions or limitations resulting solely from physical damage
or interference with such exchanges not related to market conditions),
(2) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (3) any
limitation or proposed limitation (whether or not mandatory) by any United
States governmental entity that has a material adverse effect generally on
the extension of credit by banks or other financial institutions, (4) the
commencement of a war directly or indirectly involving the United States or
(5) in the case of any of the situations in clauses (1) through (4) of this
paragraph existing
36
at the time of the commencement of the offer, a material acceleration or
worsening thereof; or
(f) the Merger Agreement shall have been terminated in accordance with
its terms or the offer shall have been terminated with the consent of
WilTel.
GENERAL
All of the foregoing conditions are for our sole benefit and may be asserted
by us regardless of the circumstances giving rise to any such conditions or
(except as otherwise provided in the Merger Agreement) may be waived by us in
whole or in part at any time and from time to time in our sole discretion prior
to the expiration of the offer. The determination as to whether any condition
has occurred or has been satisfied will be in our judgment and will be final and
binding on all parties. Any failure by us at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to any particular facts or circumstances shall not
be deemed a waiver with respect to any other facts or circumstances, and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time prior to the expiration of the offer.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion describes the material United States federal income
tax consequences for WilTel stockholders of the offer and merger. It is based
upon the Internal Revenue Code of 1986, as amended (which we refer to as the
Code), regulations under the Code, and court and administrative rulings and
decisions in effect on the date of this prospectus, all of which are subject to
change, possibly retroactively. Any change could affect the continuing validity
of the tax consequences described in this prospectus. Leucadia has received an
opinion from Weil, Gotshal & Manges LLP that the following, insofar as it
constitutes statements of law or legal conclusions and except to the extent
qualified therein and herein, are the material U.S. federal income tax
consequences to WilTel stockholders of the offer and merger.
The description applies only to WilTel stockholders who are U.S. persons.
For purposes of this description, the term 'U.S. person' means any person that
is for U.S. federal income tax purposes: (a) an individual who is a U.S. citizen
or a U.S. resident alien; (b) any entity that is created or organized under the
laws of the United States or any State and is treated as a corporation; (c) a
trust (i) in respect of which a U.S. court is able to exercise primary
supervision over the administration of the trust and one or more U.S. persons
have the authority to control all substantive decisions of the trust or
(ii) that was in existence on August 20, 1996, and validly elected to continue
to be treated as a domestic trust; or (d) an estate that is subject to U.S. tax
on its worldwide income from all sources.
Our description is not a comprehensive description of all the tax
consequences that may be relevant to you. It applies only to WilTel stockholders
who hold their shares of WilTel common stock as a capital asset. Further, it
assumes that both the offer and the subsequent merger are completed as described
in this prospectus and that all conditions to closing the offer and the merger
as set forth in this prospectus are satisfied without waiver. No attempt has
been made to address all United States federal income tax consequences that may
be relevant to a particular WilTel stockholder in light of the stockholder's
individual circumstances or to WilTel stockholders who are subject to special
treatment under the United States federal income tax laws, such as: banks,
insurance companies and financial institutions; tax-exempt organizations; mutual
funds; persons that have a functional currency other than the U.S. dollar;
investors in pass-through entities (including partnerships); traders in
securities who elect to apply a mark-to-market method of accounting; dealers in
securities or foreign currencies; holders of options granted by WilTel; WilTel
stockholders who are not U.S. persons; and WilTel stockholders who hold shares
of WilTel common stock as part of a hedge, straddle, constructive sale or
conversion transaction.
This description does not address any tax consequences arising under the
laws of any state, locality or foreign jurisdiction, and it does not address any
federal tax consequences other than
37
federal income tax consequences. Nor does it address the tax consequences of any
transaction other than the offer and the merger.
The tax consequences to WilTel stockholders who tender or surrender their
shares of WilTel common stock in the offer or the merger in exchange for
Leucadia common shares depend on whether the offer and merger constitute a
reorganization within the meaning of Section 368(a) of the Code. WilTel has
received an opinion from Weil, Gotshal & Manges LLP that the offer and merger
should qualify as a reorganization for United States federal income tax
purposes. The opinion is based on representations by Leucadia and WilTel and on
an assessment of prior and potential future transactions and is intended to
convey a high degree of likelihood (without the ability to conclude with
certainty if the offer and merger are challenged by the IRS) that the offer and
merger will so qualify. Assuming that the offer and merger qualify as a
reorganization within the meaning of Section 368(a) of the Code, then, in
general:
a WilTel stockholder will not recognize any gain or loss on the exchange of
shares of WilTel common stock for Leucadia common shares and CSRs in the
offer or the subsequent merger, except with respect to cash, if any,
received by the stockholder instead of a fractional Leucadia common share;
subject to the discussion below regarding the CSRs, the aggregate tax basis
to a WilTel stockholder of the Leucadia common shares received in exchange
for shares of WilTel common stock pursuant to the offer or the merger will
equal the WilTel stockholder's aggregate tax basis in the shares of WilTel
common stock surrendered, decreased by the amount of any tax basis
allocable to any fractional Leucadia common share for which cash is
received;
subject to the discussion below regarding the CSRs, the holding period of a
WilTel stockholder for the Leucadia common shares received pursuant to the
offer or the merger will include the holding period of the shares of WilTel
common stock surrendered in exchange therefor; and
a WilTel stockholder who receives cash instead of a fractional Leucadia
common share pursuant to the offer or the subsequent merger will recognize
gain or loss on the exchange in an amount equal to the difference between
the amount of cash received and the basis of his shares of WilTel common
stock allocable to the fractional share. The gain or loss generally will
constitute capital gain or loss, long term if the shares of WilTel common
stock exchanged therefor had been held for the applicable long term holding
period. The deductibility of capital losses is subject to limitations for
both individuals and corporations.
If you receive Leucadia common shares under CSRs, a certain portion of those
shares may be treated for federal income tax purposes as taxable interest
income. The portion of any Leucadia common shares treated as interest will have
a basis equal to the amount of interest required to be recognized and the
holding period of such portion will begin on the day after receipt of such
shares.
Certain other tax consequences resulting from your right to the receipt of
additional Leucadia common shares pursuant to the CSRs are not clear. While not
free from doubt, it is likely that in allocating the aggregate tax basis in your
shares of WilTel common shares to the Leucadia common shares received upon
consummation of the offer or the merger, you will be required to assume that you
will receive the maximum number of Leucadia common shares under the CSRs you
receive. While other allocation methodologies may be permitted, this method of
allocating basis will result, at least initially, in an allocation of less of
your basis to the Leucadia common shares you receive at the time of the offer or
the merger. After your initial allocation of basis, you may be required to
reallocate the basis among your Leucadia common shares if actual results of the
CSR differ from the assumptions you made in your initial allocation. Because the
mechanics of such subsequent basis adjustment are complex and the law governing
such an adjustment is unsettled, you should consult your own tax advisor with
respect to the calculation of tax basis in the Leucadia shares received.
A WilTel stockholder who receives cash for all its shares of WilTel common
stock pursuant to the exercise of appraisal rights, if any, generally will
recognize gain or loss equal to the difference
38
between the tax basis of the shares of WilTel common stock surrendered and the
amount of cash received, except that any cash received that is or is deemed to
be interest for federal income tax purposes will be taxed as ordinary income. A
WilTel stockholder receiving cash pursuant to the exercise of appraisal rights
may be required to recognize gain or loss in the year the merger closes,
irrespective of whether the stockholder actually receives payment for its shares
of WilTel common stock in that year.
Although WilTel has received an opinion from Weil, Gotshal & Manges LLP that
the offer and merger should qualify as a reorganization under Section 368(a) of
the Code, WilTel stockholders should be aware that the tax consequences are not
entirely free from doubt and we have not requested and will not request an
advance ruling from the IRS as to the tax consequences of the offer or merger.
In the event that the IRS were successfully to challenge the tax-free
reorganization treatment of the offer and merger, you would recognize gain or
loss in the offer or merger equal to the difference between your tax basis of
the shares of WilTel common stock surrendered and your amount realized in the
offer or merger. Your amount realized would include the fair market value of the
Leucadia common shares you receive in the offer or merger (other than Leucadia
common shares received under CSRs, which are discussed below) as well as cash
received in lieu of fractional share interests in Leucadia common shares. Your
tax basis in the Leucadia common shares received in the offer and merger (except
with respect to Leucadia common shares received under CSRs) would be equal to
their fair market value and your holding period for such shares would begin on
the day following receipt of such shares.
Moreover, in the event that the IRS successfully challenged the
characterization of the offer and merger as a reorganization, it is unclear
whether your amount realized in the offer or merger would include (i) the fair
market value of the CSRs you receive or, alternatively, (ii) the fair market
value of any Leucadia common shares you actually receive under the CSRs (less
any portion of such shares treated as interest for U.S. federal income tax
purposes). A portion of the Leucadia common shares, if any, that you receive
under the CSRs may be treated as taxable interest income for U.S. federal income
tax purposes and your basis and holding period in such portion would be as
described above.
This description is not binding on the IRS, and there can be no assurance
that the IRS will not disagree with or challenge any of the conclusions
described herein. ACCORDINGLY, EACH WILTEL STOCKHOLDER IS URGED TO CONSULT WITH
A TAX ADVISOR TO DETERMINE THE PARTICULAR FEDERAL, STATE, LOCAL OR FOREIGN
INCOME OR OTHER TAX CONSEQUENCES OF THE OFFER AND MERGER TO THE STOCKHOLDER,
INCLUDING TAX RETURN REPORTING REQUIREMENTS AND THE EFFECT OF ANY PROPOSED
CHANGES IN THE TAX LAWS.
TAX CONSOLIDATION WITH WILTEL; WILTEL TAX ATTRIBUTES
As disclosed in WilTel's Annual Report on Form 10-K for the fiscal year
ended December 31, 2002, WilTel has reported $2.4 billion of federal net
operating losses, of which $859.9 million, $1.4 billion and $126.2 million will
expire in 2020, 2021 and 2022, respectively; $297.7 million of estimated capital
loss carryforwards, which will expire in 2005; and $71.2 million of foreign net
operating losses, as well as various state net operating losses, that expire at
various dates. Additionally, WilTel has a tax basis in its assets that is
significantly higher than the book value of those assets reflected in its
financial statements; this high tax basis is expected to generate substantial
depreciation and amortization deductions for federal income tax purposes. As a
result of these favorable tax attributes, it is likely that WilTel will pay
little or no federal income taxes for the foreseeable future. The ultimate
utilization of WilTel's tax attributes will depend upon a number of factors,
including future operating results, tax law changes and the expiration of
carryforward periods. See 'Background and Reasons for the Offer and Subsequent
Merger--Additional Factors for Consideration by WilTel Stockholders--Our
Reasons for Making the Offer'.
If the offer and merger are completed, WilTel would be consolidated with
Leucadia in its federal income tax return. Under the tax rules governing
consolidated groups, WilTel and its subsidiaries would be segregated for certain
purposes into a subgroup within the Leucadia consolidated group, and WilTel's
significant tax attributes would continue to be available to offset any future
income generated by the WilTel subgroup. To the extent that WilTel's tax loss
carryforwards are attributable to periods prior to WilTel's consolidation within
the Leucadia group,
39
such excess will not be available to offset taxable income of other members of
the Leucadia consolidated group other than income attributable to the WilTel
subgroup. In addition, to the extent that the tax basis of WilTel's assets
exceed their fair market value when WilTel joins Leucadia's consolidated tax
group, future tax deductions related to such excess will not be available to
offset taxable income of members of the Leucadia consolidated group other than
members of the WilTel subgroup. Any other future deductions and losses
attributable to the WilTel subgroup should be available to offset taxable income
of the entire Leucadia consolidated group, and would not be limited to offset
only income generated by the WilTel subgroup.
TRANSFERABILITY OF LEUCADIA COMMON SHARES
The Leucadia common shares offered hereby will be registered under the
Securities Act and listed on The New York Stock Exchange. Accordingly, such
shares may be traded freely subject to (1) restrictions under Leucadia's
certificate of incorporation applicable to 5% shareholdings (see, 'Risk
Factors--Leucadia Common Shares are Subject to Transfer Restrictions') and (2)
restrictions under the Securities Act applicable to subsequent transfers of our
shares by 'affiliates' (as defined in the Securities Act) which, in general,
provide that affiliates may not transfer our shares except pursuant to further
registration of those shares under the Securities Act or in compliance with
Rule 145 (or if applicable, Rule 144) under the Securities Act or another
available exemption from registration under the Securities Act.
APPROVAL OF THE MERGER
Under Section 92A.120 of the Nevada Revised Statutes, the approval of the
board of directors of a company and the affirmative vote of the holders of at
least a majority of its outstanding shares on the record date for a stockholder
vote are required to approve a merger and adopt a merger agreement. WilTel's
board of directors has previously approved the merger and adopted the Merger
Agreement. If, after completion of this offer, we own less than 90% of the
outstanding shares of WilTel common stock, we would complete the acquisition of
the remaining outstanding shares of WilTel common stock through a vote of WilTel
stockholders with respect to the merger. Since we will own a majority of the
shares of WilTel common stock on the record date, we would have a sufficient
number of shares of WilTel common stock to approve the merger without the
affirmative vote of any other WilTel stockholder and, therefore, approval of the
merger by WilTel stockholders will be assured. Completion of the transaction in
this manner is referred to in this prospectus as a 'long-form merger'. Under
Section 92A.180 of the Nevada Revised Statutes, a merger can occur without a
vote of WilTel stockholders, referred to as a 'short-form merger,' if, after
completion of the offer, as it may be extended and including any subsequent
offering period, we were to own at least 90% of the outstanding shares of WilTel
common stock. If, after completion of the offer, as it may be extended and
including any subsequent offering period, we own at least 90% of the outstanding
shares of WilTel common stock, we may complete the acquisition of the remaining
outstanding shares of WilTel common stock by completing a short-form merger.
APPRAISAL (DISSENTERS') RIGHTS
Under Nevada law, WilTel stockholders do not have dissenters' rights in
connection with the offer and would not have such rights in connection with a
long-form merger of WilTel and Merger Sub. If after successful completion of the
offer Leucadia owns at least 90% of the outstanding shares of WilTel common
stock, WilTel stockholders who (a) do not tender their shares into the offer and
hold common stock at the effective time of a short form merger, (b) who do not
wish to accept the consideration provided for in that merger and (c) comply with
the procedures provided for in Chapter 92A of the Nevada Revised Statutes (the
'NRS'), will be entitled to payment in cash of the 'fair value' of their shares
of WilTel common stock, with accrued interest, as determined through Nevada's
statutorily prescribed appraisal process. The following summarizes provisions of
Chapter 92A of the NRS regarding dissenters' rights that would be applicable in
connection with a short form merger, which will be effected as a merger of
Merger Sub with WilTel. This discussion is qualified in its entirety by
reference to Sections 92A.300 to 92A.500 of
40
the NRS. A copy of Sections 92A.300 to 92A.500 of the NRS is attached to this
prospectus as Annex C. If you fail to take any action required by Nevada law,
your rights to dissent in connection with the merger will be waived or
terminated.
Within 10 days after the effective time, WilTel will send notice of the
effective time of the merger and the availability of dissenters' rights to each
WilTel stockholder. The notice will:
(a) state where the demand for payment must be sent and where and when
certificates for WilTel shares are to be deposited;
(b) supply a form for demanding payment;
(c) set a date by which WilTel must receive the demand for payment,
which may not be less than 30 nor more than 60 days after the date the
notice is delivered; and
(d) be accompanied by a copy of Sections 92A.300 through 92A.500 of the
NRS.
A stockholder to whom a dissenter's notice is sent must, by the date set
forth in the dissenter's notice:
(a) demand payment;
(b) certify whether the stockholder acquired beneficial ownership of the
shares before the date of the first announcement to the news media or to the
stockholders of the terms of the merger; and
(c) deposit his or her certificates in accordance with the terms of the
dissenter's notice.
A beneficial stockholder of WilTel stock may assert dissenters' rights as to
shares held on the stockholder's behalf only if the stockholder submits to
WilTel the written consent of the stockholder of record to the dissent not later
than the time the beneficial stockholder asserts dissenters' rights and the
beneficial stockholder does so with respect to all shares of which he is the
beneficial stockholder or over which he has the power to direct the vote.
WilTel stockholders who do not demand payment or deposit their certificates
where required, each by the date set forth in the dissenter's notice, will not
be entitled to demand payment for their shares under Nevada law governing
dissenters' rights.
Within 30 days after receipt of a valid demand for payment, WilTel will pay
each dissenter who complied with the procedures described by the Nevada
dissenters' rights statute the amount WilTel estimates to be the fair value of
the shares, plus accrued interest. The payment will be accompanied by:
(a) WilTel's balance sheet as of the end of a fiscal year ending not
more than 16 months before the date of payment, a statement of income for
that fiscal year, a statement of changes in shareholders' equity for that
fiscal year and the latest available interim financial statements, if any;
(b) a statement of WilTel's estimate of the fair value of the shares;
(c) an explanation of how the interest was calculated;
(d) a statement of dissenters' rights to demand payment under Section
92A.480 of the NRS; and
(e) a copy of Sections 92A.300 through 92A.500 of the NRS.
WilTel may elect to withhold payment from a dissenting stockholder if such
stockholder became the beneficial owner of the shares on or after the date of
the first announcement to the news media or to the stockholders of the proposed
terms of the merger. To the extent WilTel elects to withhold payment, after
effectuating the merger, it will estimate the fair value of the shares, plus
accrued interest, and will offer to pay this amount to each dissenter who agrees
to accept it in full satisfaction of the stockholder's demand. WilTel will send
with its offer:
(a) a statement of WilTel's estimate of the fair value of the shares;
(b) an explanation of how the interest was calculated; and
(c) a statement of dissenters' rights to demand payment pursuant to
Section 92A.480 of the NRS.
A dissenter may notify WilTel in writing of the dissenter's own estimate of
the fair value of the shares and interest due, and demand payment of his or her
estimate, less WilTel's fair value
41
payment or offer for payment, or reject the offer for payment made by WilTel and
demand payment of the fair value of the dissenter's shares and interest due if
the dissenter believes that the amount paid or offered is less than the fair
value of the dissenter's shares or that the interest due is incorrectly
calculated. A dissenter waives his right to demand such payment unless the
dissenter notifies WilTel of his demand in writing within 30 days after WilTel
made or offered payment for the dissenter's shares.
If a demand for payment remains unsettled, WilTel will commence a proceeding
within 60 days after receiving the demand for payment and petition the court to
determine the fair value of the shares of WilTel common stock and accrued
interest. If WilTel does not commence the proceeding within the 60-day period,
it will be required to pay each dissenter whose demand remains unsettled the
amount demanded.
Each dissenter who is made a party to the proceeding is entitled to a
judgment:
(a) for the amount, if any, by which the court finds the fair value of
the dissenter's shares, plus interest, exceeds the amount paid by WilTel; or
(b) for the fair value, plus accrued interest, of the dissenter's
after-acquired shares for which WilTel elected to withhold payment pursuant
to Nevada law.
Under Nevada law, the fair value of shares of WilTel common stock means the
value of the shares immediately before the consummation of the merger, excluding
any increase or decrease in value in anticipation of the merger unless excluding
such increase or decrease is inequitable. The value determined by the court for
WilTel common stock could be more than, less than, or the same as the merger
consideration, but the form of consideration payable as a result of the dissent
proceeding would be cash.
The court will determine all of the costs of the proceeding, including the
reasonable compensation and expenses of any appraisers appointed by the court.
The court will assess the costs against WilTel, except that the court may assess
costs against all or some of the dissenters, in the amounts the court finds
equitable, to the extent that the court finds the dissenters acted arbitrarily,
vexatiously or not in good faith in demanding payment. The court may also assess
the fees and expenses of the counsel and experts for the respective parties, in
amounts the court finds equitable:
(a) against WilTel and in favor of all dissenters if the court finds
WilTel did not substantially comply with the Nevada dissenters' rights
statute; or
(b) against either WilTel or a dissenter in favor of any other party, if
the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously or not in good faith with respect to
the dissenters' rights provided under the Nevada dissenter' rights statute.
If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against WilTel, the court may award to
those counsel reasonable fees to be paid out of the amounts awarded to the
dissenters who were benefited.
If a proceeding is commenced because WilTel did not pay each dissenter who
complied with the procedures described by the Nevada dissenters' rights statute
the amount WilTel estimated to be the fair value of the shares, plus accrued
interest, within 30 days after receipt of a valid demand for payment, the court
may assess costs against WilTel, except that the court may assess costs against
all or some of the dissenters who are parties to the proceeding, in amounts the
court finds equitable, to the extent the court finds that such parties did not
act in good faith in instituting the proceeding. The assessment of costs and
fees, if any, may also be affected by Nevada law governing offers of judgment.
The foregoing summary of the rights of dissenting WilTel stockholders does
not purport to be a complete statement of such rights and the procedures to be
followed by stockholders desiring to exercise any available dissenters' rights.
The preservation and exercise of dissenters' rights require strict adherence to
the applicable provisions of Nevada law, a copy of which is attached hereto as
Annex C.
42
DESCRIPTION OF THE CSRS
The following is a summary description of the CSRs. WilTel stockholders are
urged to read the Merger Agreement (a copy of which is attached as Annex A to
this prospectus) in its entirety for a more complete description of the CSRs
because it is the legal document that governs the CSRs. In the event of any
discrepancy between the terms of the Merger Agreement and the following summary,
the Merger Agreement will control.
Subject to the terms and conditions of the offer and the merger, the
consideration payable by Leucadia per share of WilTel common stock in the offer
and merger will include one CSR. As described in greater detail below, the
purpose of the CSRs is to give WilTel stockholders who participate in the offer
and merger the opportunity to receive additional Leucadia common shares in
connection with any Sale of WilTel (as defined below) consummated after the
merger and on or before the Maturity Date (as defined below) in which Leucadia
or its subsidiaries receive Net Proceeds (as defined below) in excess of the
Deal Price (as defined below). You should not take the existence of the CSRs as
an indication that a Sale of WilTel will occur or, if one does occur, as to the
proceeds therefrom. Leucadia will conduct its business (including all decisions
relating to whether, when, how and for what consideration to dispose of any
assets) as it in its sole discretion determines. Leucadia presently has no
intention to dispose of or to entertain offers to sell its shares of WilTel
common stock or all or substantially all of WilTel's assets.
The CSRs will be non-assignable and non-transferable by any holder thereof,
except as required by any applicable community property laws or laws of descent
and distribution. CSRs will not be represented by any certificate. A CSR will
not entitle its holder to any of the rights of a shareholder in Leucadia
(including voting or dividend rights).
The CSRs will become effective at the time of the merger and will mature at
11:59 p.m. New York City time on the earlier of (i) the date, if any, on which a
Sale of WilTel for Net Proceeds in excess of the Deal Price is consummated and
(ii) October 15, 2004, provided that if after the merger and prior to August 21,
2004 Leucadia or WilTel enter into a definitive agreement with an unaffiliated
third party providing for a Sale of WilTel, the date in this clause (ii) will be
the later of (A) October 15, 2004 and (B) the earlier of (x) the date the Sale
of WilTel pursuant to such agreement is consummated and (y) the date such Sale
of WilTel is abandoned (the earlier of (i) and (ii) being the 'Maturity Date').
For purposes of the CSRs, 'Sale of WilTel' means the occurrence of any of
the following events: (i) a sale by WilTel of all or substantially all of the
assets of WilTel and its subsidiaries to another entity (other than Leucadia or
one or more of its subsidiaries ('Permitted Holders')); (ii) any 'person' or
'group', other than Permitted Holders, is or becomes the 'beneficial owner',
directly or indirectly, of more than 50% of the issued and outstanding shares of
capital stock of WilTel having general voting power under ordinary circumstances
('Voting Stock'); or (iii) WilTel consolidates with, or merges with or into,
another entity (other than a Permitted Holder), other than any such transaction
where (A) the outstanding Voting Stock of WilTel is converted into or exchanged
for voting securities of the surviving entity and (B) immediately after such
transaction Permitted Holders are the 'beneficial owners', directly or
indirectly, of more than 50% of the total voting power of the surviving entity.
For purposes of this definition, the term 'beneficial owner' is used as defined
in Rules 13d-3 and 13d-5 under the Exchange Act and the terms 'person' or
'group' are used as such terms are used in Section 13(d) and 14(d) of the
Exchange Act. For the avoidance of doubt, only the consummation of the
transactions described above in this definition will constitute a 'Sale of
WilTel' and neither any discussions, negotiations or preparations, nor entering
into any agreement, relating to any such transaction will be deemed a 'Sale of
WilTel'.
If there is consummated after the merger and on or before the Maturity Date
a Sale of WilTel for Net Proceeds in excess of the Deal Price, then, following
the Maturity Date, Leucadia will issue for each CSR that number of whole
Leucadia common shares (after aggregating all
43
CSRs held by the holder thereof) determined under the following formula
(calculated to the fourth decimal point) and the following paragraphs:
Sale Profit
--------------- divided by Parent Price
50,000,000
provided, however, that in no event shall more than a total of the Cap
Number (as defined below) of Leucadia common shares be issuable in
respect of all CSRs in the aggregate, and the number of Leucadia
common shares issuable to each CSR holder will be reduced pro rata to
the extent necessary to give effect to this limitation
where,
'Sale Profit' means the amount of Net Proceeds in excess of the Deal Price;
'Net Proceeds' means the U.S. dollar amount (expressed as a whole number) of
aggregate proceeds (with any non-cash proceeds to be valued at their fair market
value as determined in good faith by Leucadia's board of directors) received by
Leucadia, WilTel or any of their subsidiaries in respect of a Sale of WilTel
consummated after the merger and on or before the Maturity Date, plus the fair
market value (to be determined in good faith by Leucadia's board of directors)
of any assets of WilTel or its subsidiaries retained by Leucadia upon
consummation of such Sale of WilTel, net of (i) the costs relating to such
transaction (including regulatory filing fees, legal, accounting and investment
banking fees, and brokerage and sales commissions), (ii) taxes paid or payable
as a result of such transaction, (iii) amounts required to be applied to the
repayment of principal, premium (if any) and interest on any indebtedness
required to be paid as a result of such transaction, (iv) deduction of
appropriate amounts to be provided as a reserve in accordance with U.S.
generally accepted accounting principles against any liabilities associated with
such transaction (including, without limitation, pension and other
post-employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with such
transaction) and (v) all liabilities of WilTel or its subsidiaries that are
retained by Leucadia or any of its subsidiaries following consummation of such
transaction;
'Deal Price' equals (A) 800,000,000, plus (B) the aggregate U.S. dollar
amount (expressed as a whole number) of contributions to capital and other
investments made by Leucadia or any of its affiliates (other than WilTel and its
subsidiaries) in, and expenditures funded by Leucadia or any of its affiliates
(other than WilTel and its subsidiaries) in support of, WilTel or its
subsidiaries after the merger and prior to the Maturity Date, minus (C) the
aggregate U.S. dollar amount (expressed as a whole number) of dividends paid by
WilTel to Leucadia after the merger and prior to the Maturity Date, plus (D) an
amount equal to notional interest on the excess, if any, of (i) the amounts
described in clause (B) above over (ii) the amount described in clause (C)
above, at a rate per annum of 8%, determined based on the number of days elapsed
from the closing date of the merger to the Maturity Date;
'Parent Price' equals 37.72, reduced to reflect the amount (if any) of cash
dividends per Leucadia common share paid (or with a record date) between August
21, 2003 and the Maturity Date in excess of Leucadia's regular $0.25 per share
annual dividend; and
'Cap Number' means the lesser of (A) 11,000,000 and (B) the number of
Leucadia common shares issued by Leucadia in the offer and the merger (excluding
consideration paid to any WilTel stockholders who properly exercised appraisal
(dissenters') rights) minus one.
