<PAGE> 1
Filed pursuant to Rule 424(b)(3)
Registration No. 333-94487
THIS PROSPECTUS SUPPLEMENT RELATES TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, BUT IS NOT COMPLETE AND MAY
BE CHANGED. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION. DATED DECEMBER 5, 2000
PRELIMINARY PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED FEBRUARY 2, 2000
[THE MONY GROUP LOGO]
$250,000,000
THE MONY GROUP INC.
% Senior Notes due 2005
------------------
We will pay interest on the senior notes on each and
. The first interest payment will be made on , 2001.
We may redeem all or a portion of the senior notes at any time prior to
their maturity at , 2005.
INVESTING IN THE SENIOR NOTES INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 5
OF THE ACCOMPANYING PROSPECTUS.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS THE MONY GROUP INC.
--------- ------------- -------------------
<S> <C> <C> <C>
Per senior note...................................... % % %
Total................................................ $ $ $
</TABLE>
(1) Plus accrued interest, if any from December , 2000, if settlement occurs
after that date.
Delivery of the senior notes, in book-entry form only, will be made on or
about December , 2000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the prospectus to which it relates is truthful or
complete. Any representation to the contrary is a criminal offense.
CREDIT SUISSE FIRST BOSTON
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY
ADVEST, INC.
FLEET SECURITIES, INC.
The date of this prospectus supplement is December , 2000.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
THE MONY GROUP INC.................. S-3
SELECTED CONSOLIDATED FINANCIAL
INFORMATION...................... S-4
CAPITALIZATION...................... S-7
RATIO OF EARNINGS TO FIXED
CHARGES.......................... S-7
USE OF PROCEEDS..................... S-7
ACQUISITION OF THE ADVEST GROUP,
INC.............................. S-8
DESCRIPTION OF THE SENIOR NOTES..... S-9
UNDERWRITING........................ S-13
LEGAL OPINIONS...................... S-14
PROSPECTUS
ABOUT THIS PROSPECTUS............... 3
THE MONY GROUP INC.................. 4
RISK FACTORS........................ 5
WHERE YOU CAN FIND MORE
INFORMATION...................... 15
SPECIAL NOTE REGARDING FORWARD
LOOKING STATEMENTS............... 16
RATIO OF EARNINGS TO FIXED
CHARGES.......................... 17
</TABLE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
THE TRUSTS.......................... 18
ACCOUNTING TREATMENT OF TRUSTS...... 19
USE OF PROCEEDS..................... 19
DESCRIPTION OF THE SENIOR NOTES..... 20
DESCRIPTION OF THE JUNIOR
SUBORDINATED NOTES............... 28
DESCRIPTION OF THE TRUST PREFERRED
SECURITIES....................... 40
DESCRIPTION OF THE GUARANTEES....... 41
RELATIONSHIP AMONG THE TRUST
PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED NOTES AND THE
GUARANTEES....................... 44
DESCRIPTION OF THE STOCK PURCHASE
CONTRACT AND STOCK PURCHASE
UNITS............................ 46
DESCRIPTION OF THE PREFERRED
STOCK............................ 47
DESCRIPTION OF THE COMMON STOCK..... 48
PLAN OF DISTRIBUTION................ 50
LEGAL MATTERS....................... 51
EXPERTS............................. 52
</TABLE>
------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
S-2
<PAGE> 3
THE MONY GROUP INC.
We are a Delaware corporation and the parent holding company of MONY Life
Insurance Company, which we call MONY Life (formerly, The Mutual Life Insurance
Company of New York). On November 16, 1998, pursuant to a plan of reorganization
which was approved by the New York Superintendent of Insurance, The Mutual Life
Insurance Company of New York converted from a mutual life insurance company to
a stock life insurance company and became our wholly-owned subsidiary. We were
organized on June 24, 1997, for the purpose of becoming the parent holding
company of MONY Life. On November 16, 1998, we completed an initial public
offering of approximately 12.9 million shares of our common stock. The shares of
common stock issued in our initial public offering are in addition to
approximately 34.3 million shares of common stock which we distributed in our
demutualization to certain of our eligible policyholders in exchange for their
ownership interests in The Mutual Life Insurance Company of New York.
Through MONY Life and its subsidiaries, we are primarily engaged in the
business of providing a wide range of life insurance, annuity, and investment
products to higher income individuals, particularly family builders,
pre-retirees, and small business owners. Our products and services are primarily
distributed through our career agency sales force, as well as other
complementary distribution channels (including brokerage general agents,
registered representatives, mutual fund wholesalers and our international sales
force). We principally sell our products in all 50 of the United States, the
District of Columbia, the U.S. Virgin Islands, Guam and the Commonwealth of
Puerto Rico. We currently insure or provide financial services to more than one
million people.
Our corporate offices are located at 1740 Broadway, New York, New York
10019, and our telephone number is (212) 708-2000.
S-3
<PAGE> 4
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected financial information. The selected
consolidated financial information for each of the years in the five year period
ended December 31, 1999 and at December 31, 1999, 1998, 1997 and 1996 has been
derived from our audited consolidated financial statements. The financial
information set forth below for all other periods presented has been derived
from unaudited consolidated financial information which we believe presents
fairly such consolidated financial information in conformity with generally
accepted accounting principles. You should read the selected consolidated
financial information in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations", our consolidated financial
statements and the notes thereto and the other financial information
incorporated by reference herein.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
AS OF AND FOR THE YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------------- ---------------------
1995 1996 1997 1998 1999 1999 2000
--------- --------- --------- --------- --------- --------- ---------
(IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT
DATA:(1)(11)(12)
Revenues:
Premiums...................... $ 875.9 $ 859.8 $ 838.6 $ 721.8 $ 717.1 $ 513.6 $ 504.0
Universal life and
investment-type product
policy fees................. 80.8 100.9 127.3 151.6 196.3 145.7 157.0
Net investment income......... 728.8 751.6 733.0 735.7 902.3 603.5 812.9
Net realized gains (losses) on
investments(2).............. 16.2 75.9 72.1 171.1 125.1 100.7 32.6
Group pension profits(3)...... 61.7 59.5 60.0 56.8 63.0 47.8 29.0
Other income.................. 96.2 117.3 145.4 163.2 197.2 140.0 174.0
--------- --------- --------- --------- --------- --------- ---------
Total revenues.............. 1,859.6 1,965.0 1,976.4 2,000.2 2,201.0 1,551.3 1,709.5
Total benefits and
expenses.................. 1,797.8 1,864.5 1,788.7 1,706.0 1,818.4 1,343.3 1,325.5
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes and
extraordinary item............ 61.8 100.5 187.7 294.2 382.6 208.0 384.0
Income tax expense(4)........... 21.4 44.0 57.3 103.0 132.0 71.1 130.8
--------- --------- --------- --------- --------- --------- ---------
Income before extraordinary
item.......................... 40.4 56.5 130.4 191.2 250.6 136.9 253.2
Extraordinary item, net......... -- -- 13.3 27.2 2.0 1.9 37.7
--------- --------- --------- --------- --------- --------- ---------
Net income...................... $ 40.4 $ 56.5 $ 117.1 $ 164.0 $ 248.6 $ 135.0 $ 215.5
========= ========= ========= ========= ========= ========= =========
Basic Earnings Per Share(5)..... -- -- -- $ 0.19 $ 5.26 $ 2.86 $ 4.63
Diluted Earnings Per Share(5)... -- -- -- 0.18 5.20 2.83 4.53
Basic Book Value Per Share...... -- -- -- 37.63 38.64 37.21 43.71
Diluted Book Value Per Share.... -- -- -- 37.12 38.18 36.78 42.04
SHARE DATA:
Weighted average shares used in
basic per share
calculations.................. -- -- -- 47,241,084 47,238,328 47,238,166 46,572,467
Weighted average shares used in
diluted per share
calculations.................. -- -- -- 47,884,815 47,812,953 47,785,963 47,619,106
CONSOLIDATED BALANCE SHEET
DATA:(11)
Total assets(6)(7).............. $21,678.2 $22,143.5 $23,611.3 $24,958.2 $24,736.3 $24,301.4 $24,592.3
Total debt...................... 578.4 422.7 423.6 375.4 298.8 355.4 351.5
Total liabilities(8)(9)......... 20,504.3 20,973.0 22,290.7 23,180.6 22,910.8 22,543.7 22,575.3
Shareholders' equity(10)........ 1,173.9 1,170.5 1,320.6 1,777.6 1,825.5 1,757.7 2,017.0
</TABLE>
S-4
<PAGE> 5
NOTES TO SELECTED CONSOLIDATED FINANCIAL INFORMATION
(1) The conversion of the predecessor to MONY Life to a stock life insurance
company and the establishment of the closed block have significantly
affected the presentation of our consolidated financial statements. The
most significant effects are as follows:
- The results of the policies included in the closed block are reflected
as a single line item in our statements of income, entitled
"Contribution from the Closed Block," whereas, prior to the
establishment of the closed block, the results of such business were
reported in various line items in our income statement, including
premiums, net investment income, net realized gains, benefits,
amortization of deferred policy acquisition costs, etc.
- The assets and liabilities allocated to the closed block are reported
separately in our balance sheet under the captions "Closed Block assets"
and "Closed Block liabilities," respectively.