If, on the Maturity Date, Net Proceeds are equal to or less than the Deal
Price, the CSRs will automatically terminate and no consideration shall be
deliverable in respect thereof. If, on the Maturity Date, the amount determined
pursuant to the above formula is greater than zero, Leucadia will thereafter
issue to each CSR holder the number of whole Leucadia common shares to which
such holder is entitled as herein described (rounded down to the nearest whole
share, after aggregating all CSRs held by such holder), and the CSRs will be
automatically cancelled.
If between the date of the merger and the Maturity Date the outstanding
Leucadia common shares are changed into a different number of shares or a
different class, by reason of the occurrence or record date of any stock
dividend, subdivision, reclassification, recapitalization, split,
44
combination, exchange of shares or similar transaction, then the number of and
kind of shares issuable in respect of the CSRs will be appropriately adjusted.
No dividends or other distributions with respect to Leucadia common shares with
a record date before the Maturity Date will be paid in respect of, and no
interest will be paid or will accrue on, any Leucadia common shares issuable in
respect of CSRs.
If Leucadia common shares become issuable under the CSRs, Leucadia will
determine the amount required under applicable tax laws to be treated as
interest income, and may, at its option, issue two stock certificates to each
holder of CSRs, one certificate in respect of the shares treated as interest and
the other certificate in respect of the remaining shares; provided, however,
that in no event will Leucadia issue any fractional share interests.
All computations and determinations relating to the CSRs will be made by
Leucadia in good faith. Promptly after the Maturity Date, Leucadia will notify
holders of CSRs in writing (which notification may be made through a press
release which will be attached to a submission that is made publicly available
on the SEC's EDGAR system) of Leucadia's determination as to (i) whether a Sale
of WilTel occurred, (ii) the amount of any Net Proceeds received in respect
thereof, (iii) the amount (if any) of any resulting Sale Profit, and (iv) the
number of Leucadia common shares (if any) due and payable to CSR holders.
CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS
REGULATORY APPROVALS
Antitrust. The offer and the merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the 'Antitrust Division') and the Federal Trade
Commission (the 'FTC') and certain waiting period requirements have been
satisfied.
Leucadia and WilTel filed their Notification and Report Forms with respect
to the offer under the HSR Act on August 29, 2003. Leucadia has been notified
that early termination of the waiting period under the HSR Act has been granted.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Leucadia's acquisition of shares of
WilTel common stock pursuant to the offer and the merger. At any time before or
after Leucadia's acquisition of shares of WilTel common stock, the Antitrust
Division or the FTC could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
acquisition of shares pursuant to the offer or otherwise seeking divestiture of
shares of WilTel common stock acquired by Leucadia or divestiture of substantial
assets of Leucadia or its subsidiaries. Private parties, as well as state
governments, may also bring legal action under the antitrust laws under certain
circumstances. There can be no assurance that a challenge to the offer or other
acquisition of shares of WilTel common stock by Leucadia on antitrust grounds
will not be made or, if such a challenge is made, of the result. See 'The
Offer--Conditions of the Offer'.
Other Regulatory Approvals. WilTel holds certain licenses, authorizations
and certificates issued by the Federal Communications Commission ('FCC') and
State utility commissions. Prior to acquiring the beneficial and voting rights
to 50% or more of WilTel's outstanding voting stock, Leucadia will need to
obtain the approval of the FCC and certain state utility commissions. In order
to obtain such approvals, Leucadia filed applications with the FCC on September
3, 2003 and will file notifications and applications with certain state utility
commissions. Although it is not possible to predict the timing of regulatory
agencies, Leucadia believes that if no challenges are filed to these
applications, Leucadia should obtain the requisite FCC and state commission
approvals within 60 to 120 days. There can be no assurance that a challenge to
the offer or the merger will not be made or, if such a challenge is made, of the
result. See 'The Offer--Conditions of the Offer'.
45
NON-U.S. APPROVALS
We are unaware of any requirement for the filing of information with, or the
obtaining of the approval of, governmental authorities in any non-U.S.
jurisdiction that is applicable to the offer or the merger.
STATE TAKEOVER LAWS
A number of states have adopted takeover laws and regulations which purport,
to varying degrees, to be applicable to attempts to acquire securities of
corporations which have substantial assets, stockholders, principal executive
offices or principal places of business in those states. We have not attempted
to comply with any state takeover statutes in connection with the offer, since
we do not believe that any of these apply. However, we reserve the right to
challenge the validity or applicability of any state law allegedly applicable to
the offer, and nothing in this prospectus nor any action taken in connection
herewith is intended as a waiver of that right. If one or more takeover statutes
apply to the offer and are not found to be invalid, we may be required to file
documents with, or receive approvals from, relevant state authorities and we may
also be unable to accept for exchange shares of WilTel common stock tendered
into the offer or may delay the offer. See 'The Offer--Conditions of the
Offer'.
STOCKHOLDER LITIGATION
Individual WilTel stockholders have filed complaints in the District Court
of Tulsa County, Oklahoma, the District Court of Clark County, Nevada, the
District Court of Washoe County, Nevada, and the Supreme Court of the State of
New York, New York County, purporting to commence class action lawsuits against
Leucadia, WilTel, and directors of WilTel. The complaints are (1) Sleeper v.
WilTel Communications Group, Inc., et al. (Civil Action No. CJ 2003 03163,
District Court Tulsa Co. Oklahoma); (2) Merullo v. WilTel Communications Group,
Inc., et al. (Civil Action No. A467774, District Court Clark Co. Nevada);
(3) Gottdiener v. WilTel Communications Group, Inc., et al. (Civil Action No.
A467700, District Court Clark Co. Nevada); (4) Guy v. WilTel Communications
Group, Inc., et al. (Civil Action No. A467773, District Court Clark Co. Nevada);
(5) Guerra v. WilTel Communications Group, Inc., et al. (Civil Action No.
A467738, District Court Clark Co. Nevada); (6) Hersch v. WilTel Communications
Group, Inc., et al. (Civil Action No. CV03-03220, District Court Washoe Co.
Nevada, transferred to Clark Co. Nevada); (7) Provorny v. Leucadia National
Corporation, et al. (Case No. 03-109061, N.Y. Supreme Court, County of New
York); and (8) Guy v. WilTel Communications Group, Inc., et al. (Civil Action
No. 03-115368, N.Y. Supreme Court, County of New York). In general, the
complaints allege, among other things: (a) breaches of fiduciary duty by
Leucadia, WilTel, and the members of WilTel's board of directors in connection
with the offer and merger, including, among other things, allegations of
inadequate disclosure; (b) that the consideration Leucadia is offering WilTel
stockholders is inadequate; and (c) that Leucadia is acting to further its own
interests at the expense of WilTel stockholders.
Among other remedies, the complaints seek to enjoin completion of the offer
and merger or, alternatively, damages in an unspecified amount and attorneys'
fees and rescission in the event that proposed transaction occurs. Leucadia
believes the complaints to be without merit. We will make publicly available, to
the extent required by applicable law, any material updates to the information
disclosed regarding these complaints.
On October 15, 2003, subject to approval from directors and officers
insurance carriers, the parties in these litigations reached an agreement in
principle to settle the litigation based upon increased disclosure in this
prospectus and the WilTel Recommendation Statement. The proposed settlement is
subject to numerous conditions, including the consummation of the offer and
merger, the drafting and execution of a formal settlement agreement, and final
approval of the settlement by the New York courts. Plaintiffs' counsel intend to
apply to the New York courts for an award of attorneys' fees and reimbursement
of expenses in an amount not yet agreed upon by the parties.
46
If any of the conditions to the proposed settlement do not occur, the
litigation could proceed and plaintiffs could seek the relief sought in their
complaints.
CERTAIN EFFECTS OF THE OFFER
EFFECTS ON THE MARKET; EXCHANGE ACT REGISTRATION
The tender and the acceptance of shares of WilTel common stock in the offer
will reduce the number of shares of WilTel common stock that might otherwise
trade publicly and also the number of holders of shares of WilTel common stock.
This could adversely affect the liquidity and market value of the remaining
shares of WilTel common stock held by the public. Depending upon the number of
shares of WilTel common stock tendered to and accepted by us in the offer, the
shares of WilTel common stock may no longer meet the requirements of the
National Association of Securities Dealers for continued inclusion on NASDAQ.
If NASDAQ ceased publishing quotations for the shares of WilTel common
stock, it is possible that the shares of WilTel common stock would continue to
trade in the over-the-counter market and that price or other quotations would be
reported by other sources. The extent of the public market for such shares of
WilTel common stock and the availability of such quotations would depend,
however, upon such factors as the number of stockholders and/or the aggregate
market value of such securities remaining at such time, the interest in
maintaining a market in the shares of WilTel common stock on the part of
securities firms, the possible termination of registration under the Exchange
Act as described below, and other factors. We cannot predict whether the
reduction in the number of shares of WilTel common stock that might otherwise
trade publicly would have an adverse or beneficial effect on the market price
for, or marketability of, the shares of WilTel common stock.
Shares of WilTel common stock are currently registered under the Exchange
Act. WilTel can terminate that registration upon application to the SEC if the
outstanding shares of WilTel common stock are not listed on a national
securities exchange and if there are fewer than 300 holders of record of shares
of WilTel common stock. Termination of registration of the shares of WilTel
common stock under the Exchange Act would reduce the information that WilTel
must furnish to its stockholders and to the SEC and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b) and the requirement of furnishing a proxy statement
in connection with stockholders meetings pursuant to Section 14(a) and the
related requirement of furnishing an annual report to stockholders, no longer
applicable with respect to the shares of WilTel common stock. In addition, if
the shares of WilTel common stock are no longer registered under the Exchange
Act, the requirements of Rule 13e-3 under the Exchange Act with respect to
'going-private' transactions would no longer be applicable to WilTel.
Furthermore, the ability of 'affiliates' of WilTel and persons holding
'restricted securities' of WilTel to dispose of such securities pursuant to Rule
144 under the Securities Act may be impaired or eliminated. If registration of
the shares of WilTel common stock under the Exchange Act were terminated, they
would no longer be eligible for NASDAQ listing or for continued inclusion on the
Federal Reserve Board's list of 'margin securities.'
Leucadia may seek to cause WilTel to apply for termination of registration
of the shares of WilTel common stock under the Exchange Act as soon after the
expiration of the offer as the requirements for such termination are met. If the
NASDAQ National Market listing and the Exchange Act registration of the shares
of WilTel common stock are not terminated prior to the merger, then the shares
of WilTel common stock will be delisted from the NASDAQ National Market and the
registration of the shares of WilTel common stock under the Exchange Act will be
terminated following the consummation of the merger.
The shares of WilTel common stock are presently 'margin securities' under
the regulations of the Federal Reserve Board, which has the effect, among other
things, of allowing brokers to extend credit on the collateral of shares of
WilTel common stock. Depending on the factors similar to those described above
with respect to listing and market quotations, following consummation of the
offer, the shares of WilTel common stock may no longer constitute 'margin
securities' for the
47
purposes of the Federal Reserve Board's margin regulations, in which event the
shares of WilTel common stock would be ineligible as collateral for margin loans
made by brokers.
FINANCING OF THE OFFER
Our offer is not conditioned on the receipt of financing. Leucadia's fees
and expenses in connection with the offer will be paid from Leucadia's available
capital resources. Leucadia intends to deliver the Leucadia common shares
offered in the offer and the merger from Leucadia's available treasury shares.
CONDUCT OF WILTEL IF THE OFFER IS NOT COMPLETED
If the offer is not completed because the minimum condition or another
condition is not satisfied or, if permissible, waived, we expect that WilTel
will continue to be significantly owned by Leucadia and operate its business as
presently operated, subject to market and industry conditions and the terms of
the agreements and other documents referred to below under '--Relationships
With WilTel'. We presently have no intention to dispose of or to entertain
offers to sell our shares of WilTel common stock.
PLANS AND PROPOSALS FOR WILTEL FOLLOWING COMPLETION OF THE MERGER
Consummation of the merger will permit us to receive the benefits that
result from ownership of all of the equity interest in WilTel. Such benefits
include management and investment discretion with regard to the future conduct
of WilTel's business, the benefits of the profits generated by operations and
increases, if any, in WilTel's value and the ability to utilize, subject to
applicable limitations, WilTel's current and future tax losses. Conversely, we
will bear the risk of any decrease in WilTel's value and losses generated by
operations. If you become a Leucadia shareholder as a result of the offer or
merger, your investment should indirectly benefit from any of the foregoing as
well as other benefits Leucadia may obtain as a result of the transactions, and,
conversely, be indirectly exposed to the foregoing risks.
Except as otherwise described in this prospectus, we have no current plans
or proposals or negotiations which relate to or would result in: (i) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving WilTel; (ii) any purchase, sale or transfer of a material
amount of assets of WilTel; (iii) any change in the management of WilTel or any
change in any material term of the employment contract of any executive officer;
or (iv) any other material change in WilTel's corporate structure or business.
However, in light of the consolidation and other changes taking place in the
telecommunications industry, we continually are evaluating and considering
possible acquisition and disposition transactions which may involve Leucadia or
WilTel.
RELATIONSHIPS WITH WILTEL
In considering whether to tender your shares in the offer, you should be
aware of various existing agreements and ongoing and prior relationships,
arrangements and transactions between Leucadia and WilTel, as described under
'Interests of Certain Persons in the Offer And Subsequent Merger'. Also, please
see 'Comparison of Rights of Holders of WilTel Common Stock and Leucadia Common
Shares--Shareholder Approval of Business Combinations--WilTel'.
ACCOUNTING TREATMENT
Our acquisition of WilTel common stock pursuant to the offer will be
accounted for under the purchase method of accounting in accordance with
accounting principles generally accepted in the United States. In addition, as a
result of acquiring the additional shares of WilTel common stock, we will
consolidate the financial position and results of operations of WilTel from the
date of this additional acquisition and no longer account for our investment in
WilTel under the equity method of accounting.
48
FEES AND EXPENSES
We have retained Innisfree M&A Incorporated as information agent in
connection with the offer. The information agent may contact holders of WilTel
common stock by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee stockholders to forward materials
relating to the offer to beneficial owners of WilTel common stock. We will pay
the information agent customary fees for these services in addition to
reimbursing the information agent for its reasonable out-of-pocket expenses. We
have agreed to indemnify the information agent against certain liabilities and
expenses in connection with the offer, including certain liabilities under the
U.S. federal securities laws.
In addition, we have retained American Stock Transfer & Trust Company as the
exchange agent and depository with respect to the offer and the merger. We will
pay the exchange agent and depository reasonable and customary fees for its
services in connection with the offer and the merger, will reimburse the
exchange agent and depository for its reasonable out-of-pocket expenses and will
indemnify the exchange agent and depository against certain liabilities and
expenses in connection with the performance of its services.
We will reimburse brokers, dealers, commercial banks and trust companies and
other nominees, upon request, for customary clerical and mailing expenses
incurred by them in forwarding offering materials to their customers.
We will pay the costs mentioned above in this section. We will not pay any
costs or expenses associated with the offer of any WilTel stockholder.
For a description of the fees and expenses of the Special Committee, see the
WilTel Recommendation Statement.
INTERESTS OF CERTAIN PERSONS IN THE OFFER AND SUBSEQUENT MERGER
INTERESTS OF MANAGEMENT AND THE WILTEL BOARD
One of WilTel's officers and some members of the WilTel board of directors
have interests in the proposed transactions that may be different from, or in
addition to, the interests of WilTel stockholders generally.
Two of the nine members of WilTel's board of directors (Ian M. Cumming and
Joseph S. Steinberg) are the Chairman and President, respectively, directors and
principal shareholders of Leucadia. In addition, Leucadia has designated two
other members to WilTel's board of directors (Alan J. Hirschfield and
Jeffrey C. Keil).
Leucadia beneficially owns 23,700,000 shares of WilTel common stock,
representing 47.4% of the outstanding shares of WilTel common stock. To the best
of our knowledge, as of August 21, 2003, none of the directors, executive
officers and affiliates of Leucadia own any shares of WilTel common stock.
Although neither Mr. Cumming nor Mr. Steinberg directly owns any shares of
WilTel common stock, by virtue of their ownership of approximately 15.7% and
15.4% interests, respectively, in Leucadia (as of June 30, 2003), each may be
deemed to be the indirect beneficial owner of shares of WilTel common stock
beneficially owned by Leucadia. Mr. Cumming and Mr. Steinberg have an oral
agreement pursuant to which they will consult with each other as to the election
of a mutually acceptable board of directors of Leucadia. Neither Leucadia nor,
to the best of its knowledge, any of the directors, executive officers or
affiliates of Leucadia have bought or sold any shares of WilTel common stock
within the past sixty days.
The Merger Agreement provides that from and after the merger, Leucadia and
WilTel will indemnify the individuals who at or prior to the merger were
directors or officers of WilTel with respect to all acts or omissions by them in
their capacities as such at any time prior to the merger, to the fullest extent
required by WilTel's articles of incorporation and by-laws (as in effect on
August 21, 2003) and permitted under applicable law. In addition, the Merger
Agreement provides that for a three year period commencing immediately after the
merger, Leucadia and WilTel will maintain in effect directors' and officers'
liability insurance covering acts or omissions occurring prior to the merger
with respect to those persons who are currently covered by WilTel's current
49
primary directors' and officers' liability insurance policy, on terms with
respect to such coverage not less favorable to WilTel's directors and officers
currently covered by such insurance than those of such policy in effect on
August 21, 2003 (or Leucadia or WilTel may substitute therefor insurance
policies, issued by reputable carriers, with respect to matters occurring prior
to the merger); provided, however, that the aggregate amount of coverage under
such insurance will be limited to $10 million. For those amounts of directors'
and officers' liability insurance in excess of the insurance described in the
preceding sentence which are currently provided under WilTel's other current
directors' and officers' liability insurance policies (the 'Other Policies'),
the Merger Agreement provides that for a six year period commencing immediately
after the merger, Leucadia will make payments to those persons who are currently
covered by such Other Policies to the extent such payments otherwise would have
been made under such Other Policies (as in effect on August 21, 2003) had such
Other Policies remained in effect for a period of six years following the
merger, with respect to acts or omissions occurring prior to the merger;
provided, however, that the maximum amount of payments that Leucadia and WilTel
agreed to make will not exceed $50 million in the aggregate.
H. E. Scruggs, Senior Vice President--Corporate of WilTel, is a Vice
President of Leucadia and does not receive compensation from WilTel.
In addition, each member of the Special Committee is entitled to $40,000 in
director fees and the chairman of the Special Committee is entitled to $50,000.
These fees will be paid by WilTel.
CERTAIN AGREEMENTS BETWEEN LEUCADIA AND WILTEL
In connection with the plan of reorganization of WilTel's predecessor
company (the 'Plan'), Leucadia and WilTel entered into a Stockholders Agreement
as of October 15, 2002. The Stockholders Agreement contains various provisions
that were presumably intended by the directors of WilTel's predecessor company
to benefit the holders of WilTel stock other than Leucadia (the 'Publicly Held
Stock'). Specifically, pursuant to the Stockholders Agreement, Leucadia and
WilTel agreed, among other things, to the following provisions, any and all of
which may be amended with either (i) the prior approval of the holders of a
majority of the Publicly Held Stock ('Stockholder Approval') or (ii) the prior
consent of a majority of the Independent Company Directors (as defined in the
Stockholders Agreement) of WilTel ('Board Approval'):
'STANDSTILL' PROVISIONS
The material 'standstill' provisions of the Stockholders Agreement provide
that, until October 16, 2007:
Leucadia would not (i) commence any tender or exchange offer for WilTel
voting securities other than a Permitted Investor Tender Offer (as defined
below) commenced after October 15, 2004 or (ii) acquire more than 49% of
the outstanding voting securities of WilTel except pursuant to a Permitted
Investor Tender Offer commenced after October 15, 2004.
Prior Stockholder Approval or Board Approval would be required for (i) the
termination (other than in accordance with its terms) or amendment of the
Stockholders Agreement and (ii) any transaction between or involving
WilTel, on the one hand, and Leucadia, on the other hand, other than a
Permitted Investor Tender Offer after October 15, 2004.
Prior Board Approval would be required for any change to the provisions of
WilTel's bylaws relating to the nomination of directors of WilTel, or the
imposition or deletion of any super-majority requirement or stockholder
approval requirement for the amendment of WilTel's articles of
incorporation or bylaws.
Leucadia also agreed that, until October 16, 2005, Leucadia would not cause
a merger with WilTel following a Permitted Investor Tender Offer unless the per
share merger consideration offered to WilTel stockholders was at least the same
as paid in the Permitted Investor Tender Offer.
Leucadia further agreed that, until October 16, 2007, Leucadia would only
tender its WilTel shares into, or give a proxy to vote or otherwise agree to
vote its WilTel shares for or otherwise support, a Third Party Sale Transaction
(as defined below), if Leucadia first required the third
50
party seeking to engage in a Third Party Sale Transaction to agree that (i) the
same form (and a proportionate amount) of consideration would be paid to all
other holders of WilTel shares as to Leucadia in the Third Party Sale
Transaction, (ii) all other holders of WilTel shares would be given the same
opportunity to participate in the Third Party Sale Transaction, and (iii) the
Third Party Sale Transaction would be structured so as to seek the acquisition
or approval of a majority of the WilTel shares not already owned by Leucadia.
The foregoing restrictions do not apply to a Third Party Sale Transaction that
is structured as a tender or exchange offer that would result in the third party
acquiring beneficial ownership of no more than 49% of the WilTel shares so long
as the acquiror in such tender or exchange offer agreed to be bound by the terms
of the Stockholders Agreement.
The Stockholders Agreement defines 'Third Party Sale Transaction' to mean
any of the following that has not been approved or recommended by a majority of
the members of WilTel's board of directors: (A) any tender or exchange offer for
WilTel voting securities made by a person other than (x) WilTel or one of its
wholly owned subsidiaries or (y) directly or indirectly, Leucadia, or (B) any
merger, consolidation, business combination, sale of all or substantially all of
the assets of WilTel and its subsidiaries, dissolution, liquidation,
restructuring, recapitalization or similar transaction of or involving WilTel.
Each of the Stockholders Agreement provisions described above will terminate
upon consummation of the offer, and the remaining provisions of the Stockholders
Agreement will terminate upon consummation of the merger.
A 'Permitted Investor Tender Offer' is defined in the Stockholders Agreement
as a tender or exchange offer made by or on behalf of Leucadia for WilTel voting
securities that:
is subject to a non-waivable condition that the holders of at least a
majority of the WilTel voting securities not owned by Leucadia have
tendered and not withdrawn their voting securities;
is open to all holders of WilTel voting securities; and
seeks to purchase at least a majority of the WilTel voting securities that
are not owned by Leucadia.
Leucadia has received Board Approval for the commencement of the offer, the
merger and the other transactions contemplated by the Merger Agreement.
BOARD PROVISIONS
The Stockholders Agreement also provides that:
Until October 16, 2007, Leucadia must use its best efforts to cause
WilTel's board of directors to be comprised of nine directors, including
six Independent Company Directors.
Until October 16, 2004, Leucadia must vote all WilTel voting securities
that it owns for the election of the directors who were initially
designated by the creditors committee of WilTel's predecessor company or
their permitted successors.
Leucadia is entitled to designate (i) four members of WilTel's board of
directors for as long as Leucadia owns at least 20% of the WilTel common
stock and (ii) at least one member of WilTel's board of directors for as
long as Leucadia owns at least 10% of the WilTel common stock.
In addition to the Stockholders Agreement, Leucadia is a party to the
following agreements with WilTel:
A Stockholder Rights and Co-Sale Agreement entered into pursuant to the
Plan under which, among other things, certain WilTel stockholders are
eligible to participate in proposed issuances or actual issuances of Rights
Securities (as defined in the agreement) to Leucadia until October 15,
2007. In addition, under this agreement certain WilTel stockholders would
be eligible to participate in any transfer (other than Exempt Transactions
(as defined in the agreement) and transfers to affiliates of Leucadia) by
Leucadia of 33% or more of the shares of WilTel common stock outstanding
until October 15, 2007. The Merger Agreement
51
provides that the Stockholder Rights and Co-Sale Agreement will terminate
upon consummation of the merger.
A registration rights agreement entered into pursuant to the Plan under
which WilTel has granted Leucadia certain rights to obligate WilTel to
register for sale under the Securities Act shares of WilTel common stock
owned by Leucadia or its affiliates. This agreement also provides customary
indemnification from WilTel for the benefit of Leucadia.
A one-year Restructuring Services Agreement effective as of October 16,
2002 under which Leucadia provides advice to WilTel with respect to
management, operations, future business opportunities, and other matters to
be mutually determined between WilTel and Leucadia. Leucadia does not
receive any compensation for services rendered under this agreement, but is
reimbursed for all expenses incurred in connection with its performance
under the agreement. This agreement is terminable upon 90 days notice by
either Leucadia or WilTel.
52
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement. This summary does not
purport to be a complete description of the terms and conditions of the Merger
Agreement and is qualified in its entirety by reference to the Merger Agreement,
a copy of which is attached as Annex A to this prospectus. WilTel stockholders
are urged to read the Merger Agreement in its entirety. In the event of any
discrepancy between the terms of the Merger Agreement and the following summary,
the Merger Agreement will control.
THE OFFER
The Merger Agreement provides for the making of the offer. The obligation of
Leucadia to accept for purchase and to exchange Leucadia common shares and CSRs
for shares of WilTel common stock tendered pursuant to the offer is subject to
the satisfaction of the minimum condition and certain other conditions described
under 'The Offer -- Conditions of the Offer'.
We may (A) extend the offer beyond the scheduled expiration date set forth
on the cover of this prospectus, or any subsequent scheduled expiration date,
if, at the scheduled expiration of the offer, any of the conditions to our
obligation to accept for exchange, and to exchange, Leucadia common shares and
CSRs for shares of WilTel common stock tendered shall not be satisfied or, to
the extent permitted by the Merger Agreement, waived, subject, however, to the
right of Leucadia or WilTel to terminate the Merger Agreement as described below
under ' -- Termination of the Merger Agreement,' and (B) extend the offer for
any period required by any rule, regulation or interpretation of the SEC
applicable to the offer. Each extension may last for no more than ten business
days, unless WilTel and Leucadia agree in writing to allow for a longer period.
We may elect to provide a subsequent offering period of up to 20 business
days after the acceptance of shares of WilTel common stock in the offer if,
(i) on the expiration date of the offer, all of the conditions to the offer have
been satisfied or waived, but the total number of shares of WilTel common stock
that have been validly tendered and not withdrawn pursuant to the offer plus the
number of shares of WilTel common stock owned by us as of the scheduled
expiration date is less than 90% of the total number of shares of WilTel common
stock then outstanding, and (ii) the requirements of Rule 14d-11 under the
Exchange Act have been met.