To assist interested parties in analyzing our consolidated financial
results, the above consolidated income statement information for the nine
month periods ended September 30, 2000 and 1999 and the years ended
December 31, 1999 and 1998 present the individual components of the closed
block activity for such periods, combined on a line by line basis, with
such activity outside the closed block. This consolidated combined basis
income statement is provided to facilitate comparisons of current period
results with that of the other periods presented.
(2) Includes writedowns for impairment and net changes in valuation allowances
on real estate, mortgage loans and investment securities aggregating $(3.3)
million, $11.3 million, $23.5 million, $24.4 million, $76.0 million, $20.1
million and $54.3 million for the nine month periods ended September 30,
2000 and 1999 and the years ended December 31, 1999, 1998, 1997, 1996 and
1995, respectively.
(3) See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- The Group Pension Transaction" and Note 10 to the
Consolidated Financial Statements included in our Form 10-K for the year
ended December 31, 1999 and our Form 10-Q for the periods ended September
30, 2000.
(4) As a mutual life insurance company, the predecessor to MONY Life was
subject to the add-on (surplus) tax imposed on mutual life insurance
companies under Section 809 of the Internal Revenue Code of 1986 (the
"Code"). Section 809 requires (and the surplus tax results from) the
disallowance of a portion of a mutual life insurance company's policyholder
dividends as a deduction from taxable income. The income tax expense
amounts include $0.0 million, $0.0 million, $0.0 million, $0.0 million,
$5.8 million, $12.8 million and $0.0 million of surplus tax for the nine
month periods ended September 30, 2000 and 1999 and the years ended
December 31, 1999, 1998, 1997, 1996 and 1995, respectively.
(5) In accordance with generally accepted accounting principles, per share
amounts presented for 1998 include only the results of operations for the
period from November 16, 1998 (the effective date of our reorganization)
through December 31, 1998. On a pro forma basis, assuming the
reorganization occurred January 1, 1998, basic and diluted earnings per
share would have been $4.05 and $3.99, respectively. See Note 4 to the
Consolidated Financial Statements included in our Form 10-K for the year
ended December 31, 1999.
(6) Includes assets of $4,980.8 million, $5,173.0 million, $5,109.8 million,
$5,751.8 million, $5,714.9 million, $5,627.6 million and $5,992.8 million
at September 30, 2000 and 1999 and December 31, 1999, 1998, 1997, 1996 and
1995, respectively, transferred in the group pension transaction with AUSA
Life Insurance Company, Inc. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- The Group Pension
Transaction" and Note 10 to the Consolidated Financial Statements in our
Form 10-K for the year ended December 31, 1999 and our Form 10-Q for the
periods ended September 30, 2000.
S-5
<PAGE> 6
(7) Includes closed block assets of $6,218.2 million, $6,153.0 million,
$6,182.1 million and $6,161.2 million at September 30, 2000 and 1999 and
December 31, 1999 and 1998, respectively. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 3 and
Note 20 to the Consolidated Financial Statements in our Form 10-K for the
year ended December 31, 1999 and our Form 10-Q for the periods ended
September 30, 2000.
(8) Includes liabilities of $4,968.7 million, $5,157.0 million, $5,099.1
million, $5,678.5 million, $5,638.7 million, $5,544.1 million and $5,855.7
million at September 30, 2000 and 1999 and December 31, 1999, 1998, 1997
1996 and 1995, respectively, transferred in the group pension transaction
with AUSA Life Insurance Company, Inc. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- The Group
Pension Transaction" and Note 10 to the Consolidated Financial Statements
in our Form 10-K for the year ended December 31, 1999 and our Form 10-Q for
the periods ended September 30, 2000.
(9) Includes closed block liabilities of $7,310.3 million, $7,275.7 million,
$7,303.3 million and $7,290.7 million at September 30, 2000 and 1999 and
December 31, 1999 and 1998, respectively. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 3 and
Note 10 to the Consolidated Financial Statements in our Form 10-K for the
year ended December 31, 1999 and our Form 10-Q for the periods ended
September 30, 2000.
(10) Shareholders' equity at December 31, 1998 includes approximately $248.7
million which represents the remaining net proceeds from our initial public
offering after deducting cash used to pay cash to certain eligible
policyholders and cash used to fund policy credits given to certain
eligible policyholders in connection with our demutualization. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 1 to the Consolidated Financial Statements in our Form
10-K for the year ended December 31, 1999.