PROMPT PAYMENT FOR SHARES OF WILTEL CAPITAL STOCK IN THE OFFER
Subject to the terms of the offer and the Merger Agreement, and the
satisfaction, or waiver to the extent permitted, of the conditions to the offer,
we are required to accept for exchange all shares of WilTel common stock validly
tendered and not withdrawn pursuant to the offer promptly after the applicable
expiration date of the offer, as it may be extended pursuant to the Merger
Agreement, and are required to exchange all accepted shares of WilTel common
stock promptly after acceptance. We will not issue fractional Leucadia common
shares in the offer. Instead, each tendering WilTel stockholder who would
otherwise be entitled to a fractional share (after aggregating all fractional
Leucadia common shares that otherwise would be received by the stockholder) will
receive cash (without interest and subject to any withholding for taxes) equal
to such stockholder's proportionate interest in the net proceeds from the sale
in the open market by the exchange agent and depository of the aggregated
fractional shares of Leucadia issued for such purposes.
THE MERGER
GENERALLY
The Merger Agreement provides that after completion of the offer, Merger Sub
will, subject to the conditions described below, be merged into WilTel. Upon
completion of the merger, WilTel will continue as the 'surviving corporation'
and will be a subsidiary of Leucadia.
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THE COMPLETION OF THE MERGER
The merger will become effective when the certificate of merger is filed
with the Secretary of State of the State of Nevada or at such other time as
specified in the certificate of merger. The merger will be completed after all
of the conditions to the merger contained in the Merger Agreement are satisfied
or, where permissible, waived. Upon completion of the merger:
the directors of Merger Sub and the officers of WilTel immediately before
the merger will become the directors and officers, respectively, of the
surviving corporation;
the articles of incorporation of the surviving corporation will be
substantively identical to WilTel's articles of incorporation immediately
before the merger, until they are subsequently amended as provided by
applicable law and such articles of incorporation;
the bylaws of the surviving corporation will be substantively identical to
Merger Sub's bylaws immediately before the merger, until they are
subsequently amended as provided by applicable law and such bylaws; and
the Stockholders Agreement and the Stockholders Rights and Co-Sale
Agreement will terminate and be of no further force or effect.
MANNER AND BASIS OF CONVERTING SHARES OF WILTEL COMMON STOCK IN THE MERGER
Under the terms of the Merger Agreement, upon completion of the merger, each
share of WilTel common stock outstanding immediately before the merger other
than Dissenting Shares (as defined in the Merger Agreement) or shares of WilTel
common stock held by WilTel, Leucadia or any subsidiary of Leucadia, will be
converted into the right to receive (i) 0.4242 of a Leucadia common share and
(ii) one CSR. Shares of WilTel common stock held by WilTel, Leucadia or any
subsidiary of Leucadia immediately before the completion of the merger will be
canceled at the effective time of the merger without payment of any
consideration.
We will not issue fractional Leucadia common shares in the merger. Instead,
each stockholder who would otherwise be entitled to a fractional share (after
aggregating all fractional Leucadia common shares that otherwise would be
received by the stockholder) will receive cash (without interest and subject to
any withholding for taxes) equal to such stockholder's proportionate interest in
the net proceeds from the sale in the open market by the exchange agent and
depository of the aggregated fractional common shares of Leucadia issued for
such purposes.
The Merger Agreement provides that promptly after the date of completion of
the merger, the exchange agent and depository will mail to each record holder of
a certificate or certificates that represented shares of WilTel common stock
immediately before the merger, a letter of transmittal and instructions for use
in exchanging WilTel common stock certificates for Leucadia common share
certificates. In addition, the Merger Agreement contemplates that, promptly
after the exchange agent and depository receives back from a record holder a
WilTel common stock certificate, the letter of transmittal and any other
documents that are reasonably required by the exchange agent and depository or
Leucadia, the exchange agent and depository will mail to the record holder a
certificate or certificates representing the appropriate number of Leucadia
common shares, any dividends or other distributions to which the holder is
entitled pursuant to the Merger Agreement and an amount of cash for any
fractional share. The CSRs will not be evidenced by any form of certificate.
After the completion of the merger, each certificate that previously
represented shares of WilTel common stock will be cancelled and retired. Each
holder of a certificate of WilTel common stock shall cease to have any rights
with respect thereto, except the right to receive Leucadia common shares, CSRs,
any dividends or other distributions to which the holder is entitled pursuant to
the Merger Agreement and cash for any fractional share. We will not pay
dividends or other distributions on any Leucadia common shares to be issued in
exchange for any WilTel common stock certificate that is not surrendered until
the WilTel common stock certificate is properly surrendered, as provided in the
Merger Agreement.
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BASIS OF CONVERTING SHARES OF COMMON STOCK OF MERGER SUB IN THE MERGER
Under the terms of the Merger Agreement, upon completion of the merger, each
share of common stock of Merger Sub outstanding immediately before the merger
will be converted into one share of common stock of the surviving corporation.
REPRESENTATIONS AND WARRANTIES
In the Merger Agreement, WilTel has provided customary representations and
warranties concerning, among other things, its capitalization and financial
condition, the accuracy and completeness of its filings with the SEC, certain
tax matters, and authorizations, consents and approvals needed for the
transactions. We have made similar customary representations, including those
concerning the accuracy and completeness of our filings with the SEC and
consents and approvals needed for the transactions. In general, the
representations and warranties of each party will expire upon completion of the
merger.
CONDUCT OF WILTEL'S BUSINESS PRIOR TO COMPLETION OF THE MERGER
The Merger Agreement contemplates that, until the completion of the merger,
WilTel will conduct its business in the ordinary course consistent with past
practice and will use commercially reasonable efforts to preserve the goodwill
of those having business relationships with it and comply in all material
respects with applicable laws and material licenses, permits and agreements. The
Merger Agreement also expressly prohibits WilTel from engaging in certain
transactions without Leucadia's prior written consent. Among other things,
WilTel has agreed that it will not:
issue, sell, grant, pledge or otherwise encumber, or redeem, purchase or
otherwise acquire, any shares of its capital stock, voting securities or
equity interests, or any securities, options, warrants or rights
convertible into, or exchangeable or exercisable for, any shares of its
capital stock, voting securities or equity interests;
declare, pay any dividend on, or make any other distribution on, any shares
of its common stock;
split, combine, subdivide or reclassify any shares of its common stock;
approve any transfer of shares under Article IV, Section 3 of WilTel's
articles of incorporation (pertaining to WilTel's tax status under Section
382 of the Internal Revenue Code), other than the transactions contemplated
by the Merger Agreement;
enter into, terminate or amend any agreement that is material to WilTel,
except in the ordinary course of business consistent with past practice;
make (i) any changes in financial or tax accounting methods, except as
required by GAAP or applicable law, or (ii) any material tax election;
adopt a plan or agreement of complete or partial liquidation, dissolution,
restructuring, merger or other reorganization; or
settle or compromise any litigation that is material to WilTel.
CONDUCT OF LEUCADIA'S BUSINESS PRIOR TO COMPLETION OF THE MERGER
The Merger Agreement contemplates that, until the completion of the merger,
Leucadia will conduct its business in compliance in all material respects with
all applicable laws; will use commercially reasonable efforts to preserve intact
its business organizations and relationships with third parties; and will not:
(i) take any actions that would materially delay the consummation of the merger,
(ii) engage in any material reorganization or (iii) pay or set a record date,
prior to the effective date of the merger, for any extraordinary dividend or
distribution. The Merger Agreement also expressly prohibits Leucadia from
engaging in certain material transactions without WilTel's prior written
consent. Among other things, Leucadia has agreed that until completion of the
merger it will not (without WilTel's consent):
55
adopt a plan or agreement of complete or partial liquidation, dissolution,
recapitalization or reclassification;
dispose of, or enter into an agreement to dispose of, any assets of
Leucadia which have, individually or in the aggregate, a market or assigned
value in excess of $750 million;
offer, sell or otherwise issue or agree to issue any capital stock, or
securities convertible into or exchangeable for capital stock, of Leucadia
or its subsidiaries that have, individually or in the aggregate, a market
or assigned value in excess of $750 million;
redeem, purchase or otherwise acquire shares of Leucadia capital stock that
have a market value in excess of $50 million, other than pursuant to
transactions consistent with past repurchases, redemptions or acquisitions;
or
engage in any action with the intent to directly or indirectly adversely
impact any of the transactions contemplated by the Merger Agreement.
REASONABLE BEST EFFORTS TO COMPLETE THE TRANSACTION
Subject to the terms of the Merger Agreement, Leucadia and WilTel will use
reasonable best efforts to take, or cause to be taken, all actions necessary to
complete the transactions contemplated by the Merger Agreement.
LIMITATION ON WILTEL'S ABILITY TO CHANGE ITS RECOMMENDATION AND CONSIDER OTHER
TAKEOVER PROPOSALS
The Merger Agreement provides WilTel's board of directors will not withdraw
or modify its approval or recommendation of the transactions contemplated by the
Merger Agreement in a manner adverse to Leucadia unless WilTel's board of
directors determines in good faith (after consulting with outside counsel) that
such action is necessary in order for WilTel's board of directors to comply with
its fiduciary duties under applicable law. Also, the Merger Agreement requires
that WilTel immediately cease and cause to be terminated any existing
discussions with any third party relating to any proposal or offer from a third
party involving any of the following:
the direct or indirect acquisition WilTel's assets (including securities of
subsidiaries, but excluding sales of assets held for sale in the ordinary
course of business consistent with past practice) equal to 20% or more of
WilTel's consolidated assets or to which 20% or more of WilTel's revenues
or earnings on a consolidated basis are attributable;
the direct or indirect acquisition of 20% or more of any class of equity
securities of WilTel;
a tender offer or exchange offer that if consummated would result in any
person beneficially owning 20% or more of any class of equity securities of
WilTel; or
a merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
WilTel or any assets of WilTel equal to 20% or more of WilTel's
consolidated assets or to which 20% or more of WilTel's revenues or
earnings on a consolidated basis are attributable.
Any proposal or offer involving the foregoing (other than the transactions
contemplated by the Merger Agreement) is referred to as a 'Takeover Proposal'.
WilTel has agreed that, except in the circumstances described below, it will
not, directly or indirectly, and it will not authorize or permit any or its
representatives directly or indirectly, to:
solicit, initiate or knowingly encourage the initiation of (including by
way of furnishing information that has not been previously publicly
disseminated) any inquiries or proposals that constitute, or may reasonably
be expected to lead to, any Takeover Proposal; or
participate in any discussions with any third party regarding, or furnish
to any third party any non-public information with respect to, or assist or
facilitate, any Takeover Proposal.
However, WilTel may furnish nonpublic information about WilTel (but will use
its best efforts to avoid providing information that may be competitively
harmful to WilTel, taking into
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consideration the identity of the person making the Takeover Proposal) to, or
participate in discussions with, any third party in response to a bona fide
written Takeover Proposal that is submitted to WilTel by the third party, if:
the Takeover Proposal is unsolicited and made in circumstances not
constituting a breach of the Merger Agreement;
WilTel's board of directors determines in good faith that such Takeover
Proposal constitutes a Superior Proposal (as defined below);
WilTel gives Leucadia written notice of the identity of the party making
the Takeover Proposal and of WilTel's intention to furnish nonpublic
information to, or enter into discussions with, the third party, and WilTel
receives from the third party a signed confidentiality agreement containing
customary protections (and not any provisions calling for an exclusive
right to negotiate with WilTel); and
WilTel furnishes the nonpublic information to Leucadia (to the extent
WilTel has not already done so).
In addition, WilTel must advise us orally and in writing, if any proposal,
offer, inquiry or other contact is received by, any information is requested
from, or any discussions or negotiations are sought to be initiated or continued
with, WilTel, in respect of any Takeover Proposal. In such notice, WilTel must
indicate the identity of the third party and the terms and conditions of any
proposal, or the nature of any inquiries. WilTel must keep us informed, on a
reasonably current basis, of all material developments affecting the status and
terms of any such proposals.
For purposes of the Merger Agreement, a 'Superior Proposal' means a bona
fide written proposal made not in breach of the Merger Agreement by a third
party to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than 50% of any class of equity securities of WilTel or
more than 50% of the assets of WilTel and its subsidiaries on a consolidated
basis, which is otherwise on terms and conditions which WilTel's board of
directors determines in its good faith and reasonable judgment (after
consultation with a financial advisor of national reputation) to be more
favorable to the holders of WilTel common stock from a financial point of view
than the offer, merger and other transactions contemplated by the Merger
Agreement, taking into account at the time of determination any changes to the
terms of the Merger Agreement that as of that time had been proposed by Leucadia
in writing and the ability and likelihood of the person making such proposal to
consummate the transations contemplated by such proposal in a timely manner
(based upon, among other things, the availability of financing and the
expectation of obtaining required approvals). Any action required to be taken by
WilTel's board of directors under this section shall be performed with the
approval of a majority of the members of the Special Committee then in office.
CONDITIONS TO THE OFFER
For a list of the conditions to the offer, see 'The Offer -- Conditions of
the Offer'.
CONDITIONS TO THE MERGER
The obligations of Leucadia and WilTel to complete the merger are subject to
the satisfaction or waiver of the following conditions:
if required by applicable law or WilTel's articles of incorporation, the
Merger Agreement shall have been duly adopted by the requisite vote of
WilTel stockholders;
no law, injunction, judgment or ruling enacted, issued or entered by any
governmental entity shall be in effect enjoining, restraining, prohibiting
or making illegal the consummation of the merger;
the registration statement on Form S-4 of which this prospectus forms a
part shall have been declared effective under the Securities Act, and shall
not be the subject of any stop order or any proceedings seeking a stop
order;
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if required, the Leucadia common shares issuable in the offer and the
merger shall have been approved for listing on the New York Stock Exchange;
and
the minimum condition shall have been satisfied and Leucadia shall have
exchanged shares of WilTel common stock for Leucadia common shares and CSRs
in the offer as contemplated under the Merger Agreement.
TERMINATION OF THE MERGER AGREEMENT
TERMINATION BY MUTUAL AGREEMENT
Leucadia and WilTel may terminate the Merger Agreement at any time before
the completion of the merger by mutual written consent.
TERMINATION BY EITHER LEUCADIA OR WILTEL
Either Leucadia or WilTel may terminate the Merger Agreement any time before
the completion of the merger if:
a governmental entity has enacted, issued or entered any law prohibiting
(or making illegal) the offer or the merger, or any injunction, judgment,
order, decree or ruling or taken any other action permanently enjoining or
prohibiting the offer or the merger, and such action shall have become
final and non-appealable, unless the governmental entity's taking of such
final, non-appealable action was due to a failure by the party seeking to
terminate the agreement to perform its obligations under the Merger
Agreement;
the offer expires without Leucadia having accepted for exchange any shares
of WilTel common stock pursuant to the offer, unless the failure to accept
shares is attributable to a failure by the party seeking to terminate the
agreement to perform its obligations under the Merger Agreement; or
the acceptance of shares of WilTel common stock for exchange pursuant to
the offer has not occurred on or before January 15, 2004, unless the
failure to accept shares of WilTel common stock for exchange pursuant to
the offer is attributable to a failure by the party seeking to terminate
the agreement to perform any of its obligation under the Merger Agreement.
TERMINATION BY LEUCADIA
We may terminate the Merger Agreement, at any time before the first date on
which we accept any shares of WilTel common stock for exchange pursuant to the
offer, if any of the following occurs:
WilTel's board of directors has withdrawn or modified, in a manner adverse
to Leucadia, its approval or recommendation of any of the transactions
contemplated by the Merger Agreement;
an event or change occurs that, individually or in the aggregate, has had
or would reasonably be expected to have a material adverse effect on
WilTel; or
WilTel's representations and warranties set forth in the Merger Agreement
that are qualified as to 'materiality' or material adverse effect are not
true and correct, or those that are not so qualified are not true and
correct in all material respects, as of the execution date of the Merger
Agreement and as of the date of determination as if made on such date, or
WilTel breaches or fails in any material respect to perform or comply with
its obligations under the Merger Agreement, and such breach or failure
cannot be cured or has not been cured within the time periods specified
under the Merger Agreement.
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TERMINATION BY WILTEL
WilTel may terminate the Merger Agreement before the date shares of WilTel
common stock are first accepted for exchange pursuant to the offer, if:
an event or change occurs that, individually or in the aggregate, has had
or would reasonably be expected to have a material adverse effect on
Leucadia; or
the representations and warranties of Leucadia set forth in the Merger
Agreement that are qualified as to 'materiality' or material adverse effect
are not true and correct, or those that are not so qualified are not true
and correct in all material respects, as of the execution date of the
Merger Agreement and as of the date of determination as if made on such
date, or Leucadia or Merger Sub breaches or fails in any material respect
to perform or comply with its obligations under the Merger Agreement, and
such breach or failure cannot be cured or has not been cured within the
time periods specified under the Merger Agreement.
EXPENSES
The Merger Agreement provides that all expenses incurred in connection with
the negotiation and execution of the Merger Agreement and the consummation of
the transactions contemplated by the Merger Agreement are to be paid by the
party incurring such expenses.
AMENDMENTS OR SUPPLEMENTS TO THE MERGER AGREEMENT
The Merger Agreement may be amended or supplemented at any time before the
completion of the merger, even after the Merger Agreement has been approved by
WilTel stockholders. Unless applicable law requires that WilTel stockholders
approve any subsequent amendment or change to the provisions of the Merger
Agreement, such amendment or change may be effected by written agreement of
WilTel and Leucadia by action taken by their respective boards of directors. Any
action by WilTel's board of directors with respect to the amendment or
termination of the Merger Agreement must be approved by a majority of the
members of the Special Committee of the WilTel board of directors.
WAIVERS
Before the completion of the merger, WilTel or Leucadia may, subject to
applicable law, (i) waive any inaccuracies in the other party's representations
and warranties; (ii) extend the time for the performance of any of the
obligations or acts of the other party; or (iii) waive the other party's
compliance with any provisions or pertinent conditions of the Merger Agreement.
Any such action by WilTel must be approved by a majority of the members of the
Special Committee of the WilTel board of directors.
COMPARISON OF RIGHTS OF HOLDERS OF WILTEL COMMON STOCK
AND HOLDERS OF LEUCADIA COMMON SHARES
INTRODUCTION
WilTel is incorporated under the laws of the State of Nevada and the rights
of WilTel stockholders are governed by Nevada law and WilTel's articles of
incorporation and by-laws. Leucadia is incorporated under the laws of the State
of New York and the rights of Leucadia's shareholders are governed by New York
law and Leucadia's certificate of incorporation and by-laws. If your shares of
WilTel common stock are exchanged pursuant to the offer or subsequent merger
into Leucadia common shares, your rights as a shareholder will change as a
result of the differences between the respective governing documents of WilTel
and Leucadia and differences between Nevada law and New York law. The following
summary highlights material differences between the current rights of WilTel
stockholders and Leucadia shareholders.
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This following comparison of the New York Business Corporation Law and
Leucadia's certificate of incorporation and by-laws, on the one hand, with the
Nevada Revised Statutes and WilTel's articles of incorporation and by-laws, on
the other hand, is intended only to be a summary and not a comprehensive
discussion of rights of either company's shareholders. Copies of our certificate
of incorporation and by-laws and WilTel's articles of incorporation and by-laws
have been filed with the SEC, and this summary is qualified in its entirety by
reference to the specific provisions of these documents. See 'Where You Can Find
More Information'.
AUTHORIZED SHARES; PREFERRED STOCK
WILTEL
WilTel's articles of incorporation authorize WilTel to issue 300,000,000
shares of capital stock consisting of 200,000,000 shares of common stock and
100,000,000 shares of preferred stock. Under Nevada law and WilTel's articles of
incorporation, the board of directors has the right to issue preferred shares
with the powers, rights and designations as it may so determine.
LEUCADIA
Leucadia's certificate of incorporation authorizes Leucadia to issue
156,000,000 shares of capital stock consisting of 150,000,000 common shares and
6,000,000 preferred shares. Under New York law and Leucadia's certificate of
incorporation, the board of directors has the right to issue preferred shares
with the powers, rights and designations as it may so determine.
VOTING OF STOCKHOLDERS; LIMITATIONS ON SHARE OWNERSHIP
WILTEL
Subject to applicable law and WilTel's articles of incorporation, each
WilTel stockholder is entitled to one vote per share of WilTel common stock. In
addition, WilTel's articles of incorporation generally restrict WilTel
stockholders from becoming 5% stockholders (as defined in the articles of
incorporation) or, if they already are 5% stockholders, from increasing their
percentage stock ownership interest or transferring their interests unless such
increase or transfer is approved by the board of directors.
LEUCADIA
Subject to applicable law and Leucadia's certificate of incorporation, each
Leucadia shareholder is entitled to one vote per Leucadia common share. In
addition, Leucadia's certificate of incorporation generally restricts Leucadia
shareholders from becoming the owners of 5% of the outstanding Leucadia common
shares or, if they already own 5% of the outstanding Leucadia common shares,
from increasing their percentage ownership interest or transferring their
interests unless such increase or transfer is approved by the board of
directors.
ANNUAL MEETING; SPECIAL MEETINGS OF STOCKHOLDERS
WILTEL
Nevada law provides that stockholders meetings are to be held as directed by
the corporation's by-laws and/or articles of incorporation. WilTel's articles of
incorporation and bylaws provide that annual and special meetings of
stockholders may be called only by the board of directors pursuant to a
resolution approved by a majority of the entire board of directors or by certain
persons specified by the by-laws. WilTel's articles of incorporation explicitly
deny any power its stockholders may have under Nevada law to call a special
meeting or to act by written consent.
WilTel's by-laws provide that, except as otherwise required by law or the
articles of incorporation, a majority of the shares entitled to vote, present in
person or represented by proxy,
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regardless of whether the proxy has authority to vote on all matters, shall
constitute a quorum at a meeting of stockholders for the transaction of
business.
LEUCADIA
New York law provides that shareholder meetings must be held annually and a
special meeting of shareholders may be called by the board of directors or by
persons authorized in the certificate of incorporation or the by-laws.
Leucadia's by-laws provide that the board of directors may call special meetings
of shareholders at any time.
Leucadia's by-laws provide that, except as otherwise required by law, the
certificate of incorporation or the by-laws, a majority of shares entitled to
vote, present in person or represented by proxy, shall constitute a quorum at a
meeting of shareholders (subject to class voting rights, if any).
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
WILTEL
WilTel's by-laws provide that stockholders seeking to bring business before
an annual meeting of shareholders or to nominate candidates for election as
directors at an annual meeting of stockholders must provide timely notice in
writing. To be timely, a stockholder's notice must be received by WilTel's
corporate secretary:
not less than 90 nor more than 120 days before the anniversary date of
immediately preceding annual meeting, or
if the annual meeting is called for a date that is not within 30 days
before or after the immediately preceding annual meeting, not later than
the close of business on the tenth day following the day on which notice of
the annul meeting is mailed to the stockholders or public disclosure of the
date of the annual meeting is first made.
LEUCADIA
Leucadia's by-laws provide that shareholders seeking to bring business
before an annual meeting of shareholders or to nominate candidates for election
as directors at an annual meeting of shareholders must provide timely notice in
writing. To be timely, a shareholder's notice must be received by Leucadia's
corporate secretary:
not less than 120 days before the first anniversary date of Leucadia's
proxy statement in connection with the last annual meeting, or
if no annual meeting was held in the previous year, not less than a
reasonable time, as determined by the board of directors, before the date
of the applicable annual meeting.
REMOVAL OF DIRECTORS; VACANCIES ON THE BOARD OF DIRECTORS
WILTEL
Under Nevada law and WilTel's articles of incorporation, a director may be
removed from office by the vote of stockholders representing not less than
two-thirds of the voting power of the issued and outstanding shares entitled to
vote, voting together as a single class.
Under Nevada law and WilTel's by-laws, a vacancy on the board of directors
may be filled by the affirmative vote of two-thirds of the remaining directors
then in office. See 'Interests of Certain Persons in the Offer and Subsequent
Merger -- Certain Agreements between Leucadia and WilTel' for a description of
certain agreements between Leucadia and WilTel with respect to the WilTel board
of directors. The Stockholders Agreement will terminate upon completion of the
merger.
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LEUCADIA
Under New York law, any director or the entire board of directors may be
removed for cause by holders of a majority of the shares voting on the removal.
Under New York law and Leucadia's by-laws, any director may be removed for cause
by the affirmative vote of a majority of the directors present, provided a
quorum (one-third of the directors) is present.
Under New York law and Leucadia's by-laws, a vacancy on the board of
directors, other than due to the removal of a director without cause, may be
filled by a vote of the board of directors or if the number of directors then in
office is less than a quorum, by vote of a majority of directors then in office.
A vacancy created by the removal of a director without cause may be filled only
by a vote of the shareholders.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
WILTEL
Pursuant to its articles of incorporation and by-laws, WilTel shall
indemnify its current or past directors or officers, to the fullest extent
permitted by Nevada law, for expenses reasonably incurred in any civil, criminal
or administrative proceeding. Nevada law and WilTel's by-laws permit
indemnification only if such director or officer (1) is not liable, and (2)
acted in good faith and in a manner which he reasonably believed to be in or not
opposed to the corporation's best interests and, with respect to any criminal
proceeding, had no reasonable cause to believe that his conduct was unlawful.
LEUCADIA
New York law generally permits a corporation to provide indemnification and
advancement of expenses, by by-law provision, agreement or otherwise, against
judgments, fines, expenses and amounts paid in settlement actually and
reasonably incurred by the person in connection with a proceeding if the person
acted in good faith and for a purpose he or she reasonably believed to be in or,
in the case of service for any other corporation or any partnership, joint
venture, trust, employee benefit plan or other enterprise, not opposed to the
best interests of the corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his or her conduct was
unlawful.
Leucadia's by-laws provide for indemnification to the fullest extent
permitted by law.
SHAREHOLDER APPROVAL OF BUSINESS COMBINATIONS
WILTEL
Under Nevada law, a business combination may be approved by the affirmative
vote of holders of shares representing a majority of the outstanding voting
power. A business combination is defined broadly to include a merger or
consolidation, sale, lease, exchange or other disposition of corporation
property exceeding threshold aggregate market values, or a dissolution of the
corporation.
In addition, WilTel's articles of incorporation provide that until the
earlier of December 15, 2007 and the Expiration Date (as defined in the articles
of incorporation), if a majority of the members of WilTel's board of directors
are not Continuing Directors (as defined in the articles of incorporation), in
addition to any approvals required by law, the prior approval of either (i) the
holders of 75% of the issued and outstanding voting securities of WilTel, or
(ii) a vote of a majority of the Continuing Directors, will be required for the
consummation of a Business Combination Transaction (as defined in the articles
of incorporation), unless certain conditions are satisfied. If the offer is
successfully consummated, this provision will no longer be applicable.
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LEUCADIA
Under New York law, for corporations in existence on February 22, 1998,
whose certificate of incorporation expressly provides, or for corporations
formed after that date, the holders of a majority of the shares entitled to vote
must approve a merger or consolidation, sale, lease, exchange or other
disposition of all or substantially all of the property of the corporation not
in the usual and regular course of the corporation's business, or a dissolution
of the corporation. In the case of all other corporations, like Leucadia,
approval by the holders of two-thirds of the votes of all outstanding shares
entitled to vote is required.
AMENDMENT OF GOVERNING DOCUMENTS
WILTEL
Under Nevada law, amendments to the articles of incorporation must be
adopted in accordance with the following procedures:
the board of directors must adopt a resolution setting forth the amendment
and declaring its advisability;
the board of directors must call a meeting, providing notice to each
stockholder entitled to vote as to the meeting and the amendment to be
considered; and
unless the articles of incorporation provide otherwise, the amendment may
be approved by the holders of a majority of the voting power entitled to
vote on the amendment.
WilTel's articles of incorporation provide that the affirmative vote of at
least (a) 75% of the combined voting power of the then outstanding shares of
WilTel common stock shall be required to amend or repeal the restriction
regarding Business Combination Transaction, (b) 80% of the combined voting power
shall be required to amend or repeal the provisions of the articles of
incorporation granting the board of directors exclusive authority to call
special meetings of stockholders and prohibiting stockholder action by written
consent, (c) 66 2/3% of the combined voting power shall be required to amend or
repeal the provisions of the articles of incorporation relating to the removal
of directors in office, and (d) a majority of the shares of WilTel common stock
shall be required to amend the other provisions of the articles of
incorporation.
Nevada law provides that, subject to any by-laws adopted by the
stockholders, the board of directors may adopt the by-laws of the corporation.
Nevada law is silent on the amendment or repeal of by-laws. WilTel's articles of
incorporation and by-laws provide that, generally, by-laws may be adopted,
altered, amended or repealed by a majority vote of the entire board of directors
or the holders of outstanding common stock or preferred stock entitled to vote
thereon. Any proposed alteration of certain provisions relating to stockholders
meetings, director elections, or the amendment of WilTel's by-laws, however,
must be approved by an affirmative vote of at least 80% of the entire board of
directors or stockholders entitled to vote.
LEUCADIA
Under New York law, an amendment to the certificate of incorporation
requires the approval of the corporation's board of directors and the
affirmative vote of a majority of the outstanding shares entitled to vote,
provided that (1) provisions in the certificate of incorporation requiring a
greater vote on a matter may be amended only with that greater vote and (2) the
affirmative vote of a majority of the outstanding shares of classes of stock
that would be adversely affected is required, in addition to the foregoing, in
certain circumstances.
Under New York law, the board of directors may amend by-laws if so
authorized in the charter or a by-law adopted by the shareholders or the
incorporators. Leucadia's by-laws authorize the board of directors to amend
by-laws by a vote of the majority of directors present at a meeting at which a
quorum is present. The shareholders of a New York corporation also have the
power to amend by-laws, by majority vote of shares outstanding and entitled to
vote in an election of directors.
63
STATE ANTI-TAKEOVER STATUTES
WILTEL
Nevada law includes two anti-takeover statutes:
the combinations with interested stockholders statutes; and
the acquisition of controlling interest statutes.
WilTel has adopted provisions in its articles of incorporation to 'opt-out'
of these combinations with interested stockholders statutes. Thus, the statutes
are generally not applicable to business combinations involving WilTel.
LEUCADIA
New York law includes an anti-takeover statute that restricts the ability of
a New York corporation to engage in a business combination with an interested
shareholder for a period of five years following such interested shareholder's
stock acquisition date. Under New York law, an interested shareholder is defined
as the beneficial owner of 20% or more of the corporation's shares or an
affiliate or associate of the corporation who has, within the previous five
years, beneficially owned 20% or more of the corporation's then outstanding
shares.
STOCK EXCHANGE LISTING
WILTEL
WilTel common stock is traded on NASDAQ under the symbol 'WTEL'.
LEUCADIA
Leucadia common shares are traded on the New York Stock Exchange and the
Pacific Exchange, Inc. under the symbol 'LUK'.
WHERE YOU CAN FIND MORE INFORMATION
Leucadia and WilTel file annual, quarterly and special reports and other
information with the SEC. You may read and copy any reports that Leucadia and
WilTel file at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference rooms.
Leucadia and WilTel's SEC filings are also available to the public from
commercial retrieval services and at the website maintained by the SEC at
www.sec.gov.
We filed a registration statement on Form S-4 to register with the SEC the
Leucadia common shares we will issue pursuant to the offer and the subsequent
merger. This prospectus is a part of that registration statement. As allowed by
SEC rules, this prospectus does not contain all the information you can find in
the registration statement or the exhibits to the registration statement. We
also filed with the SEC a tender offer statement on Schedule TO pursuant to the
Exchange Act in connection with our offer. You may obtain copies of the Form S-4
and the Schedule TO (and any amendments to those documents) in the manner
described above.
WilTel is required to file with the SEC a solicitation/recommendation
statement on Schedule 14D-9 regarding the offer within ten business days from
the date of the distribution of this prospectus and to disseminate this
statement to WilTel stockholders. You may obtain a copy of the Schedule 14D-9
(and any amendments to that document) in the manner described above.
Statements made in this prospectus as to the contents of any contract,
agreement or other document are not necessarily complete. With respect to each
contract, agreement or other document filed as an exhibit to the registration
statement or otherwise filed with the SEC, reference is made to the copy so
filed, and each statement shall be deemed qualified in its entirety by this
reference.
64
The following documents filed by us with the SEC pursuant to the Exchange
Act are hereby incorporated by reference in this prospectus:
(1) Annual Report on Form 10-K for the fiscal year ended December 31,
2002, as amended,
(2) Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 2003 and June 30, 2003,
(3) Current Reports on Form 8-K filed on February 7, 2003, May 12, 2003,
May 15, 2003, June 3, 2003, June 4, 2003, June 11, 2003, July 29, 2003,
August 7, 2003, August 12, 2003, August 13, 2003, August 22, 2003,
October 2, 2003, October 16, 2003, and October 30, 2003, and
(4) The description of Leucadia common shares in the Registration
Statement (No. 33-57054), including any amendment or report for the purpose
of updating this description.
The following documents filed by WilTel with the SEC pursuant to the
Exchange Act are hereby incorporated by reference in this prospectus:
(1) Annual Report on Form 10-K for the fiscal year ended December 31,
2002, as amended,
(2) Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 2003 and June 30, 2003, and
(3) Current Reports on Form 8-K filed on February 3, 2003, May 15, 2003,
June 25, 2003, and August 25, 2003.
All documents filed by Leucadia and WilTel pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act with the SEC from the date of this prospectus to
the date that the offer of Leucadia common shares pursuant to this prospectus is
concluded (or the date that our offer is terminated) are also deemed to be
incorporated by reference into this prospectus.
We have supplied all information contained or incorporated by reference in
this prospectus relating to us, and WilTel has supplied all such information
relating to WilTel. Documents incorporated by reference are available from us
without charge upon written or oral request of WilTel stockholders to the
information agent for the proposed transaction, Innisfree M&A Incorporated, 501
Madison Avenue, 20th Floor, New York, New York 10022, Stockholders Call
Toll-Free: (888) 750-5834, Banks and Brokers Call Collect: (212) 750-5833.
Exhibits to these documents will only be furnished if they are specifically
incorporated by reference in this document. If you request any incorporated
documents from us, we will mail them to you by first class mail, or another
equally prompt means, within one business day after we receive your request.
LEGAL MATTERS
The validity of the Leucadia common shares offered hereby will be passed
upon for Leucadia by Weil, Gotshal & Manges LLP (members of which own
approximately 120,000 Leucadia common shares).
EXPERTS
The financial statements of Leucadia and Olympus Re Holdings, Ltd.
incorporated by reference in this prospectus and elsewhere in the registration
statement by reference to Leucadia's Annual Report on Form 10-K, as amended, for
the year ended December 31, 2002 have been so incorporated in reliance on the
reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Berkadia LLC and FINOVA Group Inc.
appearing in Leucadia's Annual Report on Form 10-K, as amended, for the year
ended December 31, 2002, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial
65
statements are incorporated herein by reference in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
The financial statements of Jefferies Partners Opportunity Fund II, LLC, as
of December 31, 2002 and 2001 and for each of the years in the three year period
ended December 31, 2002, appearing in the December 31, 2002 Annual Report on
Form 10K/A of Leucadia, have been audited by KPMG LLP, independent auditors, as
set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of WilTel appearing in WilTel's Annual
Report on Form 10-K, as amended, for the year ended December 31, 2002, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
MISCELLANEOUS
The offer is being made solely by this prospectus and the related letter of
transmittal and is being made to holders of all outstanding shares of WilTel
common stock. We are not aware of any jurisdiction where the making of the offer
is prohibited by any administrative or judicial action pursuant to any valid
state statute. If we become aware of any valid state statute prohibiting the
making of the offer or the acceptance of shares pursuant thereto, we will make a
good faith effort to comply with any such state statute. If, after making a good
faith effort, we cannot comply with that state statute, the offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
shares in that state. In any jurisdiction where the securities, blue sky or
other laws require the offer to be made by a licensed broker or dealer, the
offer shall be deemed to be made on our behalf by one or more registered brokers
or dealers licensed under the laws of that jurisdiction. No person has been
authorized to give any information or make any representation on behalf of
Leucadia not contained in this prospectus or in the letter of transmittal, and
if given or made, such information or representation must not be relied upon as
having been authorized.
66
ANNEX A
AGREEMENT AND PLAN OF MERGER
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
LEUCADIA NATIONAL CORPORATION,
WRANGLER ACQUISITION CORP.
AND
WILTEL COMMUNICATIONS GROUP, INC.
DATED AS OF AUGUST 21, 2003
--------------------------------------------------------------------------------
ARTICLE I -- THE OFFER. A-1
1.1 The Offer................................................... A-1
1.2 Company Actions............................................. A-4
1.3 Stockholder Meeting......................................... A-5
ARTICLE II -- THE MERGER................................................... A-5
2.1 The Merger.................................................. A-5
2.2 Closing..................................................... A-5
2.3 Effective Time.............................................. A-5
2.4 Effects of the Merger....................................... A-6
2.5 Articles of Incorporation and By-laws of the Surviving A-6
Corporation...............................................
2.6 Directors and Officers of the Surviving Corporation......... A-6
2.7 Conversion of Securities.................................... A-6
2.8 Exchange of Certificates.................................... A-6
2.9 Appraisal Rights............................................ A-9
2.10 Exchange Ratio.............................................. A-9
2.11 CSRs........................................................ A-10
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... A-13
3.1 Organization................................................ A-13
3.2 Capitalization.............................................. A-13
3.3 Authority................................................... A-13
3.4 Consents and Approvals; No Violations....................... A-14
3.5 SEC Documents; Undisclosed Liabilities...................... A-15
3.6 Absence of Certain Changes or Events........................ A-15
3.7 Schedule 14D-9; Offer Documents; and Proxy Statement........ A-15
3.8 Tax Matters................................................. A-16
3.9 Opinion of Financial Advisor................................ A-16
3.10 Finders or Brokers.......................................... A-16
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...... A-16
4.1 Organization................................................ A-16
4.2 Authority................................................... A-16
4.3 Consents and Approvals; No Violations....................... A-17
4.4 Offer Documents; Schedule 14D-9; Proxy Statement............ A-17
4.5 Capitalization.............................................. A-18
4.6 Parent Common Stock......................................... A-18
4.7 SEC Documents; Undisclosed Liabilities...................... A-18
4.8 Absence of Certain Changes or Events........................ A-18
4.9 Tax Matters................................................. A-18
4.10 Ownership and Operations of Merger Sub...................... A-18
4.11 Finders or Brokers.......................................... A-19
ARTICLE V -- ADDITIONAL COVENANTS AND AGREEMENTS........................... A-19
5.1 Conduct of Business......................................... A-19
5.2 Recommendation.............................................. A-20
5.3 Reasonable Best Efforts..................................... A-21
5.4 Public Announcements........................................ A-22
5.5 Access; Confidentiality..................................... A-22
5.6 Notification of Certain Matters............................. A-22
5.7 Director and Officer Indemnification........................ A-23
5.8 Securityholder Litigation................................... A-23
5.9 Offer Documents; Schedule 14D-9; Proxy Statement............ A-23
5.10 Other Offers................................................ A-23
5.11 Rule 16b-3.................................................. A-25
A-i
5.12 Tax Matters................................................. A-25
Article VI -- CONDITIONS TO THE MERGER..................................... A-25
6.1 Conditions to Each Party's Obligation to Effect the
Merger.................................................... A-25
ARTICLE VII -- TERMINATION................................................. A-25
7.1 Termination................................................. A-25
7.2 Effect of Termination....................................... A-27
7.3 Expenses.................................................... A-27
ARTICLE VIII -- MISCELLANEOUS.............................................. A-27
8.1 No Survival of Representations and Warranties; etc.......... A-27
8.2 Amendment or Supplement..................................... A-27
8.3 Extension of Time, Waiver, Etc.............................. A-28
8.4 Assignment; Binding Effect.................................. A-28
8.5 Counterparts; Effectiveness................................. A-28
8.6 Entire Agreement; No Third-Party Beneficiaries.............. A-28
8.7 Governing Law; Enforcement; Jurisdiction; Waiver of Jury
Trial..................................................... A-28
8.8 Notices..................................................... A-29
8.9 Severability................................................ A-29
8.10 Headings.................................................... A-29
8.11 Definitions; Construction................................... A-29
ANNEX A -- Conditions to the Offer
A-ii
AGREEMENT AND PLAN OF MERGER (this 'Agreement'), dated as of August 21, 2003
(the 'Execution Date'), among LEUCADIA NATIONAL CORPORATION, a New York
corporation ('Parent'), WRANGLER ACQUISITION CORP., a Nevada corporation and
wholly owned subsidiary of Parent ('Merger Sub'), and WILTEL COMMUNICATIONS
GROUP, INC., a Nevada corporation (the 'Company'). Certain terms used in this
Agreement are used as defined in Section 8.11.
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company each deems it advisable that Parent acquire the Company on the terms and
subject to the conditions provided for in this Agreement;
WHEREAS, in furtherance thereof it is proposed that such acquisition be
accomplished by (a) Parent commencing an exchange offer to acquire all of the
shares of common stock, $.01 par value, of the Company ('Company Common Stock')
issued and outstanding (each, a 'Share' and, collectively, the 'Shares') that
are not beneficially owned (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the 'Exchange Act')) by Parent (each, a 'Public Share'
and, collectively, the 'Public Shares'), in which exchange offer each Public
Share validly tendered and not properly withdrawn would be exchanged for
(i) 0.4242 (such exchange ratio, or any greater exchange ratio, per Public Share
paid pursuant to the Offer being hereinafter referred to as the 'Exchange
Ratio') of a common share, $1.00 par value, of Parent ('Parent Common Stock')
(such amount of shares, or any greater amount of shares, of Parent Common Stock
paid per Public Share pursuant to the Offer being hereinafter referred to as the
'Base Offer Consideration') and (ii) one Contingent Sale Right having the terms
described in Section 2.11 hereof (as it may be amended in accordance with this
Agreement, a 'CSR' and, together with the Base Offer Consideration, the 'Offer
Consideration'), in each case, subject to any required withholding of taxes, on
the terms and subject to the conditions provided for in this Agreement (such
exchange offer, as it may be amended from time to time as permitted by this
Agreement, the 'Offer'), and (b) following the consummation of the Offer, the
merger of Merger Sub with and into the Company, with the Company being the
surviving corporation, in accordance with the Nevada Revised Statutes (the
'NRS'), pursuant to which Shares (other than certain shares as provided in
Section 2.7(b) hereof) will be converted into the right to receive the Offer
Consideration, subject to any required withholding of taxes, on the terms and
subject to the conditions provided for in this Agreement (the 'Merger');
WHEREAS, for federal income tax purposes, it is intended that the Offer and
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the 'Code'); and
WHEREAS, the respective Boards of Directors of Parent (on its own behalf and
as the sole stockholder of Merger Sub), Merger Sub and the Company have each
adopted this Agreement and approved the Offer and the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, Parent, Merger Sub and the Company hereby agree as
follows:
ARTICLE I
THE OFFER
1.1 The Offer.
(a) Provided that (i) none of the events or circumstances set forth in
paragraphs (a) through (f) of Annex A hereto shall have occurred and be existing
(and shall not have been waived by Parent) and (ii) the Company shall have
complied with its obligations under Section 1.2 hereof, Parent shall commence
(within the meaning of Rule 14d-2 under the Exchange Act) the Offer as promptly
as reasonably practicable after the Execution Date, but in no event later than
10 business days after the Execution Date.
A-1
(b) The obligation of Parent to accept for exchange, and to exchange the
Offer Consideration for, Public Shares tendered pursuant to the Offer shall be
subject only (i) to the satisfaction of the condition that at the expiration of
the Offer there be validly tendered in accordance with the terms of the Offer
(other than Shares tendered by guaranteed delivery where actual delivery has not
occurred) and not withdrawn that number of Public Shares which represents more
than 50% of the Public Shares then outstanding, subject to Section 1.1(g) hereof
the 'Minimum Condition'), and (ii) to the satisfaction (or waiver by Parent) of
the other conditions set forth in Annex A hereto. Parent expressly reserves the
right to waive any of such conditions (other than the Minimum Condition and the
condition set forth in clause (vi) of the second paragraph of Annex A hereto),
to increase the consideration per Public Share payable in the Offer and to make
any other changes in the terms of the Offer; provided, however, that no change
may be made without the prior written consent of the Company which decreases the
Exchange Ratio for the Offer from that set forth in the second 'Whereas' clause
hereof (or decreases the number of shares of Parent Common Stock issuable
pursuant to the CSRs), changes the form of consideration to be paid in the
Offer, reduces the maximum number of Shares sought to be acquired in the Offer,
imposes conditions to the Offer in addition to the conditions set forth in Annex
A hereto, waives the Minimum Condition or the condition set forth in clause (vi)
of the second paragraph of Annex A hereto, or modifies or amends any of the
conditions set forth in Annex A hereto or makes other changes in the terms of
the Offer that are in any manner adverse to the holders of Public Shares or,
except as provided below, extends the expiration date of the Offer.
Notwithstanding the foregoing, Parent may (A) extend the Offer beyond the
initial scheduled expiration date, which shall be 20 business days following the
date of commencement of the Offer, or any subsequent scheduled expiration date,
if, at the scheduled expiration of the Offer, any of the conditions to Parent's
obligation to accept for exchange, and to exchange the Offer Consideration for,
Public Shares tendered shall not be satisfied or, to the extent permitted by
this Agreement, waived, subject, however, to the parties' respective rights to
terminate this Agreement pursuant to Section 7.1, and (B) extend the Offer for
any period required by any rule, regulation or interpretation of the Securities
and Exchange Commission (the 'SEC') or the staff thereof applicable to the
Offer. Each extension of the Offer pursuant to clause (A) of the preceding
sentence shall not exceed the lesser of ten business days (or such longer period
as the Company and Parent may agree in writing in any particular instance) or
such fewer number of days that Parent reasonably believes are necessary to cause
the conditions of the Offer set forth in Annex A hereto to be satisfied. In
addition, if, at the expiration date of the Offer, all of the conditions to the
Offer have been satisfied (or, to the extent permitted by this Agreement, waived
by Parent) but the number of Public Shares validly tendered and not withdrawn
pursuant to the Offer, when taken together with Shares, if any, then
beneficially owned by Parent, constitutes less than 90% of the Shares then
outstanding, without the consent of the Company, Parent shall (subject to
applicable law) have the right to provide for a 'subsequent offering period' (as
contemplated by Rule 14d-11 under the Exchange Act) for up to 20 business days
after Parent's acceptance for exchange of the Public Shares then tendered and
not withdrawn pursuant to the Offer, in which event Parent shall (I) give the
required notice of such subsequent offering period and (II) immediately accept
for exchange, and promptly exchange the Offer Consideration for, all Public
Shares tendered and not withdrawn as of such expiration date.
(c) Subject to the terms of the Offer and this Agreement and the
satisfaction or earlier waiver of all the conditions of the Offer set forth in
Annex A hereto as of any expiration date of the Offer, Parent shall accept for
exchange, and exchange the Offer Consideration (subject to any required
withholding of taxes) for, all Public Shares validly tendered and not withdrawn
pursuant to the Offer promptly after it is permitted to do so under applicable
law.
(d) Notwithstanding anything to the contrary set forth herein, no
certificates or scrip representing fractional shares of Parent Common Stock
shall be issued in connection with the Offer, no dividends or other
distributions with respect to Parent Common Stock shall be payable on or with
respect to any such fractional share interest and such fractional share
interests will not entitle the owner thereof to vote or to any other rights of a
stockholder of Parent. In lieu thereof, each tendering stockholder who would
otherwise be entitled to a fractional share of Parent
A-2
Common Stock (after aggregating all fractional shares of Parent Common Stock
that otherwise would have been received by such stockholder) will be entitled to
receive an amount in cash (without interest) equal to such holder's
proportionate interest in the net proceeds from the sale or sales in the open
market by the Exchange Agent (as hereinafter defined), on behalf of such
holders, of the aggregated fractional shares of Parent Common Stock issued
pursuant to this paragraph. Promptly following the Purchase Date, (i) the
Exchange Agent shall determine the total amount of the fractional shares of
Parent Common Stock to which all such tendering stockholders would otherwise be
entitled, and aggregate the same into whole shares of Parent Common Stock
(rounded up to the nearest whole share), (ii) Parent shall issue such whole
shares of Parent Common Stock to the Exchange Agent, as agent for such tendering
stockholders, and (iii) the Exchange Agent shall sell such shares of Parent
Common Stock at the then prevailing prices on the New York Stock Exchange
through one or more member firms of the New York Stock Exchange (which sales
shall be executed in round lots to the extent practicable). Until the net
proceeds of such sales have been distributed to such tendering stockholders, the
Exchange Agent will hold such proceeds in trust for such holders. Promptly after
the determination of the amount of cash to be paid to such holders in lieu of
any fractional interests in Parent Common Stock, the Exchange Agent shall pay
such amounts to such holders (subject to any required withholding of taxes).
(e) The Company agrees that no Shares held by the Company or any of its
subsidiaries will be tendered to Parent pursuant to the Offer.
(f) As promptly as practicable on the date of commencement of the Offer,
Parent shall file with the SEC (i) a Tender Offer Statement on Schedule TO with
respect to the Offer (together with all amendments, supplements and exhibits
thereto, the 'Schedule TO') and (ii) a registration statement on Form S-4 to
register, under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the 'Securities Act'), the offer and sale of
Parent Common Stock pursuant to the Offer and the Merger (together with all
amendments, supplements and exhibits thereto, the 'Registration Statement'). The
Registration Statement shall include a prospectus (the 'Prospectus') containing
the information required under Rule 14d-4(b) promulgated under the Exchange Act.
The Schedule TO shall include or contain as an exhibit an offer to exchange and
form of the related letter of transmittal and all other ancillary Offer
documents (collectively with the Prospectus, and together with all amendments,
supplements and exhibits thereto and to the Prospectus, the 'Offer Documents').
Parent shall cause the Offer Documents to be disseminated to the holders of the
Public Shares as and to the extent required by applicable federal securities
laws. Parent, on the one hand, and the Company, on the other hand, shall
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that it shall be or shall have become false or misleading
in any material respect, and Parent shall cause the Offer Documents as so
corrected to be filed with the SEC and disseminated to holders of the Public
Shares, in each case, as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment upon the Offer Documents before they are filed
with the SEC and disseminated to holders of Public Shares. In addition, Parent
agrees to provide the Company and its counsel with any comments, whether written
or oral, that Parent or its counsel may receive from time to time from the SEC
or its staff with respect to the Offer Documents promptly after the receipt of
such comments, to consult with the Company and its counsel prior to responding
to any such comments and to provide the Company with copies of all such
responses, whether written or oral. Following the time the Registration
Statement is declared effective, Parent shall file the final prospectus included
therein under Rule 424(b) promulgated pursuant to the Securities Act.
(g) If none of the Shares held by the securities holder channeling fund
established in connection with Second Amended and Restated Joint Plan of
Reorganization of Williams Communications Group, Inc. and CG Austria Inc. are
validly tendered in accordance with the terms of the Offer and not withdrawn at
the expiration of the Offer, then the Shares in such fund shall be deemed not
outstanding for purposes of the Minimum Condition.
A-3
1.2 Company Actions.
(a) The Company hereby represents and warrants that the Company's Board of
Directors, at a meeting duly called and held, has (i) adopted this Agreement and
approved the Transactions, including the Offer and the Merger, and
(ii) resolved (subject to Section 5.2 hereof) to recommend that holders of
Public Shares accept the Offer, tender their Public Shares to Parent pursuant
thereto and approve this Agreement. The Company hereby consents to the inclusion
in the Offer Documents of the recommendation of the Company's Board of Directors
described in the immediately preceding sentence. The Company hereby further
represents and warrants that (A) the Board of Directors of the Company has
received the opinion of JPMorgan, dated the Execution Date, to the effect that,
as of such date, and subject to the various assumptions and qualifications set
forth therein, the consideration to be received by the holders of the Public
Shares in the Offer and the Merger is fair to such holders from a financial
point of view (the 'Fairness Opinion') and (B) the Company has been authorized
by JPMorgan to permit the inclusion of the Fairness Opinion and/or references
thereto in the Offer Documents, the Schedule 14D-9 and any Proxy Statement,
subject to prior review and consent by JPMorgan (such consent not to be
unreasonably withheld or delayed).
(b) As promptly as practicable on the date of commencement of the Offer, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments, supplements and exhibits thereto,
the 'Schedule 14D-9') which shall contain the recommendation of the Board of
Directors of the Company referred to in Section 1.2(a). The Company shall cause
the Schedule 14D-9 to be disseminated to holders of the Public Shares as and to
the extent required by applicable federal securities laws. The Company, on the
one hand, and Parent, on the other hand, shall promptly correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
be or shall have become false or misleading in any material respect, and the
Company shall cause the Schedule 14D-9 as so corrected to be filed with the SEC
and disseminated to holders of the Public Shares, in each case, as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given a reasonable opportunity to review and comment upon the
Schedule 14D-9 before it is filed with the SEC and disseminated to holders of
Public Shares. In addition, the Company agrees to provide Parent and its counsel
with any comments, whether written or oral, that the Company or its counsel may
receive from time to time from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments, to consult with
Parent and its counsel prior to responding to any such comments and to provide
Parent with copies of all such responses, whether written or oral.
(c) The Company agrees (i) to promptly upon Parent's request provide all
information about the Company required to be disclosed in the Offer Documents,
(ii) to promptly deliver to Parent a duly executed consent of the Company's
accountants to allow Parent to include in the Registration Statement the
Company's financial statements and such accountants' report thereon, (iii) that
all information provided by the Company for inclusion or incorporation by
reference in the Offer Documents will not (at the respective times such
materials, or any amendments or supplements thereto, are filed with the SEC,
first published, sent or given to stockholders of the Company, the Offer expires
or shares of Parent Common Stock are delivered in connection with the Offer, or
at the Effective Time, as the case may be) 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, in light of the
circumstances under which they were made, not misleading, and (iv) to promptly
correct any information provided by the Company for the Offer Documents if and
to the extent that such information shall have become false or misleading in any
material respect.
(d) The Company shall promptly furnish Parent with mailing labels containing
the names and addresses of all record holders of Shares and with security
position listings of Shares held in stock depositories, each as of a recent
date, together with all other available listings and computer files containing
names, addresses and security position listings of record holders and beneficial
owners of Shares. The Company shall furnish Parent with such additional
information, including updated
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listings and computer files of stockholders, mailing labels and security
position listings, and such other assistance as Parent or its agents may
reasonably require in communicating the Offer to the record and beneficial
holders of Shares.