(11) Prior to 1996, the predecessor to MONY Life, as a mutual life insurance
company, prepared its financial statements in conformity with accounting
practices prescribed or permitted by the New York Insurance Department,
which accounting practices were considered to be generally accepted
accounting principles for mutual life insurance companies. As of January 1,
1996, the predecessor to MONY Life adopted Financial Accounting Standards
Board (FASB) Interpretation No. 40, Applicability of Generally Accepted
Accounting Principles to Mutual Life Insurance and Other Enterprises, and
Statement of Financial Accounting Standards (SFAS) No. 120, Accounting and
Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises
for Certain Long Duration Participating Policies. Interpretation No. 40 and
SFAS No. 120 require mutual life insurance companies to adopt all
applicable authoritative pronouncements pursuant to generally accepted
accounting principles in their general purpose financial statements.
Accordingly, the financial information presented in the Selected
Consolidated Financial Information for periods prior to 1996 has been
derived from financial information of the predecessor to MONY Life which
has been retroactively restated to reflect the adoption of all applicable
authoritative pronouncements pursuant to generally accepted accounting
principles. See Note 4 to the Consolidated Financial Statements in our Form
10-K for the year ended December 31, 1999.
(12) The comparability of our results of operations for the periods presented is
affected by the sale of our disability income business in 1997 pursuant to
the transaction with Centre Life Reinsurance, Ltd. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
in our Form 10-K for the year ended December 31, 1999.
S-6
<PAGE> 7
CAPITALIZATION
The information presented below has been selected from or based on detailed
information and financial statements appearing in the documents incorporated
herein by reference. This information should be read in connection with the
information incorporated herein by reference.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 2000
--------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(IN MILLIONS)
<S> <C> <C>
Common stock, par value..................................... $ 0.5 $ 0.5
Capital in excess of par.................................... 1,616.1 1,616.1
Retained earnings........................................... 454.0 454.0
Treasury stock.............................................. (33.0) (33.0)
Accumulated comprehensive income............................ (20.5) (20.5)
Unamortized restricted stock compensation................... (0.1) (0.1)
Short-term debt............................................. 52.8 52.8
Long-term debt
Senior debt............................................... 296.7 546.7
Surplus notes............................................. 2.0 2.0
-------- --------
$2,368.5 $2,618.5
======== ========
</TABLE>
---------------
(1) The "As Adjusted" column reflects the issuance of the senior notes
contemplated by this prospectus supplement, but does not include the
application of the net proceeds from the sale of the senior notes and does
not include any other adjustments to reflect our acquisition of The Advest
Group, Inc. on a pro forma basis.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------- -----------------
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges... 2.1 2.8 5.9 7.5 9.9 13.1
</TABLE>
USE OF PROCEEDS
We intend to use a portion of the net proceeds from the sale of the senior
notes to finance the cash portion of our acquisition of The Advest Group, Inc.
Assuming that the applicable average closing price of our common stock, as
described below in "Acquisition of The Advest Group, Inc.", were $42.375 per
share, the closing price of our common stock on the New York Stock Exchange on
December 1, 2000, then the aggregate amount of cash we would need in connection
with the consummation of the Advest acquisition would be approximately $236.3
million (including amounts for cash payments to holders of Advest common stock,
cash payments to holders of Advest restricted stock and cash payments to holders
of Advest options, cash payments pursuant to the retention program, and
transaction expenses). You may find more information about our acquisition of
Advest under the heading "Acquisition of The Advest Group, Inc." below or in our
current report on Form 8-K, as filed with the Securities and Exchange Commission
on September 1, 2000, as amended.
Any remaining net proceeds will be used for general corporate purposes.
S-7
<PAGE> 8
ACQUISITION OF THE ADVEST GROUP, INC.
On August 23, 2000, we entered into a definitive merger agreement with The
Advest Group, Inc. which provides for our acquisition of Advest. Pursuant to the
merger agreement, each stockholder of Advest will receive, based on that
stockholder's election and the elections of all other Advest stockholders,
either (i) cash, (ii) shares of our common stock or (iii) a combination of cash
and our shares, in exchange for that stockholder's shares of Advest common
stock. These Advest stockholder elections will be adjusted so that the aggregate
merger consideration consists of 49.9% cash and 50.1% shares of our common
stock.
The amount that Advest stockholders will receive for the Advest shares they
hold will be fixed five days prior to the merger closing date using the 10-day
average closing price of our shares at that time.
On November 20, 2000, the stockholders of Advest approved the merger.
Required approvals of the merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and by the National Association of Securities Dealers,
Inc. have also been received. The merger is still subject to the approval of the
Office of Thrift Supervision. The transaction is expected to close in the first
quarter of 2001.
For the fiscal year ended September 30, 2000, Advest reported total
revenues of $418,752,000 and net income of $21,024,000.