1.3 Stockholder Meeting.
(a) As promptly as practicable following the acquisition of Public Shares
pursuant to the Offer, if required by applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in accordance
with applicable law and the Company's articles of incorporation and by-laws:
(i) duly call, give notice of, convene and hold a meeting of the
Company's stockholders for the purposes of considering and taking action
upon the approval of this Agreement (the 'Company Shareholders Meeting');
and
(ii) in consultation with Parent, prepare and file with the SEC a
preliminary proxy or information statement relating to the Merger and this
Agreement and obtain and furnish the information required by the SEC to be
included therein and, after consultation with Parent, respond promptly to
any comments made by the SEC with respect to the preliminary proxy or
information statement and cause a definitive proxy or information statement
(together with all amendments, supplements and exhibits thereto, the 'Proxy
Statement') to be mailed to the Company's stockholders at the earliest
practicable date; provided that no amendments or supplements to the Proxy
Statement shall be made by the Company without consultation with Parent.
Parent shall provide the Company with such information with respect to
Parent and its directors and officers as shall be required to be included in
the Proxy Statement.
(b) Notwithstanding the provisions of Section 1.3(a), in the event that
Parent and its subsidiaries shall acquire in the aggregate at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, the parties hereto shall,
subject to Article VI hereof, take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company, in accordance with
Section 92A.180 of the NRS.
(c) Parent shall vote, or cause to be voted, all of the Shares acquired in
the Offer or otherwise then owned by it or any of its subsidiaries in favor of
the approval of this Agreement.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with Chapter 92A of the NRS, at the Effective
Time Merger Sub shall merge with and into the Company, and the separate
corporate existence of Merger Sub shall thereupon cease, and the Company shall
be the surviving corporation in the Merger (the 'Surviving Corporation').
2.2 Closing. The closing of the Merger (the 'Closing') shall take place at
10:00 a.m. (New York City time) on a date to be specified by the parties, which
date shall be no later than the second business day after satisfaction or waiver
of the conditions set forth in Article VI (other than conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction or
waiver of such conditions), unless another time or date, or both, are agreed to
in writing by the parties hereto. The date on which the Closing is held is
herein referred to as the 'Closing Date'. The Closing will be held at the
offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York,
unless another place is agreed to by the parties hereto.
2.3 Effective Time. Subject to the provisions of this Agreement, on the
Closing Date the parties shall file with the Secretary of State of the State of
Nevada articles of merger pursuant to the applicable provisions of the NRS (the
'Certificate of Merger'), executed in accordance with the relevant provisions of
the NRS, and shall make all other filings or recordings required under the NRS
in order to effect the Merger. The Merger shall become effective upon the filing
of the Certificate of Merger or at such other time as is agreed by the parties
hereto and specified in the
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Certificate of Merger (the time at which the Merger becomes effective is herein
referred to as the 'Effective Time').
2.4 Effects of the Merger. From and after the Effective Time, the Merger
shall have the effects set forth in the NRS. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
At the Effective Time, each of (i) the Stockholders Rights and Co-Sale
Agreement, dated as of October 15, 2002, between Parent and the Company and
(ii) the Stockholders Agreement (as hereinafter defined) shall terminate and be
of no further force or effect.
2.5 Articles of Incorporation and By-laws of the Surviving Corporation. At
the Effective Time, (a) the articles of incorporation of the Company as in
effect immediately prior to the Effective Time shall be the articles of
incorporation of the Surviving Corporation until thereafter amended as provided
by law and such articles of incorporation, and (b) the by-laws of Merger Sub as
in effect immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation until thereafter amended as provided by law and such
by-laws.
2.6 Directors and Officers of the Surviving Corporation. The directors of
Merger Sub and the officers of the Company, respectively, immediately prior to
the Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified or their earlier death, resignation or removal in
accordance with the articles of incorporation and by-laws of the Surviving
Corporation.
2.7 Conversion of Securities. At the Effective Time, by virtue of the Merger
and without any action on the part of the holders of any securities of Merger
Sub or the Company:
(a) Each then issued and outstanding share of capital stock of Merger
Sub shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock, $.0l par value, of the Surviving
Corporation.
(b) Any Shares that are owned by the Company as treasury stock, and all
Shares owned by Parent or any subsidiary of Parent, shall be automatically
canceled and retired and shall cease to exist and no consideration shall be
delivered in exchange therefor.
(c) Each issued and outstanding Share (other than (i) Shares to be
canceled in accordance with Section 2.7(b) and (ii) any Dissenting Shares
(as hereinafter defined)), shall be converted into the right to receive
(A) one CSR and (B) the Exchange Ratio of a share of Parent Common Stock,
issuable to the holder thereof upon surrender, in the manner provided in
this Agreement, of the certificate formerly representing such Share, without
interest (the 'Merger Consideration'). As of the Effective Time, all such
Shares shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate which
immediately prior to the Effective Time represented any such Shares (each, a
'Certificate') shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration, any dividends or other
distributions to which such holder is entitled pursuant to Section 2.8(c)
and cash in lieu of any fractional shares of Parent Common Stock to which
such holder is entitled pursuant to Section 2.8(e), in each case to be
issued or paid in consideration therefor upon surrender of such Certificate
in accordance with Section 2.8(b), without interest.
2.8 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit with
American Stock Transfer & Trust Company or such other bank or trust company as
may be designated by Parent (the 'Exchange Agent'), for exchange in accordance
with this Article II, through the Exchange Agent, certificates representing the
shares of Parent Common Stock issuable pursuant to Section 2.7 in exchange for
shares of Company Common Stock (such shares of Parent Common Stock, together
with any dividends or other distributions with respect thereto with a record
date
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after the Effective Time and any cash payments in lieu of any fractional shares
of Parent Common Stock, being hereinafter referred to as the 'Exchange Fund').
The Exchange Agent shall invest any cash included in the Exchange Fund as
directed by Parent. Any interest and other income resulting from such
investments shall be the property of, and shall be paid to, Parent.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
record of a Certificate whose shares of Company Common Stock were converted into
the right to receive the Merger Consideration pursuant to Section 2.7(c), (i) a
form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and which shall be in such
form and shall have such other provisions as Parent may specify) and
(ii) instructions for use in surrendering the Certificates in exchange for
certificates representing the Merger Consideration, any dividends or other
distributions to which holders of Certificates are entitled pursuant to
Section 2.8(c) and cash in lieu of any fractional shares of Parent Common Stock
to which such holders are entitled pursuant to Section 2.8(e). Upon surrender of
a Certificate for cancellation to the Exchange Agent, together with such letter
of transmittal, duly completed and validly executed, and such other documents as
may be reasonably required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor (A) a certificate representing
that number of whole shares of Parent Common Stock that such holder has the
right to receive pursuant to the provisions of this Article II after taking into
account all the shares of Company Common Stock held by such holder under all
such Certificates so surrendered, (B) any dividends or other distributions to
which such holder is entitled pursuant to Section 2.8(c) and (C) cash in lieu of
any fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.8(e), and the Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of shares of Company Common
Stock that is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock may
be issued to a person other than the person in whose name the Certificate so
surrendered is registered, if, upon presentation to the Exchange Agent, such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such issuance shall pay any transfer or other
taxes required by reason of the issuance of shares of Parent Common Stock to a
person other than the registered holder of such Certificate or establish to the
reasonable satisfaction of the Exchange Agent that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 2.8(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration, any
dividends or other distributions to which the holder of such Certificate is
entitled pursuant to Section 2.8(c) and cash in lieu of any fractional shares of
Parent Common Stock to which such holder is entitled pursuant to
Section 2.8(e). No interest will be paid or will accrue on any cash payable to
holders of Certificates pursuant to Section 2.8(c) or (e).
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock that the holder thereof has the
right to receive upon the surrender thereof, and no cash payment in lieu of any
fractional shares of Parent Common Stock shall be paid to any such holder
pursuant to Section 2.8(e), in each case until the holder of such Certificate
shall surrender such Certificate in accordance with this Article II. Following
surrender of any Certificate, there shall be paid to the record holder thereof
the certificate representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of cash payable in lieu of any fractional shares of Parent Common Stock
to which such holder is entitled pursuant to Section 2.8(e) and the amount of
dividends or other distributions payable with respect to such whole shares of
Parent Common Stock with a record date after the Effective Time and paid with
respect to Parent Common Stock prior to such surrender and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to such surrender and a payment
date subsequent to such surrender payable with respect to such whole shares of
Parent Common Stock.
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(d) No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms of this Article II (including any dividends or other
distributions paid pursuant to Section 2.8(c) and cash paid in lieu of any
fractional shares pursuant to Section 2.8(e)) shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the shares of
Company Common Stock previously represented by such Certificates, and at the
close of business on the day on which the Effective Time occurs, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. Subject to the last sentence of
Section 2.8(f), if, at any time after the Effective Time, Certificates are
presented to the Surviving Corporation or the Exchange Agent for any reason,
they shall be canceled and exchanged as provided in this Article II.
(e) No Fractional Shares. Notwithstanding anything to the contrary set forth
herein, no certificates or scrip representing fractional shares of Parent Common
Stock shall be issued in connection with the Merger, no dividends or other
distributions with respect to Parent Common Stock shall be payable on or with
respect to any such fractional share interest and such fractional share
interests will not entitle the owner thereof to vote or to any other rights of a
stockholder of Parent. In lieu thereof, each former holder of shares of Company
Common Stock who would otherwise have been entitled to such a fractional share
interest (after aggregating all fractional shares of Parent Common Stock that
otherwise would have been received by such holder) will be entitled to receive
an amount in cash (without interest) equal to such holder's proportionate
interest in the net proceeds from the sale or sales in the open market by the
Exchange Agent, on behalf of such holders, of the aggregated fractional shares
of Parent Common Stock issued pursuant to this paragraph. Promptly following the
Effective Time, (i) the Exchange Agent shall determine the total amount of the
fractional shares of Parent Common Stock to which all such former Company
stockholders would otherwise be entitled, and aggregate the same into whole
shares of Parent Common Stock (rounded up to the nearest whole share), (ii)
Parent shall issue such whole shares of Parent Common Stock to the Exchange
Agent, as agent for such former stockholders, and (iii) the Exchange Agent shall
sell such shares of Parent Common Stock at the then prevailing prices on the New
York Stock Exchange through one or more member firms of the New York Stock
Exchange (which sales shall be executed in round lots to the extent
practicable). Until the net proceeds of such sales have been distributed to such
former stockholders, the Exchange Agent will hold such proceeds in trust for
such holders. Promptly after the determination of the amount of cash to be paid
to such former stockholders in lieu of any fractional interests in Parent Common
Stock, the Exchange Agent shall pay such amounts to such former stockholders
(subject to any required withholding of taxes).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of the Certificates for six months after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
Certificates who have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of their claim for the Merger
Consideration, any dividends or other distributions with respect to shares of
Parent Common Stock and cash in lieu of any fractional shares of Parent Common
Stock in accordance with this Article II. If any Certificate shall not have been
surrendered immediately prior to such date on which any Merger Consideration
(and dividends or other distributions payable pursuant to Section 2.8(c) and
cash payable in lieu of fractional shares pursuant to Section 2.8(e)) would
otherwise escheat to or become the property of any Governmental Entity, any such
Merger Consideration (and dividends or other distributions payable pursuant to
Section 2.8(c) and cash payable in lieu of fractional shares pursuant to
Section 2.8(e)) in respect thereof shall, to the extent permitted by applicable
law, become the property of Parent, free and clear of all claims or interest of
any person previously entitled thereto.
(g) No Liability. None of Parent, Merger Sub, the Company or the Exchange
Agent shall be liable to any person in respect of any CSRs or any shares of
Parent Common Stock (or dividends or other distributions with respect thereto)
or cash in lieu of any fractional shares of Parent
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Common Stock or cash from the Exchange Fund, in each case delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(h) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such person of a bond in such reasonable amount as Parent may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration, any dividends or other
distributions to which the holder of such Certificate would be entitled pursuant
to Section 2.8(c) and cash in lieu of any fractional shares of Parent Common
Stock to which such holder would be entitled pursuant to Section 2.8(e), in each
case pursuant to this Agreement.
(i) Withholding Rights. The Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable to any holder of shares of
Company Common Stock pursuant to this Agreement such amounts as may be required
to be deducted and withheld with respect to the making of such payment under the
Code or under any provision of state or foreign tax law. To the extent that
amounts are so withheld and paid over to the appropriate taxing authority, the
Exchange Agent will be treated as though it withheld from the type of
consideration from which withholding is required an appropriate amount otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock in order to provide for such withholding obligation. If withholding is
required from shares of Parent Common Stock, the Exchange Agent shall be treated
as having sold such consideration for an amount of cash equal to the fair market
value of such consideration at the time of such deemed sale and paid such cash
proceeds to the appropriate taxing authority.
2.9 Appraisal Rights. Notwithstanding anything in this Agreement to the
contrary, if appraisal rights are available under Section 92A.380 of the NRS in
respect of the Merger, then Shares that are issued and outstanding immediately
prior to the Effective Time and which are held by stockholders who have demanded
and perfected their demands for appraisal of such Shares in the time and manner
provided in Sections 92A.300 through 92A.500 (inclusive) of the NRS and, as of
the Effective Time, have neither effectively withdrawn nor lost their rights to
such appraisal and payment under the NRS (the 'Dissenting Shares'), shall not be
converted as described in Section 2.7(c) hereof, but shall, by virtue of the
Merger, be entitled to only such rights as are granted by Section 92A.380 of the
NRS; provided, that if such holder shall have failed to perfect or shall have
effectively withdrawn or lost his, her or its right to appraisal and payment
under the NRS, such holder's Shares shall thereupon be deemed to have been
converted, at the Effective Time, as described in Section 2.7(c), into the right
to receive the Merger Consideration, without any interest thereon. The Company
shall give Parent (i) prompt notice of any written demands for appraisal of any
Shares, attempted withdrawals of such demands and any other instruments served
pursuant to the NRS and received by the Company relating to stockholders' rights
of appraisal, and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demands for appraisal under the NRS. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Parent, voluntarily make any payment with respect to, or settle, or offer or
agree to settle, any such demand for payment. Any funds paid to holders of
Dissenting Shares shall be paid solely out of the assets of the Surviving
Corporation and Parent shall not contribute funds to Merger Sub or the Surviving
Corporation to fund payments to holders of Dissenting Shares, assume the
Surviving Corporation's obligation to make such payment, or otherwise reimburse
the Surviving Corporation, directly or indirectly, for such payment. Any portion
of the Merger Consideration made available to the Exchange Agent pursuant to
Section 2.8 to pay for Shares for which appraisal rights have been perfected
shall be returned to Parent upon demand.
2.10 Exchange Ratio. Notwithstanding anything to the contrary, if between
the Execution Date and the Effective Time, the outstanding shares of Parent
Common Stock shall have been changed into a different number of shares or a
different class, by reason of the occurrence or record date of any stock
dividend, subdivision, reclassification, recapitalization, split, combination,
exchange of shares or similar transaction, the Exchange Ratio shall be
appropriately adjusted to reflect such
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stock dividend, subdivision, reclassification, recapitalization, split,
combination, exchange of shares or similar transaction.
2.11 CSRs.
(a) Subject to the terms and conditions of this Agreement, the consideration
payable by Parent per share of Company Common Stock in the Offer and Merger will
include one CSR. As described in greater detail below, the purpose of the CSRs
is to give Company stockholders who participate in the Offer and Merger the
opportunity to receive additional Parent Common Stock in connection with any
Sale of the Company (as hereinafter defined) consummated after the Effective
Time and on or before the Maturity Date (as hereinafter defined) in which Parent
or its subsidiaries receive Net Proceeds (as hereinafter defined) in excess of
the Deal Price (as hereinafter defined).
(b) The CSRs will be uncertificated contract rights and will be
non-assignable and non-transferable by any holder thereof, except as required by
any applicable community property laws or laws of descent and distribution.
(c) The CSRs will become effective at the Effective Time and will mature at
11:59 p.m. New York City time on the earlier of (i) the date, if any, on which a
Sale of the Company for Net Proceeds in excess of the Deal Price is consummated
and (ii) October 15, 2004, provided that if after the Effective Time and prior
to the first anniversary of the Execution Date Parent or the Surviving
Corporation shall have entered into a definitive agreement with an unaffiliated
third party providing for a Sale of the Company (a 'Sale Contract'), the date in
this clause (ii) shall be the later of (A) October 15, 2004 and (B) the earlier
of (x) the date the Sale of the Company pursuant to such Sale Contract is
consummated and (y) the date such Sale of the Company is abandoned (the earlier
of (i) and (ii) being the 'Maturity Date').
For purposes of the CSRs, 'Sale of the Company' means the occurrence of any
of the following events: (i) a sale by the Surviving Corporation of all or
substantially all of the assets of the Surviving Corporation and its
subsidiaries to another entity (other than Parent or one or more of its
subsidiaries ('Permitted Holders')), including any such sale of assets to a
Permitted Holder that is done as part of a related sale of such assets to an
entity that is not a Permitted Holder; (ii) any 'person' or 'group', other than
Permitted Holders, is or becomes the 'beneficial owner', directly or indirectly,
of more than 50% of the issued and outstanding shares of capital stock of the
Surviving Corporation having general voting power under ordinary circumstances
('Voting Stock'); or (iii) the Surviving Corporation consolidates with, or
merges with or into, another Person (other than a Permitted Holder), other than
any such transaction where (A) the outstanding Voting Stock of the Surviving
Corporation is converted into or exchanged for voting securities of the
surviving entity and (B) immediately after such transaction Permitted Holders
are the 'beneficial owners', directly or indirectly, of more than 50% of the
total voting power of the surviving entity. For purposes of this definition, the
term 'beneficial owner' is used as defined in Rules 13d-3 and 13d-5 under the
Exchange Act and the terms 'person' or 'group' are used as such terms are used
in Section 13(d) and 14(d) of the Exchange Act. For the avoidance of doubt, only
the consummation of the transactions described above in this definition shall
constitute a 'Sale of the Company' and neither any discussions, negotiations or
preparations, nor entering into any agreement, relating to any such transaction
shall be deemed a 'Sale of the Company'.
(d) If there is consummated after the Effective Time and on or before the
Maturity Date a Sale of the Company for Net Proceeds in excess of the Deal
Price, then, following the Maturity Date, Parent will issue for each CSR that
number of whole shares of Parent Common Stock (after aggregating all CSRs held
by the holder thereof) determined under the following formula (calculated to the
fourth decimal point) and paragraphs (e) and (f) of this Section 2.11:
Sale Profit
----------- divided by Parent Price
50,000,000
provided, however, that in no event shall more than a total of the Cap
Number (as hereinafter defined) of shares of Parent Common Stock be
issuable in respect of all CSRs in the aggregate, and the number of
shares of Parent Common Stock issuable to each
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CSR holder shall be reduced pro rata to the extent necessary to give
effect to this limitation
where,
'Sale Profit' means the amount of Net Proceeds in excess of the Deal
Price;
'Net Proceeds' means the US$ amount (expressed as a whole number) of
aggregate proceeds (with any non-cash proceeds to be valued at their fair
market value as determined in good faith by the Board of Directors of
Parent) received by Parent, the Surviving Corporation or any of their
subsidiaries in respect of a Sale of the Company consummated after the
Effective Time and on or before the Maturity Date, plus the fair market
value (to be determined in good faith by the Board of Directors of Parent)
of any assets of the Surviving Corporation or its subsidiaries retained by
Parent upon consummation of such Sale of the Company, net of (i) the costs
relating to such transaction (including, without limitation, regulatory
filing fees, legal, accounting and investment banking fees, and brokerage
and sales commissions), (ii) taxes paid or payable as a result of such
transaction, (iii) amounts required to be applied to the repayment of
principal, premium (if any) and interest on any indebtedness required to be
paid as a result of such transaction, (iv) deduction of appropriate amounts
to be provided as a reserve in accordance with GAAP against any liabilities
associated with such transaction (including, without limitation, pension and
other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated
with such transaction) and (v) all liabilities of the Surviving Corporation
or its subsidiaries that are retained by Parent or any of its subsidiaries
following consummation of such transaction;
'Deal Price' equals (A) 800,000,000, plus (B) the aggregate US$ amount
(expressed as a whole number) of contributions to capital and other
investments made by Parent or any of its affiliates (other than the
Surviving Corporation and its subsidiaries) in, and expenditures funded by
Parent or any of its affiliates (other than the Surviving Corporation and
its subsidiaries) in support of, the Surviving Corporation or its
subsidiaries after the Effective Time and prior to the Maturity Date, minus
(C) the aggregate US$ amount (expressed as a whole number) of dividends paid
by the Surviving Corporation to Parent after the Effective Time and prior to
the Maturity Date, plus (D) an amount equal to notional interest on the
excess, if any, of (i) the amounts described in clause (B) above over
(ii) the amount described in clause (C) above, at a rate per annum of 8%,
determined based on the number of days elapsed from the Closing Date to the
Maturity Date and a 360-day year;
'Parent Price' equals 37.72, reduced to reflect the amount (if any) of
cash dividends per share of Parent Common Stock paid (or with a record date)
between the Execution Date and the Maturity Date in excess of Parent's
regular $0.25 per share annual dividend; and
'Cap Number' means the lesser of (A) 11,000,000 and (B) the number of
shares of Parent Common Stock issued by Parent in the Offer and the Merger
(excluding consideration paid to holders of Dissenting Shares) minus one.
(e) If, on the Maturity Date, Net Proceeds are equal to or less than the
Deal Price, the CSRs shall automatically terminate and no consideration shall be
deliverable in respect thereof. If, on the Maturity Date, the amount determined
pursuant to the formula in Section 2.11(d) above is greater than zero, Parent
will thereafter issue to each CSR holder the number of whole shares of Parent
Common Stock to which such holder is entitled as herein described (rounded down
to the nearest whole share, after aggregating all CSRs held by such holder), and
the CSRs shall be automatically cancelled.
(f) Notwithstanding anything to the contrary, if between the Effective Time
and the Maturity Date the outstanding shares of Parent Common Stock shall have
been changed into a different number of shares or a different class, by reason
of the occurrence or record date of any stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares or
similar transaction, then the number of and kind of shares issuable in respect
of the CSRs shall be
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appropriately adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of shares or
similar transaction.
(g) If shares of Parent Common Stock become issuable under the CSRs, Parent
will determine the amount required under applicable tax laws to be treated as
interest income, and may, at its option, issue two stock certificates to each
holder of CSRs, one certificate in respect of the shares treated as interest and
the other certificate in respect of the remaining shares; provided, however,
that in no event will Leucadia issue any fractional share interests.
(h) All computations and determinations relating to the CSRs shall be made
by Parent in good faith. Promptly after the Maturity Date, Parent shall notify
holders of CSRs in writing (which notification may be made through a press
release which will be attached to a submission that is made publicly available
on the SEC's EDGAR system) of Parent's determination as to (i) whether a Sale of
the Company occurred after the Effective Time and on or before the Maturity
Date, (ii) the amount of any Net Proceeds received in respect thereof,
(iii) the amount (if any) of any resulting Sale Profit, and (iv) the number of
shares of Parent Common Stock (if any) due and payable to CSR holders under this
Agreement ((i) through (iv) collectively, the 'Relevant Determinations').
Following such notice, CSR holders shall have 180 days to communicate to Parent
in writing any objections to Parent's determination of the Relevant
Determinations; provided that a CSR holder may object to Parent's determinations
only (A) on the basis that Parent's determinations, including determinations
regarding fair market value in the definition of 'Net Proceeds' being made in
good faith, were not made in accordance with this Agreement, (B) to the extent
that if such holder's objection was upheld, Parent would be required to issue an
aggregate of at least 25,000 more shares of Parent Common Stock in respect of
the CSRs than would be issuable according to Parent's determinations and (C) if
the bases for such holder's objection are specified in writing and in reasonable
detail (an 'Objection Notice'). If Parent receives one or more Objection
Notices, then Parent and the CSR holders who delivered such Objection Notice
shall discuss the objections set forth therein in good faith and Parent agrees,
and each CSR holder, by accepting a CSR agrees, to use all reasonable efforts to
ensure that any final resolution of such objections will be applicable to, and
binding on, all CSR holders (and not only those CSR holders who objected to
Parent's determinations). If shares are issued or other amounts are paid in
settlement of one or more Objection Notices, then all objecting and
non-objecting CSR holders shall, to the extent practicable, be treated equally
by Parent and receive the same amount and form of consideration as the objecting
CSR holders, based on and in proportion to the number of CSRs held by each such
holder. If any such objections are not resolved by the date that is 270 days
after the Maturity Date, then Parent and the CSR holders shall submit the matter
to an Agreed Court for resolution through appropriate proceedings, provided that
Parent and such holders shall use all reasonable efforts to ensure that such
proceedings are conducted as a class action such that any final resolution in
such proceedings will be applicable to, and binding on, all CSR holders (and not
only those CSR holders who objected to Parent's determinations), provided
further that, if class action status is not available for such proceedings,
Parent agrees, and each CSR holder, by accepting a CSR agrees, to use all
reasonable efforts to ensure that any final resolution in such proceedings will
be applicable to, and binding on, all CSR holders (and not only those CSR
holders who objected to Parent's determinations). By accepting a CSR, each CSR
holder irrevocably waives any rights to trial by jury in any legal proceeding
related to the CSRs.
(i) The holder of a CSR will not be entitled to any of the rights of a
stockholder in Parent (including, without limitation, voting and dividend
rights).
(j) No dividends or other distributions with respect to Parent Common Stock
with a record date before the Maturity Date will be paid in respect of, and no
interest will be paid or will accrue on, any shares of Parent Common Stock
issuable in respect of CSRs. None of Parent or any of its subsidiaries shall be
liable to any person in respect of any shares of Parent Common Stock issuable in
respect of CSRs delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
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(k) Notwithstanding anything to the contrary, Parent shall be free to
conduct its business (including, without limitation, all decisions relating to
whether, when, how and for what consideration to dispose of any assets) as it in
its sole discretion shall determine.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as follows:
3.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has the
requisite corporate power and authority necessary to own or lease all of its
properties and assets and to carry on its business as it is now being conducted.
The Company has heretofore made available to Parent a complete and correct copy
of its articles of incorporation and by-laws as amended to date (the 'Company
Charter Documents'). The Company is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned
or leased by it makes such licensing or qualification necessary, except where
the failure to be so licensed, qualified or in good standing has not had and
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect (as defined below) on the Company ('Company Material
Adverse Effect'). For purposes of this Agreement, the term 'Material Adverse
Effect' shall mean, with respect to any party, a state of facts, effect, event
or change which has or would reasonably be expected to have a material adverse
effect on the business, properties, net assets, results of operations or
financial condition of such party and its subsidiaries taken as a whole.
3.2 Capitalization. The authorized capital stock of the Company consists of
200,000,000 shares of Company Common Stock and 100,000,000 shares of preferred
stock, $.01 par value ('Company Preferred Stock'). At the close of business on
the Execution Date, there were 50,000,000 Shares issued and outstanding (of
which no Shares are held by the Company in its treasury and no Shares are held
by any subsidiary of the Company) and no shares of Company Preferred Stock
issued and outstanding. All Shares have been duly authorized and validly issued
and are fully paid and nonassessable. Since the Execution Date, the Company has
not issued any shares of its capital stock, voting securities or equity
interests, or any securities convertible into or exchangeable or exercisable for
any shares of its capital stock, voting securities or equity interests. Except
as set forth above in this Section 3.2, as of the Execution Date there are not,
and as of the Effective Time there will not be, any shares of capital stock,
voting securities or equity interests of the Company issued and outstanding or
any subscriptions, options, warrants, calls, convertible or exchangeable
securities, rights, commitments or agreements of any character providing for the
issuance of any shares of capital stock, voting securities or equity interests
of the Company, including any representing the right to purchase or otherwise
receive any Company Common Stock.
3.3 Authority.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and, subject to obtaining the approval of its
stockholders to the adoption of this Agreement as contemplated by Section 1.3
(to the extent required by the NRS), to perform its obligations hereunder and to
consummate the Transactions. The execution, delivery and performance by the
Company of this Agreement, and the consummation by it of the Transactions, have
been duly authorized and approved by its Board of Directors and, except for
obtaining the approval of its stockholders to the adoption of this Agreement as
contemplated by Section 1.3 (to the extent required by the NRS), no other
corporate action on the part of the Company is necessary to authorize the
execution, delivery and performance by the Company of this Agreement and the
consummation by it of the Transactions. This Agreement has been duly executed
and delivered by the Company and, assuming due authorization, execution and
delivery hereof by the other parties hereto, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforceability (i) may be limited by
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bankruptcy, insolvency, fraudulent transfer, moratorium or other similar laws of
general application affecting or relating to the enforcement of creditors'
rights generally and (ii) is subject to general principles of equity, whether
considered in a proceeding at law or in equity (the 'Bankruptcy and Equity
Exception').
(b) The Company's Board of Directors, at a meeting duly called and held, has
duly adopted resolutions (i) adopting this Agreement and approving the
Transactions, including the Offer and the Merger, and (ii) resolving (subject to
Section 5.2 hereof) to recommend that holders of Public Shares accept the Offer,
tender their Public Shares to Parent pursuant thereto and approve this
Agreement.
(c) All action has been taken to render inapplicable to this Agreement and
the Transactions the restrictive provisions of (x) Sections 3.C and 3.G of
Article IV of the articles of incorporation of the Company and (y) Article II of
the Stockholders Agreement, dated as of October 15, 2002, between Parent and the
Company (the 'Stockholders Agreement'), to the extent, if any, such provisions
would otherwise be applicable to this Agreement or any of the Transactions.
(d) The affirmative vote (in person or by proxy) of the holders of a
majority of the outstanding shares of Company Common Stock in favor of the
approval of this Agreement is the only vote or approval of the holders of any
class or series of capital stock of the Company or any of its subsidiaries which
is necessary to adopt and approve this Agreement and approve the Transactions.
3.4 Consents and Approvals; No Violations.
(a) Except for (i) the filing with the SEC of the Schedule 14D-9 and, if
necessary, of a Proxy Statement in definitive form relating to the Company
Shareholders Meeting, and other filings required under, and compliance with
other applicable requirements of, the Exchange Act and the rules of the NASDAQ
National Market System, (ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Nevada pursuant to the NRS, (iii) filings
required under, and compliance with other applicable requirements of, the HSR
Act and (iv) filings with, and approvals of, the Federal Communications
Commission (the 'FCC') and applicable State regulatory authorities for the
change of control of the Company ('FCC Filings'), no consents or approvals of,
or filings, declarations or registrations with, any Governmental Entity are
necessary for the consummation by the Company of the Transactions, other than
such other consents, approvals, filings, declarations or registrations that, if
not obtained, made or given, would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(b) Neither the execution and delivery of this Agreement by the Company nor
the consummation by the Company of the Transactions, nor compliance by the
Company with any of the terms or provisions hereof, will (i) conflict with or
violate any provision of the Company Charter Documents or the governing
documents of any subsidiary of the Company or (ii) assuming that the
authorizations, consents and approvals referred to in Section 3.4(a) (and the
approval of the Company's stockholders contemplated by Section 1.3) are obtained
and the filings referred to in Section 3.4(a) are made, (x) violate any Law,
judgment, writ or injunction of any Governmental Entity applicable to the
Company or any of its subsidiaries or any of their respective properties or
assets, or (y) violate, conflict with, result in the loss of any material
benefit under, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination of
or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any Lien upon any of the respective
properties or assets of, the Company or any of its subsidiaries under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, permit, lease, agreement or other instrument or obligation to
which the Company or any of its subsidiaries is a party, or by which they or any
of their respective properties or assets may be bound or affected except, in the
case of clause (ii), for such violations, conflicts, losses, defaults,
terminations, cancellations, accelerations or Liens as would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
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3.5 SEC Documents; Undisclosed Liabilities.
(a) The Company has filed all required reports, schedules, forms,
prospectuses, and registration, proxy and other statements with the SEC since
October 15, 2002 (collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein, the 'Company
SEC Documents'). As of their respective effective dates (in the case of Company
SEC Documents that are registration statements filed pursuant to the Securities
Act) and as of their respective SEC filing dates (in the case of all other
Company SEC Documents), the Company SEC Documents complied in all material
respects with the requirements of the Exchange Act and the Securities Act, as
the case may be, and the rules and regulations of the SEC promulgated
thereunder, applicable to such Company SEC Documents, and none of the Company
SEC Documents as of such respective dates, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated financial statements of the Company included in the
Company SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the case
of unaudited quarterly statements, as indicated in the notes thereto) applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments, none of which has been or will
be, individually or in the aggregate, material).
(c) Neither the Company nor any of its subsidiaries has any liabilities
which, if known, would be required to be reflected or reserved against on a
consolidated balance sheet of the Company prepared in accordance with GAAP or
the notes thereto, except liabilities (i) reflected or reserved against on the
balance sheet of the Company and its subsidiaries as of June 30, 2003 included
in the Company's Quarterly Report on Form 10-Q for the period then ended or
(ii) incurred after June 30, 2003 in the ordinary course of business consistent
with past practice that have not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
3.6 Absence of Certain Changes or Events. Since December 31, 2002, there has
not occurred any event or change that has had or would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
3.7 Schedule 14D-9; Offer Documents; and Proxy Statement. Subject to the
accuracy of the representations and warranties of Parent and Merger Sub set
forth in Section 4.4, neither the Schedule 14D-9 nor any information supplied
(or to be supplied) in writing by or on behalf of the Company for inclusion in
the Offer Documents will (at the respective times such materials, or any
amendments or supplements thereto, are filed with the SEC, first published, sent
or given to stockholders of the Company, the Offer expires or shares of Parent
Common Stock are delivered in connection with the Offer, or at the Effective
Time, as the case may be) 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 made therein, in the light of the circumstances
under which they are made, not misleading. The Proxy Statement (if any) will
not, on the date the Proxy Statement (or any amendment or supplement thereto) is
first mailed to stockholders of the Company, 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, in the light of the
circumstances under which they are made, not misleading and will not, at the
time of the Company Shareholders Meeting (if such a meeting is held), omit to
state any material fact necessary to correct any statement in any earlier
communication from the Company with respect to the solicitation of proxies for
the Company Shareholders Meeting which shall have become false or misleading in
any material respect. The Proxy Statement (if any) and the Schedule 14D-9 will
comply as to form in all material respects with the applicable requirements of
the Exchange Act.
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Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to information supplied by or on behalf of Parent for inclusion in
any of the foregoing documents.
3.8 Tax Matters.
(a) Neither the Company nor any of its subsidiaries knows of any facts or
circumstances that should reasonably be expected to prevent the Offer and the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
(b) To the knowledge (within the meaning of Treasury Regulation
Section 1.382-2T(k)) of the Company, no Person or 'entity' (within the meaning
of Treasury Regulation Section 1.382-3(a)(1)), other than any Person or entity
that currently has on file a Schedule 13D under the Exchange Act in respect of
the Company Common Stock (each a '13D Filer'), owns (or has owned at any time
since October 15, 2002) actually or constructively (within the meaning of
Treasury Regulation Section 1.382-2T(h)) an amount of Company Common Stock that
results in it, or any other Person or entity, being treated as a '5%
Shareholder' of the Company under Treasury Regulation Section 1.382-2T(g), and
the ownership of Company Common Stock by each 13D Filer (other than Parent and
its subsidiaries) is as reported in the Schedule 13D(s) filed by such 13D Filer.
3.9 Opinion of Financial Advisor. The Board of Directors of the Company has
received the Fairness Opinion and the Company has delivered to Parent a true and
complete copy of the Fairness Opinion.
3.10 Finders or Brokers. Except for JPMorgan, whose fees and expenses will
be paid by the Company, no broker, investment banker, financial advisor or other
Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Company or any of its subsidiaries. The
Company has heretofore delivered to Parent a complete copy of the Company's
engagement letter with JPMorgan, which letter describes all fees payable by the
Company to JPMorgan (the 'Engagement Letter').
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to the
Company as follows:
4.1 Organization. Parent is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York and has the
requisite corporate power and authority necessary to own or lease all of its
properties and assets and to carry on its business as it is now being conducted.
Parent has heretofore made available to the Company a complete and correct copy
of its certificate of incorporation and by-laws as amended to date. Parent is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent ('Parent Material Adverse Effect'). Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada.
4.2 Authority. Each of Parent and Merger Sub has all necessary corporate
power and authority to execute and deliver this Agreement, to perform their
respective obligations hereunder and to consummate the Transactions. The
execution, delivery and performance by Parent and Merger Sub of this Agreement,
and the consummation by Parent and Merger Sub of the Transactions, have been
duly authorized and approved by their respective Boards of Directors and adopted
by Parent as the sole stockholder of Merger Sub, and no other corporate action
on the part of Parent and Merger Sub is necessary to authorize the execution,
delivery and performance by Parent and Merger Sub of this Agreement and the
consummation by them of the Transactions. This Agreement has been duly executed
and delivered by Parent and Merger Sub and, assuming due
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authorization, execution and delivery hereof by the Company, constitutes a valid
and binding obligation of each of Parent and Merger Sub, enforceable against
each of them in accordance with its terms, subject to the Bankruptcy and Equity
Exception.
4.3 Consents and Approvals; No Violations.
(a) Except for (i) the filing of the Offer Documents and, if necessary, a
Proxy Statement in definitive form relating to the Company Shareholders Meeting
with, and the requirement that the Registration Statement be declared effective
by, the SEC, and other filings required under, and compliance with other
applicable requirements of, the Securities Act, the Exchange Act and the rules
of The New York Stock Exchange, (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Nevada pursuant to the NRS,
(iii) FCC Filings and (iv) filings required under, and compliance with other
applicable requirements of, the HSR Act, no consents or approvals of, or
filings, declarations or registrations with, any Governmental Entity are
necessary for the consummation by Parent and Merger Sub of the Transactions,
other than such other consents, approvals, filings, declarations or
registrations that, if not obtained, made or given, would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
(b) Neither the execution and delivery of this Agreement by Parent or Merger
Sub, nor the consummation by Parent or Merger Sub of the Transactions, nor
compliance by Parent or Merger Sub with any of the terms or provisions hereof,
will (i) conflict with or violate any provision of the certificate of
incorporation or bylaws of Parent or Merger Sub or (ii) assuming that the
authorizations, consents, approvals and filings referred to in Section 4.3(a)
are obtained and made, (x) violate any Law, judgment, writ or injunction of any
Governmental Entity applicable to Parent or any of its subsidiaries or any of
their respective properties or assets, or (y) violate, conflict with, result in
the loss of any material benefit under, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, result
in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of, Parent or any of its
subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, permit, lease, agreement or
other instrument or obligation to which Parent or any of its subsidiaries is a
party, or by which they or any of their respective properties or assets may be
bound or affected, except, in the case of clause (ii), for such violations,
conflicts, losses, defaults, terminations, cancellations, accelerations or Liens
as would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
4.4 Offer Documents; Schedule 14D-9; Proxy Statement. Subject to the
accuracy of the representations and warranties of the Company set forth in
Section 3.7, neither the Offer Documents nor any information supplied (or to be
supplied) in writing by or on behalf of Parent or Merger Sub for inclusion in
the Schedule 14D-9 will (at the respective times such materials, or any
amendments or supplements thereto, are filed with the SEC, first published, sent
or given to stockholders of the Company, the Offer expires or shares of Parent
Common Stock are delivered in connection with the Offer, or at the Effective
Time, as the case may be) 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 made therein, in the light of the circumstances
under which they are made, not misleading. The information supplied by Parent
for inclusion in the Proxy Statement (if any) will not, on the date the Proxy
Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, 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, in the light of the circumstances under
which they are made, not misleading, and will not, at the time of the Company
Shareholders Meeting (if such a meeting is held), omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Company Shareholders Meeting
which shall have become false or misleading in any material respect. The Offer
Documents will comply as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act. Notwithstanding the
foregoing, Parent and Merger Sub make no
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representation or warranty with respect to any information supplied by or on
behalf of the Company for inclusion in any of the foregoing documents.
4.5 Capitalization. The authorized capital stock of Parent consists of
150,000,000 shares of Parent Common Stock and 6,000,000 shares of preferred
stock, $1.00 par value ('Parent Preferred Stock'). At the close of business on
August 15, 2003, there were 118,503,871 shares of Parent Common Stock issued and
outstanding (of which 58,867,179 shares were held by Parent in its treasury) and
no shares of Parent Preferred Stock issued and outstanding. As of August 15,
2003, there were 1,318,570 shares of Parent Common Stock reserved for issuance
upon the exercise of outstanding options and warrants.
4.6 Parent Common Stock. The shares of Parent Common Stock issuable in the
Offer and the Merger as contemplated by this Agreement have been duly authorized
and, when issued as contemplated by this Agreement, will be validly issued,
fully paid and nonassessable (except, where applicable, as provided by
Section 630 of the New York Business Corporation Law).
4.7 SEC Documents; Undisclosed Liabilities.
(a) Parent has filed all required reports, schedules, forms, prospectuses,
and registration, proxy and other statements with the SEC since January 1, 2002
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the 'Parent SEC Documents'). As of
their respective effective dates (in the case of Parent SEC Documents that are
registration statements filed pursuant to the Securities Act) and as of their
respective SEC filing dates (in the case of all other Parent SEC Documents), the
Parent SEC Documents complied in all material respects with the requirements of
the Exchange Act and the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder, applicable to such Parent SEC
Documents, and none of the Parent SEC Documents as of such respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The consolidated financial statements of Parent included in the Parent
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the case
of unaudited quarterly statements, as indicated in the notes thereto) applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of Parent and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments, none of which has been or will be,
individually or in the aggregate, material).
(c) Neither Parent nor any of its subsidiaries has any liabilities which, if
known, would be required to be reflected or reserved against on a consolidated
balance sheet of Parent prepared in accordance with GAAP or the notes thereto,
except liabilities (i) reflected or reserved against on the balance sheet of
Parent and its subsidiaries as of June 30, 2003 included in Parent's Quarterly
Report on Form 10-Q for the period then ended or (ii) incurred after June 30,
2003 in the ordinary course of business consistent with past practice that have
not had and would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
4.8 Absence of Certain Changes or Events. Since December 31, 2002, there has
not occurred any event or change that has had or would reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect.
4.9 Tax Matters. Neither Parent nor any of its subsidiaries knows of any
facts or circumstances that should reasonably be expected to prevent the Offer
and the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
4.10 Ownership and Operations of Merger Sub. Parent beneficially owns all of
the outstanding capital stock of Merger Sub. Merger Sub was formed solely for
the purpose of engaging in the
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Transactions, has engaged in no other business activities and had conducted its
operations only as contemplated hereby.
4.11 Finders or Brokers. No broker, investment banker, financial advisor or
other Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of Parent or any of its subsidiaries.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 Conduct of Business.
(a) Except as expressly permitted by this Agreement or as required by
applicable Law, during the period from the Execution Date until the Effective
Time, unless Parent otherwise agrees in writing, the Company shall, and shall
cause each of its subsidiaries to (1) conduct its business in the ordinary
course consistent with past practice, (2) use commercially reasonable efforts to
maintain and preserve intact the goodwill of those having business relationships
with it to the end that its goodwill and ongoing business shall be unimpaired at
the Effective Time, and (3) comply in all material respects with all applicable
Laws and the requirements of all licenses, Permits, leases, agreements and other
instruments that are material to the Company and its subsidiaries taken as a
whole. Any transaction specifically approved by Ian M. Cumming and Joseph S.
Steinberg acting in their capacities as directors of the Company shall
constitute Parent approval for purposes of this Section 5.1(a). Without limiting
the generality of the foregoing, during the period from the Execution Date to
the Effective Time, the Company shall not, and shall not permit any of its
subsidiaries to, without the prior written consent of Parent:
(i) (A) issue, sell, grant, dispose of, pledge or otherwise encumber any
shares of its capital stock, voting securities or equity interests, or any
securities or rights convertible into, exchangeable or exercisable for, or
evidencing the right to subscribe for any shares of its capital stock,
voting securities or equity interests, or any rights, warrants, options,
calls, commitments or any other agreements of any character to purchase or
acquire any shares of its capital stock, voting securities or equity
interests or any securities or rights convertible into, exchangeable or
exercisable for, or evidencing the right to subscribe for, any shares of its
capital stock, voting securities or equity interests; (B) redeem, purchase
or otherwise acquire any of its outstanding shares of capital stock, voting
securities or equity interests, or any rights, warrants, options, calls,
commitments or any other agreements of any character to acquire any shares
of its capital stock, voting securities or equity interests; (C) declare,
set aside for payment or pay any dividend on, or make any other distribution
in respect of, any shares of its capital stock or otherwise make any
payments to its stockholders in their capacity as such (other than dividends
by a direct or indirect wholly owned subsidiary of the Company to its
parent); (D) split, combine, subdivide or reclassify any shares of its
capital stock; or (E) approve any transfer of shares under Article IV,
Section 3 of the Company's articles of incorporation (other than the
Transactions);
(ii) (A) enter into, terminate or amend any agreement that is material
to the Company and its subsidiaries taken as a whole, except in the ordinary
course of business consistent with past practice, (B) enter into or extend
the term or scope of any contract or agreement that purports to restrict the
Company, or any subsidiary or affiliate of the Company, from engaging in any
line of business or in any geographic area, (C) amend or modify the
Engagement Letter, (D) enter into any contract or agreement that would be
breached by, or require the consent of any third party in order to continue
in full force following, consummation of the Transactions, or (E) release
any Person from, or modify or waive any provision of, any confidentiality or
similar agreement;
(iii) make (x) any changes in financial or tax accounting methods,
principles or practices, except insofar as may be required by a change in
GAAP or applicable Law, or (y) any material Tax election;
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(iv) adopt a plan or agreement of complete or partial liquidation,
dissolution, restructuring, recapitalization, merger, consolidation or other
reorganization (other than transactions exclusively between wholly owned
subsidiaries of the Company);
(v) settle or compromise any litigation or proceeding material to the
Company and its subsidiaries taken as a whole (this covenant being in
addition to the Company's agreement set forth in Section 5.8 hereof); or
(vi) agree, in writing or otherwise, to take any of the foregoing
actions or take any action or agree, in writing or otherwise, to take any
action, which would cause any of the representations or warranties of the
Company set forth in this Agreement (A) that are qualified as to materiality
or Material Adverse Effect to be untrue and (B) that are not so qualified to
be untrue in any material respect.
(b) Parent agrees that, during the period from the Execution Date until the
Effective Time, except as expressly contemplated or permitted by this Agreement
or as required by applicable Law, or unless the Company otherwise agrees in
writing, Parent shall, and shall cause each of its subsidiaries to, conduct
their business in compliance in all material respects with all applicable laws
and regulations and shall use their commercially reasonable efforts to preserve
intact their business organizations and relationships with third parties and
shall not (1) take any action or engage in any transactions that would
materially delay the consummation of the transactions contemplated by this
Agreement, (2) engage in any material recapitalization or restructuring of
Parent or (3) pay or set a record date prior to the Effective Time relating to
any extraordinary dividend or extraordinary distribution, other than dividends
and distributions declared and paid in the ordinary course and consistent with
historical dividends and distributions by Parent and its subsidiaries. Without
limiting the generality of the foregoing, during the period from the Execution
Date to the Effective Time, Parent shall not, and shall not permit any of its
subsidiaries to, without the prior written consent of the Company:
(i) adopt a plan or agreement or complete or partial liquidation,
dissolution, recapitalization or reclassification relating to Parent or its
capital stock (excluding liquidations of subsidiaries and inter-corporate
transactions by and between one or more of Parent's subsidiaries);
(ii) adopt or propose any change in Parent's certification of
incorporation (other than the filing of a certificate of designations);
(iii) dispose of, or enter into any agreement to dispose of (by sale,
merger, consolidation or disposition of stock or assets for cash or capital
stock) any corporation, partnership or other person or division or business
unit thereof or any equity interest therein of Parent or its subsidiaries if
such disposition would relate to assets that have, individually or in the
aggregate, a market or assigned value in excess of $750 million;
(iv) offer, sell or otherwise issue or agree to issue any capital stock
of Parent or its subsidiaries, including securities convertible into or
exchangeable for Parent Common Stock or stock of one or more of Parent's
subsidiaries, that have, individually or in the aggregate, a market or
assigned value in excess of $750 million (other than in connection with the
transactions contemplated by this Agreement);
(v) redeem, purchase or otherwise acquire directly or indirectly shares
of capital stock of Parent that have a market value in excess of $50
million, other than pursuant to transactions contemplated by this Agreement
or consistent with past repurchases, redemptions or acquisitions;
(vi) engage in any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement; or
(vii) take, agree in writing, publicly announce or otherwise take any of
the actions described in paragraph (i) through (v) above.
5.2 Recommendation. Except as expressly permitted by this Section 5.2, the
Board of Directors of the Company shall not withdraw or modify, or propose
publicly to withdraw or modify, in a
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manner adverse to Parent, the approval or recommendation by such Board of
Directors described in the first sentence of Section 1.2(a) hereof.
Notwithstanding the foregoing, the Board of Directors of the Company may
withdraw or modify its recommendation described in Section 1.2(a) if such Board
determines in good faith, after reviewing applicable provisions of state law and
after consulting with outside counsel, that such action is necessary in order
for such Board to comply with its fiduciary duties under applicable law.
5.3 Reasonable Best Efforts.
Subject to the terms and conditions of this Agreement (including
Section 5.3(d)), the Company and Parent shall each cooperate with the other and
use (and shall cause their respective subsidiaries to use) their respective
reasonable best efforts to promptly (i) take or cause to be taken all actions,
and do or cause to be done all things, necessary, proper or advisable under this
Agreement and applicable Laws to consummate the Transactions as soon as
practicable, including preparing and filing promptly and fully all documentation
to effect all necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents (including any
required or recommended filings under applicable Antitrust Laws (as hereinafter
defined)) and (ii) obtain all approvals, consents, registrations, permits,
authorizations and other confirmations from any Governmental Entity or third
party necessary, proper or advisable to consummate the Transactions. For
purposes hereof, 'Antitrust Laws' means the Sherman Act, as amended, the Clayton
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and
all other applicable Laws issued by a Governmental Entity that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade or lessening of competition through
merger or acquisition.
In furtherance and not in limitation of the foregoing, (i) each party hereto
agrees to make an appropriate filing of a Notification and Report Form pursuant
to the HSR Act with respect to the Transactions as promptly as practicable and
in any event within five business days of the Execution Date and to supply as
promptly as practicable any additional information and documentary material that
may be requested pursuant to the HSR Act and use its reasonable best efforts to
take, or cause to be taken, all other actions consistent with this Section 5.3
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable; (ii) each of the parties shall
use its reasonable best efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable and keep the
Registration Statement effective for so long as necessary to consummate the
Merger (it being understood that this covenant shall not be construed to require
Parent to file a general consent to service of process, or to qualify to do
business in any jurisdiction in which it is not now so qualified); and
(iii) the Company shall use its reasonable best efforts to (x) take all action
necessary to ensure that no state takeover statute or similar Law is or becomes
applicable to any of the Transactions and (y) if any state takeover statute or
similar Law becomes applicable to any of the Transactions, take all action
necessary to ensure that the Transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise minimize
the effect of such Law on the Transactions.
Each of Parent and the Company shall use its reasonable best efforts to
(i) cooperate in all respects with each other in connection with any filing or
submission with a Governmental Entity in connection with the Transactions and in
connection with any investigation or other inquiry by or before a Governmental
Entity relating to the Transactions, including any proceeding initiated by a
private party, and (ii) keep the other party informed in all material respects
and on a reasonably timely basis of any material communication received by such
party from, or given by such party to, the Federal Trade Commission, the
Antitrust Division of the Department of Justice or any other Governmental Entity
and of any material communication received or given in connection with any
proceeding by a private party, in each case regarding any of the Transactions.
In furtherance and not in limitation of the covenants of the parties
contained in this Section 5.3, each of Parent and the Company shall use its
reasonable best efforts to resolve such objections, if any, as may be asserted
by a Governmental Entity or other Person with respect to the Transactions.
Notwithstanding the foregoing or any other provision of this Agreement, the
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Company shall not, without Parent's prior written consent, commit to any
divestiture transaction, and nothing in this Section 5.3 shall (i) limit any
applicable rights a party may have to terminate this Agreement pursuant to
Section 7.1 so long as such party has up to then complied in all material
respects with its obligations under this Section 5.3, (ii) require Parent to
offer, accept or agree to (A) dispose or hold separate any part of its or the
Company's businesses, operations, assets or product lines (or a combination of
Parent's and the Company's respective businesses, operations, assets or product
lines), (B) not compete in any geographic area or line of business, and/or
(C) restrict the manner in which, or whether, Parent, the Company, the Surviving
Corporation or any of their affiliates may carry on business in any part of the
world or (iii) require any party to this Agreement to contest or otherwise
resist any administrative or judicial action or proceeding, including any
proceeding by a private party, challenging any Transaction as violative of any
Antitrust Law.
5.4 Public Announcements. The initial press release with respect to the
execution of this Agreement shall be a joint press release to be reasonably
agreed upon by Parent and the Company. Thereafter, except as may be required by
Law or by any applicable listing agreement with a national securities exchange
or NASDAQ as determined in the good faith judgment of the party proposing to
make such release, neither the Company nor Parent shall issue or cause the
publication of any press release or other public announcement (to the extent not
previously issued or made in accordance with this Agreement) with respect to the
Offer, the Merger, this Agreement or the other Transactions without the prior
consent of the other party (which consent shall not be unreasonably withheld or
delayed).
5.5 Access; Confidentiality. Upon reasonable notice and subject to
applicable Laws relating to the exchange of information, the Company shall, and
shall cause each of its subsidiaries to, afford to the officers, employees,
accountants, counsel, financial advisors and other representatives of Parent,
during the period from the Execution Date until the Effective Time, access to
all its properties, books, contracts, commitments and records, and to its
officers, employees, accountants, counsel, financial advisors and other
representatives and, during such period, the Company shall, and shall cause its
subsidiaries to, make available to Parent (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of Federal securities laws and (b) all other
information concerning its business, properties and personnel as Parent may
reasonably request; provided that no investigation shall affect or modify any
representation or warranty of the Company. Until the Effective Time, such
information provided will be subject to the terms of Section 3.6 of the
Stockholders Agreement.