S-8
<PAGE> 9
DESCRIPTION OF THE SENIOR NOTES
We have summarized provisions of the senior notes below. It is important
for you to consider the information contained in this prospectus supplement and
the accompanying prospectus before making your decision to invest in the senior
notes. If any specific information regarding the senior notes in this prospectus
supplement is inconsistent with the more general terms of the senior notes
described in the prospectus, you should rely on the information contained in
this prospectus supplement.
GENERAL
The senior notes will be issued under an amended and restated indenture
dated as of February 15, 2000, as supplemented by the First Supplemental
Indenture dated as of March 8, 2000, and the Second Supplemental Indenture to be
dated December , 2000, with respect to the issuance of the senior notes,
between us and The Chase Manhattan Bank, as trustee.
The senior notes will mature on December 15, 2005 and will bear interest at
% per annum. Interest on the senior notes will accrue from December ,
2000. The senior notes provide that we will:
- pay interest semi-annually on and of each year,
commencing , 2001, and at maturity;
- pay interest to the person in whose name a senior note is registered at
the close of business on the or preceding the
interest payment date;
- compute interest on the basis of a 360-day year consisting of twelve
30-day months; and
- make payments by wire transfer for senior notes held in book-entry form
or by check mailed to the address of the person entitled to the payment
as it appears in the senior note register.
We will issue the senior notes only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. The
senior notes will not be subject to any sinking fund.
RANKING
The senior notes will be senior unsecured obligations of The MONY Group
Inc. and will rank equally in right of payment with all of our other senior
unsecured and unsubordinated indebtedness. The senior notes will rank senior to
any subordinated indebtedness.
We are a holding company and will primarily depend on the receipt of
dividends from and payments on surplus notes of MONY Life to meet our
obligations under the senior notes and our other outstanding obligations,
including debt obligations. See "Risk Factors -- Dividends and debt service
payments may be affected by limitations imposed on MONY Life Insurance Company"
in the accompanying prospectus. Because the creditors of our subsidiaries,
including MONY Life's policyholders, generally would have a right to receive
payment superior to our right to receive payment from the assets of our
subsidiaries, the holders of our senior notes will effectively be subordinated
to the creditors of our subsidiaries. If we were to liquidate or reorganize,
your right to participate in any distribution of our subsidiaries' assets is
necessarily subject to the claims of the subsidiaries' creditors, including MONY
Life's policyholders. As of September 30, 2000, the aggregate amount of
liabilities and obligations of our subsidiaries that would have effectively
ranked senior to the senior notes was approximately $22,277 million.
OPTIONAL REDEMPTION
The senior notes will be redeemable, in whole or in part, at our option at
any time at a redemption price equal to the greater of:
- 100% of the principal amount of the senior notes; or
- the sum of the present values of the remaining scheduled payments for
principal and interest on the senior notes, not including any portion of
the payments of interest accrued as of the date of
S-9
<PAGE> 10
redemption, discounted to the redemption date on a semiannual basis at
the Treasury Rate, plus 25 basis points;
plus, in each case, accrued and unpaid interest on the senior notes to the date
of redemption.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable to
the remaining term of the senior notes that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities with comparable maturity to the remaining
term of the senior notes.
"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the Reference Treasury Dealer Quotations for the redemption date,
after excluding the highest and lowest Reference Treasury Dealer Quotations, or
(2) if the trustee obtains fewer than three Reference Treasury Dealer
Quotations, the average of all of the quotations.
"Independent Investment Banker" means Credit Suisse First Boston
Corporation and any successor firm or, if such firm is unwilling or unable to
select the Comparable Treasury Issue, an independent investment banking
institution of national standing appointed by the trustee after consultation
with The MONY Group Inc.
"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation and any two of the following as determined by us: Goldman, Sachs &
Co., Salomon Smith Barney, Inc. and Chase Securities Inc.; provided that (i) if
any of the foregoing shall cease to be a primary treasury dealer in U.S.
Government securities, we will substitute another primary treasury dealer in its
place and (ii) if we fail to select a substitute within a reasonable period of
time, then the substitute will be any other primary treasury dealer selected by
the trustee after consultation with us.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the trustee, of the bid and asked prices for the Comparable Treasury Issue,
expressed in each case as a percentage of its principal amount, quoted in
writing to the trustee by the Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding the redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the comparable treasury issue, expressed as
a percentage of its principal amount, equal to the Comparable Treasury Price for
the redemption date.
Notice of any redemption will be mailed at least 30 days but not more then
60 days before the redemption date to each holder of the senior notes to be
redeemed.
Unless we default in payment of the redemption price, on or after the
redemption date, interest will cease to accrue on the senior notes or portions
of the senior notes called for redemption.
DEFEASANCE
The defeasance and covenant defeasance provisions of the indenture
described under the caption "Description of the Senior Notes -- Defeasance and
Covenant Defeasance" in the accompanying prospectus will apply to the senior
notes.