5.6 Notification of Certain Matters. The Company shall give prompt notice to
Parent, and Parent shall give prompt notice to the Company, of (i) any notice or
other communication received by such party from any Governmental Entity in
connection with the Transactions or from any Person alleging that the consent of
such Person is or may be required in connection with the Transactions, if the
subject matter of such communication or the failure of such party to obtain such
consent could be material to the Company, the Surviving Corporation or Parent,
(ii) any orders, actions, suits, claims, investigations or proceedings commenced
or, to such party's knowledge, threatened against, relating to or involving or
otherwise affecting such party or any of its subsidiaries which relate to the
Transactions, (iii) the discovery of any fact or circumstance that, or the
occurrence or non-occurrence of any event the occurrence or non-occurrence of
which, would cause any representation or warranty made by such party contained
in this Agreement (A) that is qualified as to materiality or Material Adverse
Effect to be untrue and (B) that is not so qualified to be untrue in any
material respect, and (iv) any material failure of such party to comply with or
satisfy any covenant or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.6 shall not (x) (nor shall any information provided pursuant to
Section 5.5) be considered in determining whether any representation or warranty
is true for purposes of Section 7.1 or the conditions to the Offer, (y) cure any
breach or non-compliance with any other provision of this Agreement or
(z) limit the remedies available to the party receiving such notice.
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5.7 Director and Officer Indemnification.
From and after the Effective Time, Parent and the Surviving Corporation
shall (i) indemnify the individuals who at or prior to the Effective Time were
directors or officers of the Company (collectively, the 'Indemnitees') with
respect to all acts or omissions by them in their capacities as such at any time
prior to the Effective Time, to the fullest extent (A) required by the Company
Charter Documents as in effect on the Execution Date and (B) permitted under
applicable Law.
For a three year period commencing immediately after the Effective Time,
Parent and the Surviving Corporation shall maintain in effect directors' and
officers' liability insurance covering acts or omissions occurring prior to the
Effective Time with respect to those persons who are currently covered by the
Company's current primary directors' and officers' liability insurance policy,
on terms with respect to such coverage not less favorable to the Company's
directors and officers currently covered by such insurance than those of such
policy in effect on the Execution Date (or Parent or the Surviving Corporation
may substitute therefore insurance policies, issued by reputable carriers, with
respect to matters occurring prior to the Effective Time); provided, however,
that the aggregate amount of coverage under such insurance shall be limited to
$10 million. For those amounts of directors' and officers' liability insurance
in excess of the insurance described in the preceding sentence which are
currently provided under the Company's other current directors' and officers'
liability insurance policies (the 'Other Policies'), for a six year period
commencing immediately after the Effective Time, Parent agrees to make payments
to those persons who are currently covered by such Other Policies to the extent
such payments otherwise would have been made under such Other Policies (as in
effect on the Execution Date) had such Other Policies remained in effect for a
period of six years following the Effective Time, with respect to acts or
omissions occurring prior to the Effective Time; provided, however, that the
maximum amount of payments that Parent and the Surviving Corporation shall be
required to make shall not exceed $50 million in the aggregate.
The Indemnitees to whom this Section 5.7 applies shall be third party
beneficiaries of this Section 5.7. The provisions of this Section 5.7 are
intended to be for the benefit of each Indemnitee and his heirs.
5.8 Securityholder Litigation. The Company shall give Parent the opportunity
to participate in the defense or settlement of any securityholder litigation
against the Company and/or its directors relating to the Transactions, and no
such settlement shall be agreed to without Parent's prior consent.
5.9 Offer Documents; Schedule 14D-9; Proxy Statement. Without limiting any
other provision of this Agreement, whenever any party hereto becomes aware of
any matter, event or change which is required to be set forth in an amendment or
supplement to the Offer Documents, the Schedule 14D-9 and/or the Proxy
Statement, such party shall promptly inform the other parties thereof and each
of the parties shall cooperate in the preparation, filing with the SEC and (as
and to the extent required by applicable federal securities laws) dissemination
to the Company's stockholders of such amendment or supplement.
5.10 Other Offers.
(a) The Company shall immediately cease, and shall cause its subsidiaries
and the Company's and its subsidiaries' respective directors, officers,
employees, investment bankers, attorneys, accountants and other representatives
to cease, any discussions or negotiations with any Person that may be ongoing
with respect to a Takeover Proposal (as hereinafter defined) and demand in
writing the return from all such Persons or the destruction of all copies of
confidential information provided to such Persons by the Company or its
representatives that are still in the possession of such Persons. The Company
shall not, and shall cause its subsidiaries and the Company's and its
subsidiaries' respective directors, officers, employees, investment bankers,
attorneys, accountants and other representatives not to, directly or indirectly
(i) solicit, initiate or knowingly encourage the initiation of (including by way
of furnishing information that has not been previously publicly disseminated)
any inquiries or proposals that constitute, or may reasonably be expected to
lead to, any Takeover Proposal or (ii) participate in any discussions with any
third party regarding, or
A-23
furnish to any third party any non-public information with respect to, or assist
or facilitate, any Takeover Proposal; provided, however, that if the Board of
Directors of the Company receives an unsolicited, bona fide written Takeover
Proposal that was made in circumstances not involving a breach of this Agreement
and that the Board of Directors of the Company determines in good faith
constitutes a Superior Proposal (as hereinafter defined), then the Company may
(but only prior to the Purchase Date), in response to such Takeover Proposal and
after providing Parent not less than 24 hours written notice of its intention to
take such actions, (A) furnish to the Person making such Takeover Proposal
information (including non-public information, provided that the Company shall
use its best efforts to avoid providing information that may be competitively
harmful to the Company, taking into consideration the identity of such Person)
with respect to the Company, but only after such Person enters into a customary
confidentiality agreement with the Company, provided that (1) such
confidentiality agreement may not include any provision calling for an exclusive
right to negotiate with the Company and (2) the Company advises Parent of all
such non-public information delivered to such Person concurrently with its
delivery to such Person and concurrently with its delivery to such Person the
Company delivers to Parent all such information not previously provided to
Parent, and (B) participate in discussions and negotiations with such Person
regarding such Takeover Proposal.
(b) In addition to the other obligations of the Company set forth in this
Section, the Company shall promptly advise Parent, orally and in writing, and in
no event later than 48 hours after receipt, if any proposal, offer, inquiry or
other contact is received by, any information is requested from, or any
discussions or negotiations are sought to be initiated or continued with, the
Company in respect of any Takeover Proposal, and shall, in any such notice to
Parent, identify the Person making such proposal, offer, inquiry or other
contact and the terms and conditions of any proposals or offers or the nature of
any inquiries or contacts, and thereafter shall keep Parent informed, on a
reasonably current basis, of all material developments affecting the status and
terms of any such proposals, offers, inquiries or requests and of the status of
any such discussions or negotiations.
(c) For purposes of this Agreement:
'Takeover Proposal' shall mean any bona fide written proposal or offer
from any Person (other than Parent and its subsidiaries) relating to any
(A) direct or indirect acquisition (whether in a single transaction or a
series of related transactions) of assets of the Company and its
subsidiaries (including securities of subsidiaries, but excluding sales of
assets held for sale in the ordinary course of business consistent with past
practice) equal to 20% or more of the Company's consolidated assets or to
which 20% or more of the Company's revenues or earnings on a consolidated
basis are attributable, (B) direct or indirect acquisition (whether in a
single transaction or a series of related transactions) of 20% or more of
any class of equity securities of the Company, (C) tender offer or exchange
offer that if consummated would result in any Person beneficially owning 20%
or more of any class of equity securities of the Company or (D) merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or
involving any subsidiary (or subsidiaries) or any assets of the Company and
its subsidiaries equal to 20% or more of the Company's consolidated assets
or to which 20% or more of the Company's revenues or earnings on a
consolidated basis are attributable; in each case, other than the
Transactions.
'Superior Proposal' shall mean a bona fide written proposal made not in
breach of this Agreement by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more
than 50% of any class of equity securities of the Company or more than 50%
of the assets of the Company and its subsidiaries on a consolidated basis,
which is otherwise on terms and conditions which the Board of Directors of
the Company determines in its good faith and reasonable judgment (after
consultation with a financial advisor of national reputation) to be more
favorable to the holders of Shares from a financial point of view than the
Offer, the Merger and the other Transactions, taking into account at the
time of determination any changes to the terms of this Agreement that as of
that time
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had been proposed by Parent in writing and the ability and likelihood of the
Person making such proposal to consummate the transactions contemplated by
such proposal in a timely manner (based upon, among other things, the
availability of financing and the expectation of obtaining required
approvals). Any action required to be taken by the Company's Board of
Directors pursuant to this Section 5.10 shall be performed with Director
Approval.
5.11 Rule 16b-3. Parent and the Company shall take such steps as may be
reasonably requested by any party hereto to cause dispositions of Company
equity securities pursuant to the transactions contemplated by this
Agreement by each individual who is a director or officer of the Company to
be exempt under Rule 16b-3 promulgated under the Exchange Act and the rules
and regulations promulgated thereunder in accordance with that certain No-
Action Letter dated January 12, 1999 issued by the SEC regarding such
matters.
5.12 Tax Matters.
(a) Each of Parent, Merger Sub and the Company shall provide to Weil,
Gotshal & Manges LLP and Gibson, Dunn & Crutcher LLP a certificate
containing representations reasonably requested by such counsel in
connection with the opinion referred to in clause (vi) of the second
paragraph of Annex A hereto.
(b) During the period from the Execution Date until the Effective Time,
none of Parent, Merger Sub or the Company shall take any action, or permit
their respective subsidiaries to take any action, that should reasonably be
expected to prevent the Offer and the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party hereto to effect the Merger shall be
subject to the satisfaction (or waiver, if permissible under applicable Law) at
or prior to the Effective Time of the following conditions:
(a) This Agreement shall have been duly adopted by the requisite vote of
the holders of Company Common Stock, if and to the extent required by
applicable Law and the articles of incorporation of the Company, in order to
consummate the Merger;
(b) No Law, injunction, judgment or ruling enacted, promulgated, issued,
entered, amended or enforced by any Governmental Entity shall be in effect
enjoining, restraining, preventing or prohibiting consummation of the Merger
or making the consummation of the Merger illegal;
(c) The Registration Statement shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order;
(d) If such approval is necessary, the shares of Parent Common Stock
issuable to the stockholders of the Company in the Merger as contemplated by
this Agreement shall have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance; and
(e) The Minimum Condition shall have been satisfied and Parent shall
have purchased Public Shares pursuant to the Offer, provided that this
condition shall be deemed satisfied with respect to Parent if Parent shall
have failed to purchase Public Shares pursuant to the Offer in breach of its
obligations under this Agreement.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated and the Transactions
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval thereof:
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(a) By the mutual written consent of the Company and Parent duly
authorized by the respective Boards of Directors of the Company (including
the Director Approval contemplated by Section 8.2(b)) and Parent.
(b) By either of the Company or Parent:
(i) if any Governmental Entity shall have enacted, promulgated, issued,
entered, amended or enforced (A) a Law prohibiting the Offer or the Merger
or making the Offer or the Merger illegal, or (B) an injunction, judgment,
order, decree or ruling, or taken any other action, in each case,
permanently enjoining, restraining, preventing or prohibiting the Offer or
the Merger and such injunction, judgment, order, decree or ruling or other
action shall have become final and non-appealable; provided, that the right
to terminate this Agreement under this Section 7.1(b)(i) shall not be
available to a party if the issuance of such final, non-appealable
injunction, judgment, order, decree or ruling was primarily due to the
failure of such party to perform any of its obligations under this
Agreement;
(ii) if the Offer shall have expired pursuant to its terms (and not have
been extended by Parent in accordance with Section 1.1 hereof) without any
Public Shares being purchased therein, provided, that the right to terminate
this Agreement under this Section 7.1(b)(ii) shall not be available to any
party whose failure to perform any of is obligations under this Agreement
resulted in the failure of Parent to purchase Public Shares in the Offer; or
(iii) if no Public Shares shall have been purchased pursuant to the
Offer on or before the Walk-Away Date; provided, that the right to terminate
this Agreement under this Section 7.1(b)(iii) shall not be available to any
party whose failure to perform any of is obligations under this Agreement
resulted in the failure of the Offer to be so consummated by the Walk-Away
Date.
(c) By the Company:
(i) if Parent shall have failed to commence the Offer on or prior to the
date provided therefor in Section 1.1; provided, that the Company may not
terminate this Agreement pursuant to this Section 7.1(c)(i) if the Company
is in material breach of this Agreement; or
(ii) if (A) there shall have occurred any events or changes that,
individually or in the aggregate, have had or would reasonably be expected
to have a Parent Material Adverse Effect or (B)(x) the representations and
warranties of Parent or Merger Sub set forth in this Agreement that are
qualified as to 'materiality' or 'Material Adverse Effect' shall not be true
and correct, or the representations and warranties of Parent or Merger Sub
set forth in this Agreement that are not so qualified shall not be true and
correct in all material respects, in each case, on and as of the Execution
Date and on and as of the date of such determination as if made on such date
(other than those representations and warranties that address matters only
as of a particular date which are true and correct as of such date), or
(y) Parent or Merger Sub shall have breached or failed in any material
respect to perform or comply with any obligation, agreement or covenant
required by this Agreement to be performed or complied with by them, which
inaccuracy, breach or failure (in each case under clauses (x) and (y))
cannot be cured or has not been cured by the later of (I) the next scheduled
expiration date of the Offer pursuant to Section 1.1 and (II) ten business
days after Parent receives notice of such inaccuracy, breach or failure;
provided, however, that the Company may only exercise this termination right
prior to the Purchase Date.
(d) By Parent:
(i) if, due to a circumstance or occurrence that if occurring after the
commencement of the Offer would make it impossible to satisfy one or more of
the conditions set forth in Annex A hereto, Parent shall have failed to
commence the Offer on or prior to the date provided therefor in
Section 1.1; provided, that Parent may not terminate this Agreement pursuant
to this Section 7.1(d)(i) if Parent is in material breach of this Agreement;
(ii) if the Board of Directors of the Company shall have withdrawn or
modified, in a manner adverse to Parent, its approval or recommendation of
any of the Transactions;
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provided, however, that Parent may only exercise this termination right
prior to the Purchase Date; or
(iii) if (A) there shall have occurred any events or changes that,
individually or in the aggregate, have had or would reasonably be expected
to have a Company Material Adverse Effect or (B)(x) the representations and
warranties of the Company set forth in this Agreement that are qualified as
to 'materiality' or 'Material Adverse Effect' shall not be true and correct,
or the representations and warranties of the Company set forth in this
Agreement that are not so qualified shall not be true and correct in all
material respects, in each case, on and as of the Execution Date and on and
as of the date of such determination as if made on such date (other than
those representations and warranties that address matters only as of a
particular date which are true and correct as of such date), or (y) the
Company shall have breached or failed in any material respect to perform or
comply with any obligation, agreement or covenant required by this Agreement
to be performed or complied with by it, which inaccuracy, breach or failure
(in each case under clauses (x) and (y)) cannot be cured or has not been
cured by the later of (I) the next scheduled expiration date of the Offer
pursuant to Section 1.1 and (II) ten business days after the Company
receives notice of such inaccuracy, breach or failure; provided, however,
that Parent may only exercise this termination right prior to the Purchase
Date.
7.2 Effect of Termination. In the event of the termination of this Agreement
as provided in Section 7.1, written notice thereof shall be given to the other
party or parties, specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become null and void
(other than Sections 5.8, 7.2 and 7.3, Article VIII and the last sentence of
Section 5.5, all of which shall survive termination of this Agreement), and
there shall be no liability on the part of Parent or the Company or their
respective directors, officers and affiliates, except (i) as provided in
Section 7.3 and (ii) nothing shall relieve any party from liability for fraud or
any willful breach of this Agreement.
7.3 Expenses. All fees and expenses incurred by the parties in connection
with this Agreement and the Transactions shall be borne solely and entirely by
the party that incurred such fees and expenses, irrespective of whether or not
the Transactions are consummated.
ARTICLE VIII
MISCELLANEOUS
8.1 No Survival of Representations and Warranties; etc. Except as otherwise
provided in this Agreement, the representations, warranties and agreements of
each party hereto shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any other party hereto, any Person
controlling any such party or any of their officers, directors or
representatives, whether prior to or after the execution of this Agreement, and
no information provided or made available shall be deemed to be disclosed in
this Agreement except to the extent actually set forth herein. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or, except as otherwise provided in Section 7.2, upon the
termination of this Agreement pursuant to Section 7.1, as the case may be,
except that the agreements set forth in Article II and Sections 5.7 and 5.8 and
any other agreement in this Agreement which contemplates performance after the
Effective Time shall survive the Effective Time indefinitely and those set forth
in Sections 5.8, 7.2 and 7.3 and this Article VIII shall survive termination
indefinitely.
8.2 Amendment or Supplement.
(a) At any time prior to the Effective Time, this Agreement may be amended
or supplemented in any and all respects, whether before or after approval of any
of the transactions contemplated hereby by stockholders of the Company, by
written agreement of the parties hereto, by action taken by their respective
Boards of Directors (which in the case of the Company shall include the Director
Approval contemplated by Section 8.2(b)); provided, however, that following
approval of the transactions contemplated hereby by stockholders of the Company
there shall be
A-27
no amendment or change to the provisions hereof which by Law would require
stockholder approval without such approval.
(b) Until the Effective Time, the approval by affirmative vote or written
consent of a majority of the members of the Special Committee of the Board of
Directors of the Company established May 27, 2003 then in office ('Director
Approval') shall be required to authorize (i) any amendment or termination of
this Agreement by the Company, (ii) any extension by the Company of time for
performance of any obligation or action under this Agreement by Parent or
(iii) any waiver, exercise or enforcement of any of the Company's rights under
this Agreement.
8.3 Extension of Time, Waiver, Etc. At any time prior to the Effective Time,
any party may, subject to applicable law, (a) waive any inaccuracies in the
representations and warranties of any other party hereto, (b) extend the time
for the performance of any of the obligations or acts of any other party hereto
or (c) waive compliance by the other party with any of the agreements contained
herein or, except as otherwise provided herein, waive any of such party's
conditions; provided, however, in the case of the Company until the Effective
Time, the Director Approval contemplated by Section 8.2(b) is obtained.
Notwithstanding the foregoing, no failure or delay by the Company, Parent or
Merger Sub in exercising any right hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
8.4 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Any purported
assignment not permitted under this Section shall be null and void.
8.5 Counterparts; Effectiveness. This Agreement may be executed in two or
more separate counterparts, each of which shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by the other parties hereto.
8.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement, together
with Annex A hereto, constitute the entire agreement, and supersede all other
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof and thereof. This
Agreement, except for the provisions of Section 5.7, is not intended to and
shall not confer upon any Person other than the parties hereto any rights
hereunder.
8.7 Governing Law; Enforcement; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the principles of conflicts of
laws thereof.
(b) The parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in the United States District Court for the Southern District
of New York or in any New York State court located in the City of New York
(each, an 'Agreed Court') this being in addition to any other remedy to which
they are entitled at law or in equity.
(c) Each of the parties hereto (i) consents to submit itself to the personal
jurisdiction of any Agreed Court in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (ii) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (iii) agrees that it will not bring
any action relating to this Agreement or any of the transactions contemplated
hereby in any court other than an Agreed Court.
A-28
(d) Each of the parties hereto hereby irrevocably waives any and all rights
to trial by jury in any legal proceeding arising out of or related to this
Agreement or the transactions contemplated hereby.
8.8 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission) and shall be
given,
If to Parent or Merger Sub, to:
Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
Attention: President
Facsimile: (212) 598-3241
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Stephen E. Jacobs, Esq.
Facsimile: (212) 310-8007
If to the Company, to:
WilTel Communications Group, Inc.
One Technology Center
Tulsa, Oklahoma 74103
Attention: President
Facsimile: (918) 547-0448
with a copy (which shall not constitute notice) to:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue, 47th Floor
Los Angeles, California 90071
Attention: Andrew E. Bogen, Esq. and
Jennifer Bellah-Maguire, Esq.
Facsimile: (213) 229-7520
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 P.M. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
8.9 Severability. If any term or other provision of this Agreement is
determined by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
terms, provisions and conditions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
8.10 Headings. Headings of the Articles and Sections of this Agreement are
for convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
8.11 Definitions; Construction.
(a) As used in this Agreement, the following terms have the meanings
ascribed thereto below:
'affiliate' shall mean, as to any Person, any other Person which,
directly or indirectly, controls, or is controlled by, or is under common
control with, such Person. For this
A-29
purpose, 'control' (including, with its correlative meanings, 'controlled
by' and 'under common control with') shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of
management or policies of a Person, whether through the ownership of
securities or partnership or other ownership interests, by contract or
otherwise.
'business day' shall mean a day except a Saturday, a Sunday or other
day on which the SEC or banks in the City of New York are authorized or
required by Law to be closed.
'GAAP' shall mean generally accepted accounting principles in the
United States.
'Governmental Entity' shall mean any government, court, arbitrator,
regulatory or administrative agency, commission or authority or other
governmental instrumentality, federal, state or local, domestic, foreign
or multinational.
'HSR Act' shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
'Laws' shall mean all laws, statutes, ordinances, codes, rules,
regulations, decrees and orders of Governmental Entities.
'Liens' shall mean all liens, pledges, charges, mortgages,
encumbrances, adverse rights or claims and security interests whatsoever.
'Person' shall mean an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity,
including a Governmental Entity.
'Purchase Date' shall mean the first date on which Parent accepts for
exchange Public Shares tendered and not withdrawn pursuant to the Offer.
'subsidiary' when used with respect to any party, shall mean any
corporation, limited liability company, partnership, association, trust
or other entity the accounts of which would be consolidated with those of
such party in such party's consolidated financial statements if such
financial statements were prepared in accordance with GAAP, as well as
any other corporation, limited liability company, partnership,
association, trust or other entity of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of
the ordinary voting power (or, in the case of a partnership, more than
50% of the general partnership interests) are, as of such date, owned by
such party or one or more subsidiaries of such party or by such party and
one or more subsidiaries of such party. For purposes of this Agreement,
the Company shall not be considered a subsidiary of Parent.
'Transactions' refers collectively to this Agreement and the
transactions contemplated hereby, including the Offer and the Merger.
'Walk-Away Date' shall mean January 15, 2004.
(b) The following terms are defined on the page of this Agreement set forth
after such term below:
Agreed Court............................. 28
Agreement................................ 1
Antitrust Laws........................... 21
Bankruptcy and Equity Exception.......... 14
Base Offer Consideration................. 1
Certificate.............................. 6
Certificate of Merger.................... 5
Closing.................................. 5
Closing Date............................. 5
Code..................................... 1
Company.................................. 1
Company Charter Documents................ 13
Company Common Stock..................... 1
Company Material Adverse Effect.......... 13
Company SEC Documents.................... 15
Company Shareholders Meeting............. 5
CSR...................................... 1
Director Approval........................ 28
Dissenting Shares........................ 9
Effective Time........................... 6
Engagement Letter........................ 16
Exchange Act............................. 1
Exchange Ratio........................... 1
Execution Date........................... 1
A-30
Fairness Opinion......................... 4
FCC...................................... 14
FCC Filings.............................. 14
Material Adverse Effect.................. 13
Merger................................... 1
Merger Consideration..................... 6
Merger Sub............................... 1
Minimum Condition........................ 2
NRS...................................... 1
Offer.................................... 1
Offer Consideration...................... 1
Offer Documents.......................... 3
Parent................................... 1
Parent Common Stock...................... 1
Parent Material Adverse Effect........... 16
Parent SEC Documents..................... 18
Proxy Statement.......................... 5
Public Share............................. 1
Registration Statement................... 3
Schedule 14D-9........................... 4
SEC...................................... 2
Securities Act........................... 3
Share.................................... 1
Stockholders Agreement................... 14
Surviving Corporation.................... 5
As used in this Agreement, 'including' shall mean 'including, without
limitation.'
(c) The parties hereto have participated jointly in the negotiation and
drafting of this Agreement and, in the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as jointly drafted
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provision of this
Agreement.
[Signature page follows]
A-31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
LEUCADIA NATIONAL CORPORATION
By: /s/ JOSEPH S. STEINBERG
..................................
Name: Joseph S. Steinberg
Title: President
WRANGLER ACQUISITION CORP.
By: /s/ LAURA ULBRANDT
..................................
Name: Laura E. Ulbrandt
Title: Vice President
WILTEL COMMUNICATIONS GROUP, INC.
By: /s/ JEFF K. STOREY
..................................
Name: Jeff K. Storey
Title: President & Chief Executive Officer
A-32
ANNEX A
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex A have the meanings set forth in
the attached Agreement, except that the term 'the Agreement' shall be deemed to
refer to the attached Agreement.