NOTICES
We will mail notices and communications to the holder's address shown on
the register of the senior notes.
THE TRUSTEE; PAYING AGENTS AND TRANSFER AGENTS
The Chase Manhattan Bank is the trustee under the indenture. The trustee
and its affiliates also perform certain commercial banking services for us and
will serve as trustee pursuant to indentures and
S-10
<PAGE> 11
other instruments entered into by us or trusts established by us in connection
with future issues of securities, for which they receive customary fees. The
trustee will be the paying agent and transfer agent for the senior notes.
BOOK-ENTRY DELIVERY AND SETTLEMENT
We will issue the senior notes in the form of one or more permanent global
notes in definitive, fully registered, book-entry form. The global notes will be
deposited with or on behalf of The Depository Trust Company ("DTC") and
registered in the name of Cede & Co., as nominee of DTC.
DTC has advised us as follows:
- DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code
and a "clearing agency" registered under Section 17A of the Securities
Exchange Act of 1934.
- DTC holds securities that its participants deposit with DTC and
facilitates the settlement among participants of securities transactions,
such as transfers and pledges, in deposited securities, through
electronic computerized book-entry changes in participants' accounts,
thereby eliminating the need for physical movement of securities
certificates.
- Direct participants include securities brokers and dealers, trust
companies, clearing corporations and other organizations.
- DTC is owned by a number of its direct participants and by the New York
Stock Exchange, Inc., the American Stock Exchange LLC and the National
Association of Securities Dealers, Inc.
- Access to the DTC system is also available to others such as securities
brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a direct participant, either
directly or indirectly.
- The rules applicable to DTC and its participants are on file with the
SEC.
We have provided the following descriptions of the operations and
procedures of DTC solely as a matter of convenience. These operations and
procedures are solely within the control of DTC and are subject to change by
them from time to time. None of The MONY Group Inc., the underwriters nor the
trustee takes any responsibility for these operations or procedures, and you are
urged to contact DTC or its participants directly to discuss these matters.
We expect that under procedures established by DTC:
- Upon deposit of the global notes with DTC or its custodian, DTC will
credit on its internal system the accounts of direct participants
designated by the underwriters with portions of the principal amounts of
the global notes.
- Ownership of the senior notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by
DTC or its nominee, with respect to interests of direct participants, and
the records of direct and indirect participants, with respect to
interests of persons other than participants.
The laws of some jurisdictions require that purchasers of securities take
physical delivery of those securities in definitive form. Accordingly, the
ability to transfer interests in the senior notes represented by a global note
to those persons may be limited. In addition, because DTC can act only on behalf
of its participants, who in turn act on behalf of persons who hold interests
through participants, the ability of a person having an interest in senior notes
represented by a global note to pledge or transfer those interests to persons or
entities that do not participate in DTC's system, or otherwise to take actions
in respect of such interest, may be affected by the lack of a physical
definitive security in respect of such interest.
S-11
<PAGE> 12
So long as DTC or its nominee is the registered owner of a global note, DTC
or that nominee will be considered the sole owner or holder of the senior notes
represented by that global note for all purposes under the indenture and under
the senior notes. Except as provided below, owners of beneficial interests in a
global note will not be entitled to have senior notes represented by that global
note registered in their names, will not receive or be entitled to receive
physical delivery of certificated senior notes and will not be considered the
owners or holders thereof under the indenture or under the senior notes for any
purpose, including with respect to the giving of any direction, instruction or
approval to the trustee. Accordingly, each holder owning a beneficial interest
in a global note must rely on the procedures of DTC and, if that holder is not a
direct or indirect participant, on the procedures of the participant through
which that holder owns its interest, to exercise any rights of a holder of
senior notes under the indenture or the global note.
Neither The MONY Group Inc. nor the trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of senior notes by DTC, or for maintaining, supervising or reviewing any records
of DTC relating to the senior notes.
Payments on the senior notes represented by the global notes will be made
to DTC or its nominee, as the case may be, as the registered owner thereof. We
expect that DTC or its nominee, upon receipt of any payment on the senior notes
represented by a global note, will credit participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the global
note as shown in the records of DTC or its nominee. We also expect that payments
by participants to owners of beneficial interests in the global note held
through such participants will be governed by standing instructions and
customary practice as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. The
participants will be responsible for those payments.
Payments on the senior notes represented by the global notes will be made
in immediately available funds. Transfers between participants in DTC will be
effected in accordance with DTC rules and will be settled in immediately
available funds.