Notwithstanding any other provision of the Offer, Parent shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating
to Parent's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, and may delay the acceptance
for payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and (subject to the provisions of the Agreement) may
terminate the Offer and not accept for payment any tendered shares if (i) the
Minimum Condition shall not have been satisfied at the expiration of the Offer,
(ii) any applicable waiting period under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer, (iii) FCC and applicable
State regulatory approval of the change of control of the Company shall not have
been obtained prior to the expiration of the Offer or such approval shall not be
in full force and effect at the expiration of the Offer, (iv) the Registration
Statement shall not have become effective under the Securities Act prior to the
expiration of the Offer or shall be the subject of any stop order or proceedings
seeking a stop order at the expiration of the Offer, (v) the shares of Parent
Common Stock issuable in exchange for Shares in the Offer shall not have been
approved (if such approval is necessary), prior to the expiration of the Offer,
for listing on the New York Stock Exchange (subject to official notice of
issuance), (vi) the Company shall not have received, prior to the expiration of
the Offer, a written opinion of Weil, Gotshal & Manges LLP (or, if Weil, Gotshal
& Manges LLP shall not have delivered such opinion, the Company shall not have
received, prior to the expiration of the Offer, a written opinion of Gibson,
Dunn & Crutcher LLP) to the effect that the Offer and the Merger should
constitute a reorganization within the meaning of Section 368(a) of the Code
(which opinion may rely on such assumptions and representations as such counsel
reasonably deems appropriate) or (vii) at any time on or after the date of the
Agreement and prior to the expiration of the Offer, any of the following
conditions shall exist:
(a) there shall be any injunction, judgment, ruling, order or decree
issued or entered by any Governmental Entity that (i) restrains, enjoins,
prevents, prohibits or makes illegal the acceptance for payment, payment for
or purchase of some or all of the Shares by Parent or the consummation of
the Transactions, (ii) imposes material limitations on the ability of Parent
or any of its affiliates effectively to exercise full rights of ownership of
100% of the Shares, including, without limitation, the right to vote the
Shares purchased by them on all matters properly presented to the Company's
stockholders on an equal basis with all other stockholders (including,
without limitation, the adoption of the Agreement and approval of the
Transactions), (iii) restrains, enjoins, prevents, prohibits or makes
illegal, or imposes material limitations on, Parent's or any of its
affiliates' ownership or operation of all or any portion of the businesses
and assets of the Company and its subsidiaries, or, as a result of the
Transactions, of Parent and its subsidiaries, (iv) compels Parent or any of
its affiliates to dispose of any Shares or, as a result of the Transactions,
compels Parent or any of its affiliates to hold separate any portion of the
businesses or assets of the Company and its subsidiaries, or of Parent and
its subsidiaries, or (v) imposes damages on Parent, the Company or any of
their respective affiliates as a result of the Transactions in amounts that
are material with respect to the Transactions;
(b) there shall be any Law enacted, issued, promulgated, amended or
enforced by any Governmental Entity applicable to (i) Parent, the Company or
any of their respective affiliates or (ii) the Transactions (other than the
routine application of the waiting period provisions of the HSR Act) that
results, or is reasonably likely to result, directly or indirectly, in any
of the consequences referred to in paragraph (a) above;
A-A-1
(c) (i) there shall have occurred any events or changes that,
individually or in the aggregate, have had or would reasonably be expected
to have a Company Material Adverse Effect or (ii)(A) the representations and
warranties of the Company set forth in the Agreement that are qualified as
to 'materiality' or 'Material Adverse Effect' shall not be true and correct,
or the representations and warranties of the Company set forth in the
Agreement that are not so qualified shall not be true and correct in all
material respects, in each case, at and as of the date of such determination
as if made on such date (other than those representations and warranties
that address matters only as of a particular date which are true and correct
as of such date), or (B) the Company shall have breached or failed in any
material respect to perform or comply with any obligation, agreement or
covenant required by the Agreement to be performed or complied with by it;
(d) the Board of Directors of the Company shall have withdrawn or
modified, in a manner adverse to Parent, its approval or recommendation of
any of the Transactions;
(e) there shall have occurred (1) any general suspension of trading in
securities on the New York Stock Exchange, the American Stock Exchange or in
the NASDAQ National Market System, for a period in excess of three hours
(excluding suspensions or limitations resulting solely from physical damage
or interference with such exchanges not related to market conditions),
(2) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (3) any
limitation or proposed limitation (whether or not mandatory) by any United
States Governmental Entity that has a material adverse effect generally on
the extension of credit by banks or other financial institutions, (4) the
commencement of a war directly or indirectly involving the United States or
(5) in the case of any of the situations in clauses (1) through (4) of this
paragraph existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(f) the Agreement shall have been terminated in accordance with its
terms or the Offer shall have been terminated with the consent of the
Company.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Parent regardless of the circumstances giving rise to such
conditions or may be waived by Parent, in whole or in part at any time and from
time to time in the sole discretion of Parent (except for any condition which,
pursuant to Section 1.1 of the Agreement, may only be waived with the Company's
consent). The failure by Parent at any time to exercise any of the foregoing
rights will not be deemed a waiver of any right, the waiver of such right with
respect to any particular facts or circumstances shall not be deemed a waiver
with respect to any other facts or circumstances, and each right will be deemed
an ongoing right which may be asserted at any time and from time to time prior
to the expiration of the Offer.
If the Offer is terminated, all tendered Shares not theretofore accepted for
payment shall forthwith be returned to the tendering stockholders.
A-A-2
ANNEX B
INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF LEUCADIA AND MERGER SUB
1. Leucadia
The following table sets forth, to the best of our knowledge, for each
executive officer and director of Leucadia, his or her name, business or
residence address, principal occupation or employment at the present time and
during the last five years, and the name of any corporation or the organization
in which such employment is conducted or was conducted. Except as otherwise
indicated, to the best of our knowledge, all of the persons listed below are
citizens of the United States of America. During the past five years, to the
best of our knowledge, none of the executive officers or directors of Leucadia
have been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which the person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of these laws. Unless otherwise indicated, the
principal business address of each director and executive officer is
c/o Leucadia National Corporation, 315 Park Avenue South, New York, NY 10010.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------- --------------------------------------------------
Ian M. Cumming ........................ Chairman of the Board and a Director of Leucadia since
c/o Leucadia National June 1978. Chairman of the Board of The FINOVA Group, Inc.
Corporation (a middle market lender) since August 2001. Director of
529 E. South Temple Skywest, Inc. (a Utah-based regional air carrier) since
Salt Lake City, Utah 84102 June 1986. Director of MK Gold Company (an international
gold mining company) since June 1995. Director of
HomeFed Corporation (a real estate development company)
since May 1999. Director of Carmike Cinemas, Inc. (a
motion picture exhibitor) from January 2002 until
August 2003. Chairman of WilTel Communications Group,
Inc. since October 2002. Director of Allcity Insurance
Company since February 1988.
Joseph S. Steinberg ................... President of Leucadia since January 1979 and Director
since December 1978. Director of Jordan Industries, Inc.
(a public company that owns and manages manufacturing
companies) since June 1988. Director of MK Gold Company
since June 1995; Director of HomeFed Corporation since
August 1998 and Chairman of the Board of Directors of
HomeFed Corporation since December 1999. Director of The
FINOVA Group, Inc. since December 2001. Director of
White Mountains Insurance Group, Ltd. (a publicly traded
insurance company) since June 2001. Director of WilTel
Communications Group, Inc. since October 2002. Director
of Allcity Insurance Company since February 1988 and
Chairman of the Board of Allcity Insurance Company since
August 1998.
Paul M. Dougan ........................ Director of Leucadia. Director, President and Chief
c/o Equity Oil Company Executive Officer of Equity Oil Company (a company engaged
10 West 300 South in oil and gas exploration and production having an
Salt Lake City, Utah 84102 office in Salt Lake City, Utah).
B-1
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------- --------------------------------------------------
Lawrence D. Glaubinger ................ Director of Leucadia. Private Investor; President of
c/o Lawrence Economic Lawrence Economic Consulting Inc., (a management
Consulting, Inc. consulting firm) and a manager of Bee Gee Trading
P.O. Box 3567 Company LLC (a private commodities trading company).
Hallandale Beach, FL 33008 Director of Marisa Christina Inc. Chairman of the Board
of Stern & Stern Industries, Inc. from November 1977
through 2000.
James E. Jordan ....................... Director of Leucadia. Managing Director of Arnhold and
c/o Arnhold and S. Bleichroeder Advisers, Inc. (a privately owned global
S. Bleichroeder Advisers, Inc. investment management company). Director of Allcity
1345 Avenue of the Americas Insurance Company since 1997. Director of First Eagle
New York, NY 10105 family of mutual funds and JZ Equity Partners Plc., a
British investment trust company.
Jesse Clyde Nichols, III .............. Director of Leucadia. Private investor. President of
4945 Glendale Road Crimsco, Inc. From May 1974 through 2000.
Westwood Hills, KS 66205
Thomas E. Mara ........................ Executive Vice President of Leucadia since May 1980 and
Treasurer of Leucadia since January 1993. Director of MK
Gold Company since February 2000. Director and Chief
Executive Officer of The FINOVA Group, Inc. since
September 2002. Director of Allcity Insurance Company
since October 1994.
Joseph A. Orlando ..................... Vice President since January 1994 and Chief Financial
Officer of Leucadia since April 1996. Director of Allcity
Insurance Company since October 1998.
Mark Hornstein ........................ Vice President of Leucadia since July 1983.
Barbara L. Lowenthal .................. Vice President and Comptroller of Leucadia since April
1996.
H. E. Scruggs ......................... Vice President of Leucadia since August 2002 as well as
c/o Leucadia National from March 2000 until December 2001. Senior Vice President
Corporation of WilTel Communications Group, Inc. since October 2002.
529 E. South Temple President, Chief Executive Officer and Director of
Salt Lake City, UT 84102 Allcity Insurance Company since September 2000. Chairman
of American Investment Bank, another Leucadia
subsidiary, since 1997. Director of MK Gold Company
since March 2001.
2. Merger Sub
The following table sets forth, to the best of our knowledge, for each
executive officer and director of Merger Sub, his or her name, business or
residence address, principal occupation or employment at the present time and
during the last five years, and the name of any corporation or the organization
in which such employment is conducted or was conducted. Except as otherwise
indicated, to the best of our knowledge, all of the persons listed below are
citizens of the United States of America. During the past five years, to the
best of our knowledge, none of the executive officers or directors of Merger Sub
have been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which the person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of these laws. Unless otherwise indicated, the
principal business address of each director and executive officer is c/o
Leucadia National Corporation, 315 Park Avenue South, New York, NY 10010.
B-2
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------- --------------------------------------------------
Joseph A. Orlando ................... Mr. Orlando is the sole director and the President and Chief
Financial Officer of Merger Sub. Vice President since
January 1994 and Chief Financial Officer of Leucadia since
April 1996. Director of Allcity Insurance Company since
October 1998.
Thomas E. Mara ...................... Mr. Mara is the Vice President and Treasurer of Merger Sub.
Executive Vice President of Leucadia since May 1980 and
Treasurer of Leucadia since January 1993. Director of MK
Gold Company since February 2000. Director and Chief
Executive Officer of The FINOVA Group, Inc. since
September 2002. Director of Allcity Insurance Company
since October 1994.
Mark Hornstein ...................... Mr. Hornstein is Vice President of Merger Sub. Vice
President of Leucadia since July 1983.
Laura E. Ulbrandt ................... Mrs. Ulbrandt is Vice President and Secretary of Merger Sub.
Corporate Secretary of Leucadia since October 1997.
Barbara L. Lowenthal ................ Ms. Lowenthal is Vice President of Merger Sub. Vice
President and Comptroller of Leucadia since April 1996.
B-3
ANNEX C
SECTIONS 92A.300 - 92A.500 OF THE NEVADA REVISED STATUTES
-- RIGHTS OF DISSENTING OWNERS, AS AMENDED, AND
EFFECTIVE ON OCTOBER 1, 2003
NRS 92A.300 Definitions. As used in NRS 92A.300 to 92A.500, inclusive,
unless the context otherwise requires, the words and terms defined in NRS
92A.305 to 92A.335, inclusive, have the meanings ascribed to them in those
sections.
NRS 92A.305 'Beneficial stockholder' defined. 'Beneficial stockholder' means
a person who is a beneficial owner of shares held in a voting trust or by a
nominee as the stockholder of record.
NRS 92A.310 'Corporate action' defined. 'Corporate action' means the action
of a domestic corporation.
NRS 92A.315 'Dissenter' defined. 'Dissenter' means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner required by NRS 92A.400 to
92A.480, inclusive.
NRS 92A.320 'Fair value' defined. 'Fair value,' with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
NRS 92A.325 'Stockholder' defined. 'Stockholder' means a stockholder of
record or a beneficial stockholder of a domestic corporation.
NRS 92A.330 'Stockholder of record' defined. 'Stockholder of record' means
the person in whose name shares are registered in the records of a domestic
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee's certificate on file with the domestic corporation.
NRS 92A.335 'Subject corporation' defined. 'Subject corporation' means the
domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective or
the surviving or acquiring entity of that issuer after the corporate action
becomes effective.
NRS 92A.340 Computation of interest. Interest payable pursuant to NRS
92A.300 to 92A.500, inclusive, must be computed from the effective date of the
action until the date of payment, at the average rate currently paid by the
entity on its principal bank loans or, if it has no bank loans, at a rate that
is fair and equitable under all of the circumstances.
NRS 92A.350 Rights of dissenting partner of domestic limited partnership. A
partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a constituent
entity.
NRS 92A.360 Rights of dissenting member of domestic limited-liability
company. The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity.
NRS 92A.370 Rights of dissenting member of domestic nonprofit corporation.
1. Except as otherwise provided in subsection 2, and unless otherwise
provided in the articles or bylaws, any member of any constituent domestic
nonprofit corporation who voted against the merger may, without prior notice,
but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual obligations to the
constituent or
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surviving corporations which did not occur before his resignation and is thereby
entitled to those rights, if any, which would have existed if there had been no
merger and the membership had been terminated or the member had been expelled.
2. Unless otherwise provided in its articles of incorporation or bylaws, no
member of a domestic nonprofit corporation, including, but not limited to, a
cooperative corporation, which supplies services described in chapter 704 of
NRS to its members only, and no person who is a member of a domestic nonprofit
corporation as a condition of or by reason of the ownership of an interest in
real property, may resign and dissent pursuant to subsection 1.
NRS 92A.380 Right of stockholder to dissent from certain corporate actions
and to obtain payment for shares.
1. Except as otherwise provided in NRS 92A.370 and 92A.390, any stockholder
is entitled to dissent from, and obtain payment of the fair value of his shares
in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic corporation
is a constituent entity:
(1) If approval by the stockholders is required for the conversion or
merger by NRS 92A.120 to 92A.160, inclusive, or the articles of
incorporation, regardless of whether the stockholder is entitled to vote
on the conversion or plan of merger; or
(2) If the domestic corporation is a subsidiary and is merged with
its parent pursuant to NRS 92A.180.
(b) Consummation of a plan of exchange to which the domestic corporation
is a constituent entity as the corporation whose subject owner's interests
will be acquired, if his shares are to be acquired in the plan of exchange.
(c) Any corporate action taken pursuant to a vote of the stockholders to
the extent that the articles of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting stockholders are
entitled to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment pursuant to
NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent with
respect to him or the domestic corporation.
NRS 92A.390 Limitations on right of dissent: Stockholders of certain classes
or series; action of stockholders not required for plan of merger.
1. There is no right of dissent with respect to a plan of merger or exchange
in favor of stockholders of any class or series which, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at the
meeting at which the plan of merger or exchange is to be acted on, were either
listed on a national securities exchange, included in the national market system
by the National Association of Securities Dealers, Inc., or held by at least
2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the shares
provide otherwise; or
(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu of
fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the plan of
merger or exchange, were either listed on a national securities
exchange, included in the national market system by the National
Association of Securities Dealers, Inc., or held of record by a least
2,000 holders of owner's interests of record; or
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(2) A combination of cash and owner's interests of the kind described
in sub-subparagraphs (I) and (II) of subparagraph (1) of paragraph (b).
2. There is no right of dissent for any holders of stock of the surviving
domestic corporation if the plan of merger does not require action of the
stockholders of the surviving domestic corporation under NRS 92A.130.
NRS 92A.400 Limitations on right of dissent: Assertion as to portions only
to shares registered to stockholder; assertion by beneficial stockholder.
1. A stockholder of record may assert dissenter's rights as to fewer than
all of the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one person and notifies the subject corporation
in writing of the name and address of each person on whose behalf he asserts
dissenter's rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares held
on his behalf only if:
(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the beneficial
stockholder or over which he has power to direct the vote.
NRS 92A.410 Notification of stockholders regarding right of dissent.
1. If a proposed corporate action creating dissenters' rights is submitted
to a vote at a stockholders' meeting, the notice of the meeting must state that
stockholders are or may be entitled to assert dissenters' rights under
NRS 92A.300 to 92A.500, inclusive, and be accompanied by a copy of those
sections.
2. If the corporate action creating dissenters' rights is taken by written
consent of the stockholders or without a vote of the stockholders, the domestic
corporation shall notify in writing all stockholders entitled to assert
dissenters' rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430.
NRS 92A.420 Prerequisites to demand for payment for shares.
1. If a proposed corporate action creating dissenters' rights is submitted
to a vote at a stockholders' meeting, a stockholder who wishes to assert
dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the
proposed action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1 and
NRS 92A.400 is not entitled to payment for his shares under this chapter.
NRS 92A.430 Dissenter's notice: Delivery to stockholders entitled to assert
rights; contents.
1. If a proposed corporate action creating dissenters' rights is authorized
at a stockholders' meeting, the subject corporation shall deliver a written
dissenter's notice to all stockholders who satisfied the requirements to assert
those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to what
extent the transfer of the shares will be restricted after the demand for
payment is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of the terms of
the proposed action
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and requires that the person asserting dissenter's rights certify whether or
not he acquired beneficial ownership of the shares before that date;
(d) Set a date by which the subject corporation must receive the demand
for payment, which may not be less than 30 nor more than 60 days after the
date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
NRS 92A.440 Demand for payment and deposit of certificates; retention of
rights of stockholder.
1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he or the beneficial owner on whose behalf he is
dissenting, as the case may be acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates, if any, in accordance with the terms of
the notice.
2. The stockholder who demands payment and deposits his certificates, if
any, before the proposed corporate action is taken retains all other rights of a
stockholder until those rights are canceled or modified by the taking of the
proposed corporate action.
3. The stockholder who does not demand payment or deposit his certificates
where required, each by the date set forth in the dissenter's notice, is not
entitled to payment for his shares under this chapter.
NRS 92A.450 Uncertificated shares: Authority to restrict transfer after
demand for payment; retention of rights of stockholder.
1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is
received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action.
NRS 92A.460 Payment for shares: General requirements.
1. Except as otherwise provided in NRS 92A.470, within 30 days after receipt
of a demand for payment, the subject corporation shall pay each dissenter who
complied with NRS 92A.440 the amount the subject corporation estimates to be the
fair value of his shares, plus accrued interest. The obligation of the subject
corporation under this subsection may be enforced by the district court:
(a) Of the county where the corporation's registered office is located;
or
(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, a statement
of income for that year, a statement of changes in the stockholders' equity
for that year and the latest available interim financial statements, if any;
(b) A statement of the subject corporation's estimate of the fair value
of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment under
NRS 92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
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NRS 92A.470 Payment for shares: Shares acquired on or after date of
dissenter's notice.
1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment, after
taking the proposed action, it shall estimate the fair value of the shares, plus
accrued interest, and shall offer to pay this amount to each dissenter who
agrees to accept it in full satisfaction of his demand. The subject corporation
shall send with its offer a statement of its estimate of the fair value of the
shares, an explanation of how the interest was calculated, and a statement of
the dissenters' right to demand payment pursuant to NRS 92A.480.
NRS 92A.480 Dissenter's estimate of fair value: Notification of subject
corporation; demand for payment of estimate.
1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of
his shares and interest due, if he believes that the amount paid pursuant to NRS
92A.460 or offered pursuant to NRS 92A.470 is less than the fair value of his
shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this section
unless he notifies the subject corporation of his demand in writing within 30
days after the subject corporation made or offered payment for his shares.
NRS 92A.490 Legal proceeding to determine fair value: Duties of subject
corporation; powers of court; rights of dissenter.
1. If a demand for payment remains unsettled, the subject corporation shall
commence a proceeding within 60 days after receiving the demand and petition the
court to determine the fair value of the shares and accrued interest. If the
subject corporation does not commence the proceeding within the 60-day period,
it shall pay each dissenter whose demand remains unsettled the amount demanded.
2. A subject corporation shall commence the proceeding in the district court
of the county where its registered office is located. If the subject corporation
is a foreign entity without a resident agent in the state, it shall commence the
proceeding in the county where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced under
subsection 2 is plenary and exclusive. The court may appoint one or more persons
as appraisers to receive evidence and recommend a decision on the question of
fair value. The appraisers have the powers described in the order appointing
them, or any amendment thereto. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to a
judgment:
(a) For the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the subject
corporation; or
(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold payment
pursuant to NRS 92A.470.
NRS 92A.500 Legal proceeding to determine fair value: Assessment of costs
and fees.
1. The court in a proceeding to determine fair value shall determine all of
the costs of the proceeding, including the reasonable compensation and expenses
of any appraisers appointed by
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the court. The court shall assess the costs against the subject corporation,
except that the court may assess costs against all or some of the dissenters, in
amounts the court finds equitable, to the extent the court finds the dissenters
acted arbitrarily, vexatiously or not in good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters if
the court finds the subject corporation did not substantially comply with
the requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith
with respect to the rights provided by NRS 92A.300 to 92A.500, inclusive.
3. If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the subject corporation, the
court may award to those counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court may assess
the costs against the subject corporation, except that the court may assess
costs against all or some of the dissenters who are parties to the proceeding,
in amounts the court finds equitable, to the extent the court finds that such
parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115.
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THE EXCHANGE AGENT AND DEPOSITORY FOR THIS OFFER IS:
American Stock Transfer & Trust Company
59 Maiden Lane, New York, NY 10038
(800) 937-5449
By Mail, Hand or Overnight Delivery:
American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
By Facsimile Transmissions:
(for Eligible Institutions only)
(718) 234-5001
Confirm Facsimile By
Telephone:
(800) 937-5449 or
(212) 936-5100
Questions and requests for assistance may be directed to the information
agent at the address and telephone numbers listed below. Additional copies of
this prospectus, the letter of transmittal and other tender offer materials may
be obtained from the information agent as set forth below, and will be furnished
promptly at our expense. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the offer.
THE INFORMATION AGENT FOR THIS OFFER IS:
[INNISFREE LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022
Stockholders Call Toll-Free: (888) 750-5834
Banks and Brokers Call Collect: (212) 750-5833
PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
LEUCADIA NATIONAL CORPORATION
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 contrast, 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 Leucadia'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 Leucadia.
Section 726 of the Business Corporation Law provides that a corporation may
obtain insurance to indemnify itself and its directors and officers. Leucadia
maintains an insurance policy providing both directors and officers liability
coverage and corporate reimbursement coverage.
Article Sixth of Leucadia'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.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
See Exhibit Index immediately preceding Exhibits.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) 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 that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes: (1) to file, during any period
in which offers or sales are being made, a post-effective amendment or
prospectus supplement to this registration statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
registration
II-1
statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the 'Calculation of Registration
Fee' table in the effective registration statement; and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement; (2) that, for the purpose of
determining any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; (3) to remove from
registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The undersigned registrant hereby undertakes as follows: that every
prospectus: (i) that is filed pursuant to the paragraph immediately preceding,
or (ii) that purports to meet the requirements of Section 10(a)(3) of the
Securities Act and is used in connection with an offering of securities subject
to Rule 415, will be filed as part of an amendment to this registration
statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered herein, 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
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
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 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 to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Leucadia National Corporation has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, State of New York on October 30, 2003.
LEUCADIA NATIONAL CORPORATION
By: /s/ JOSEPH A. ORLANDO
..................................
NAME: JOSEPH A. ORLANDO
TITLE: VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been duly signed below by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman of the Board October 30, 2003
......................................... (Principal Executive Officer)
(IAN M. CUMMING)
* President and Director October 30, 2003
......................................... (Principal Executive Officer)
(JOSEPH S. STEINBERG)
/s/ JOSEPH A. ORLANDO Vice President and Chief Financial Officer October 30, 2003
......................................... (Principal Financial Officer)
(JOSEPH A. ORLANDO)
/s/ BARBARA L. LOWENTHAL Vice President and Comptroller October 30, 2003
......................................... (Principal Accounting Officer)
(BARBARA L. LOWENTHAL)
* Director October 30, 2003
.........................................
(PAUL M. DOUGAN)
* Director October 30, 2003
.........................................
(LAWRENCE D. GLAUBINGER)
* Director October 30, 2003
.........................................
(JAMES E. JORDAN)
* Director October 30, 2003
.........................................
(JESSE CLYDE NICHOLS, III)
*By: /s/ JOSEPH A. ORLANDO
....................................
ATTORNEY-IN-FACT
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EXHIBIT INDEX
2(1) -- Agreement and Plan of Merger, dated as of August 21,
2003, by and among Leucadia, Merger Sub and WilTel
(attached as Annex A to the prospectus which is a part of
this registration statement).
3(1) -- Restated Certificate of Incorporation of Leucadia (filed
as Exhibit 5.1 to Leucadia's Report on Form 8-K dated July
14, 1993).*
3(2) -- Certificate of Amendment of the Restated Certificate of
Incorporation of Leucadia, dated as of December 23, 2002
(filed as Exhibit 3.2 to Leucadia's Annual Report of
Form 10-K for the year ended December 31, 2002).*
3(3) -- Amended and Restated By-laws, as amended through February
23, 1999 (filed as Exhibit 3.2 to Leucadia's Annual Report
of Form 10-K for the year ended December 31, 1998).*
5 -- Opinion of Weil, Gotshal & Manges LLP.**
8 -- Opinions of Weil, Gotshal & Manges LLP relating to tax
matters.
23(1) -- Consent of independent accountants from
PricewaterhouseCoopers LLP, independent accountants of
Leucadia.
23(2) -- Consent of independent accountants from
PricewaterhouseCoopers, independent accountants of Olympus
Re Holdings, Ltd.
23(3) -- Consent of independent auditors from Ernst & Young LLP,
independent accountants of Berkadia LLC.
23(4) -- Consent of independent auditors from Ernst & Young LLP,
independent accountants of WilTel.
23(5) -- Consent of independent auditors from Ernst & Young LLP,
independent accountants of the FINOVA Group Inc.
23(6) -- Consents of Weil, Gotshal & Manges LLP (included in
Exhibits 5 and 8).
23(7) -- Consent of independent auditors from KPMG LLP,
independent auditors of Jefferies Partners Opportunity
Fund II, LLC.
24 -- Power of Attorney.**
99(1) -- Stockholders Agreement, dated as of October 15, 2002,
between Leucadia and WilTel (filed as Exhibit 99.6 to the
Current Report on Form 8-K filed by WilTel on October 24,
2002).*
99(2) -- Registration Rights Agreement, dated as of October 15,
2002, between Leucadia and WilTel (filed as Exhibit 99.10
to the Current Report on Form 8-K filed by WilTel on
October 24, 2002).*
99(3) -- Co-Sale Agreement, dated as of October 15, 2002, between
Leucadia and WilTel (filed as Exhibit 99.11 to the Current
Report on Form 8-K filed by WilTel on October 24, 2002).*
99(4) -- Restructuring Services Agreement, effective as of October
16, 2002, between Leucadia and WilTel (filed as
Exhibit 10.1 to the Current Report on Form 8-K filed by
WilTel on December 6, 2002).*
99(5) -- Letter of Transmittal.**
99(6) -- Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees.**
99(7) -- Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.**
99(8) -- Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.**
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99(9) -- Text of press release issued by Leucadia and WilTel
announcing the commencement of the offer.**
99(10) -- Opinion of J.P. Morgan Securities Inc. (included as part
of WilTel's Solicitation/Recommendation Statement on
Schedule 14D-9, filed by WilTel with the Securities and
Exchange Commission).
99(11) -- Sleeper v. WilTel Communications Group, Inc., et al (Case
No. CJ 2003 03163).**
99(12) -- Guy v. WilTel Communications Group, Inc., et al (Case
No. A467773).**
99(13) -- Merullo v. WilTel Communications Group, Inc., et al (Case
No. 6467774).**
99(14) -- Guerra v. WilTel Communications Group, Inc., et al (Case
No. A467738).**
99(15) -- Gottdeiner v. WilTel Communications Group, Inc., et al
(Case No. A467700).**
99(16) -- Provorny v. Leucadia National Corporation, et al (Index
No. 03-109061).**
99(17) -- Hersch v. WilTel Communications Group, Inc., et al (Case
No. CV03 03220).
99(18) -- Betty Guy v. WilTel Communications Group, Inc., et al
(Index No. 03-115368).**
99(19) -- Text of press release issued by Leucadia announcing
extension of the offer (filed as an exhibit to the Current
Report on Form 8-K filed by Leucadia on October 2, 2003).*
99(20) -- Amendment, effective as of August 21, 2003, to the
Stockholders Agreement between Leucadia and WilTel.
99(21) -- Text of press release issued by Leucadia announcing
extension of the offer (filed as an exhibit to the Current
Report on Form 8-K filed by Leucadia on October 16,
2003).*
99(22) -- Text of press release issued by Leucadia announcing
extension of the offer (filed as an exhibit to the Current
Report on Form 8-K filed by Leucadia on October 30,
2003).*
---------
* Incorporated by reference.
** Previously filed
II-5