CERTIFICATED NOTES
We will issue certificated senior notes to each person that DTC identifies
as the beneficial owner of the senior notes represented by the global notes upon
surrender by DTC of the global notes if:
- DTC notifies us that it is no longer willing or able to act as a
depository for the global notes or DTC is no longer eligible or in good
standing under the Exchange Act or other applicable statute or
regulation, and we have not appointed a successor depository within 90
days of that notice;
- We determine not to have the senior notes represented by a global note;
or
- An event of default under the indenture has occurred and DTC requests the
issuance of certificated senior notes.
Neither The MONY Group Inc. nor the trustee will be liable for any delay by
DTC, its nominee or any direct or indirect participant in identifying the
beneficial owners of the related senior notes. The MONY Group Inc. and the
trustee may conclusively rely on, and will be protected in relying on,
instructions from DTC or its nominee for all purposes, including with respect to
the registration and delivery, and the respective principal amounts, of the
senior notes to be issued.
S-12
<PAGE> 13
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated December , 2000, we have agreed to sell to the underwriters
named below, for whom Credit Suisse First Boston Corporation, Chase Securities
Inc., Goldman, Sachs & Co., Salomon Smith Barney, Inc., Advest, Inc. and Fleet
Securities, Inc. are acting as representatives, the following respective
principal amounts of the senior notes:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
UNDERWRITER SENIOR NOTES
----------- -------------------
<S> <C>
Credit Suisse First Boston Corporation...................... $
Chase Securities Inc........................................
Goldman, Sachs & Co. .......................................
Salomon Smith Barney, Inc...................................
Advest, Inc.................................................
Fleet Securities, Inc.......................................
------------
Total..................................................... $250,000,000
============
</TABLE>
The underwriters propose to offer the senior notes initially at the public
offering price on the cover page of this prospectus supplement and to selling
group members at that price less a selling concession of % of the principal
amount per senior note. The underwriters and selling group members may allow a
discount of % of the principal amount per senior note on sales to other
broker/dealers. After the initial public offering, the public offering price and
concession and discount to broker/dealers may be changed by the representatives.
The underwriting agreement provides that the underwriters are obligated to
purchase all of the senior notes if any are purchased.
We estimate that our out of pocket expenses for this offering will be
approximately $ .
The senior notes are a new issue of securities with no established trading
market. The senior notes will not be listed on any securities trading market or
any securities exchange. One or more of the underwriters intends to make a
secondary market for the senior notes. However, they are not obligated to do so
and may discontinue making a secondary market for the senior notes at any time
without notice. No assurance can be given as to how liquid the trading market
for the senior notes will be.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act of 1933 or contribute to payments which the underwriters may be
required to make in that respect.
In connection with the offering, the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.
- Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
- Over-allotment involves sales by the underwriters of shares in excess of
the principal amount of the senior notes the underwriters are obligated
to purchase, which creates a syndicate short position. The underwriters
may close out any short position by purchasing senior notes in the open
market.
- Syndicate covering transactions involve purchases of senior notes in the
open market after the distribution has been completed in order to cover
syndicate short positions.
- Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the senior notes originally sold by such
syndicate member are purchased in a stabilizing transaction or a
syndicate covering transaction to cover syndicate short positions.
S-13
<PAGE> 14
These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of the
senior notes or preventing or retarding a decline in the market price of the
senior notes. As a result the price of the senior notes may be higher than the
price that might otherwise exist in the open market. These transactions, if
commenced, may be discontinued at any time.
A prospectus supplement in electronic format may be made available on the
web sites maintained by one or more of the underwriters participating in this
offering. The representatives may agree to allocate a number of shares to
underwriters for sale to their online brokerage account holders. Internet
distributions will be allocated by the underwriters that will make internet
distributions on the same basis as other allocations. Credit Suisse First Boston
Corporation may effect an on-line distribution through its affiliate, DLJ
direct, Inc., an on-line broker/dealer, as a selling group member.
The Chase Manhattan Bank, trustee under the indenture, is an affiliate of
Chase Securities Inc., an underwriter for this offering.
Advest, Inc., one of the underwriters for this offering, is a wholly-owned
subsidiary of The Advest Group, Inc. We have entered into a definitive merger
agreement with The Advest Group, Inc., which contemplates our acquisition of The
Advest Group, Inc. You may find more information about our acquisition of Advest
under the heading "Acquisition of The Advest Group, Inc." in this prospectus
supplement. The offering is being conducted in accordance with the applicable
provisions of Rule 2720 of the National Association of Securities Dealers, Inc.
Conduct Rules because Advest, Inc. may be deemed an affiliate of The MONY Group
Inc. under this rule.
The underwriters or their affiliates engage in transactions with, and have
performed services for, us and our affiliates in the ordinary course of
business.
LEGAL OPINIONS
The validity of the senior notes will be passed upon for The MONY Group
Inc. by Dewey Ballantine LLP, New York, New York. Frederick W. Kanner, Esq., a
member of the firm Dewey Ballantine LLP, is a member of the board of directors
of The MONY Group Inc. The validity of the senior notes will be passed upon for
the underwriters by LeBoeuf, Lamb, Greene & MacRae, L.L.P., a limited liability
partnership including professional corporations, New York, New York. Dewey
Ballantine LLP has from time to time represented, and continues to represent,
certain of the underwriters on other legal matters.
S-14
<PAGE> 15
PROSPECTUS
$1,000,000,000
THE MONY GROUP INC.
Senior Notes
Junior Subordinated Notes
Stock Purchase Contracts
Stock Purchase Units
Preferred Stock
Common Stock
-------------------------
MONY CAPITAL TRUST I
MONY CAPITAL TRUST II
Trust Preferred Securities
Fully and unconditionally guaranteed as set forth herein by
THE MONY GROUP INC.
-------------------------
We may from time to time issue up to $1,000,000,000 aggregate principal
amount of these securities. The accompanying prospectus supplement will specify
the terms of the securities.
We may sell these securities to or through underwriters, and also to other
purchasers or through agents. The names of the underwriters will be set forth in
the accompanying prospectus supplement.
See "Risk Factors" beginning on page 5 of this prospectus to read about
factors you should consider before buying any of these securities.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------
Our shares of common stock are listed on the New York Stock Exchange under
the trading symbol "MNY."
The date of this prospectus is February 2, 2000.
<PAGE> 16
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About this Prospectus................ 3
The MONY Group Inc................... 4
Risk Factors......................... 5
Where You Can Find More Information.. 15
Special Note Regarding Forward-
Looking Statements................. 16
Ratios of Earnings to Fixed
Charges............................ 17
The Trusts........................... 18
Accounting Treatment of Trusts....... 19
Use of Proceeds...................... 19
Description of the Senior Notes...... 20
Description of the Junior
Subordinated Notes................. 28
Description of the Trust Preferred
Securities......................... 40
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Description of the Guarantees........ 41
Relationship Among the Trust
Preferred Securities, the Junior
Subordinated Notes and the
Guarantees......................... 44
Description of Stock Purchase
Contracts and Stock Purchase
Units.............................. 46
Description of the Preferred
Stock.............................. 47
Description of the Common
Stock.............................. 48
Plan of Distribution................. 50
Legal Matters........................ 51
Experts.............................. 52
</TABLE>
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<PAGE> 17
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
this shelf registration process, we may, from time to time, sell any combination
of:
- senior notes;
- junior subordinated notes;
- stock purchase contracts;
- stock purchase units;
- preferred stock; and
- common stock,
and MONY Capital Trust I and MONY Capital Trust II may, from time to time, sell:
- trust preferred securities guaranteed by us;
in one or more offerings up to a total dollar amount of $1,000,000,000. This
prospectus provides you with a general description of those securities. Each
time we sell any of these securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should read this prospectus and the applicable prospectus
supplement together with additional information under the heading "Where You Can
Find More Information."
The registration statement that contains this prospectus, including the
exhibits to the registration statement, contains additional information about
our company, the Trusts and the securities offered under this prospectus. The
registration statement can be read at the SEC web site or at the SEC offices
mentioned under the heading "Where You Can Find More Information."
3
<PAGE> 18
THE MONY GROUP INC.
We are a Delaware corporation. We are the parent holding company of MONY
Life Insurance Company (formerly, The Mutual Life Insurance Company of New
York). On November 16, 1998, pursuant to a plan of reorganization which was
approved by the New York Superintendent of Insurance, The Mutual Life Insurance
Company of New York converted from a mutual life insurance company to a stock
life insurance company and became our wholly-owned subsidiary. We were organized
on June 24, 1997, for the purpose of becoming the parent holding company of MONY
Life Insurance Company. We have no other operations or subsidiaries. Also, on
November 16, 1998, The Mutual Life Insurance Company of New York changed its
name to MONY Life Insurance Company. At that same time, we completed an initial
public offering of approximately 12.9 million shares of our common stock. The
shares of common stock issued in our initial public offering are in addition to
approximately 34.3 million shares of common stock which we distributed in our
demutualization to some of our eligible policyholders in exchange for their
ownership interests in MONY Life Insurance Company.
Through MONY Life Insurance Company and its subsidiaries, we are primarily
engaged in the business of providing a wide range of life insurance, annuity,
and investment products to higher income individuals, particularly family
builders, pre-retirees, and small business owners. Our products and services are
primarily distributed through our career agency sales force, as well as other
complementary distribution channels (including brokerage general agents,
registered representatives, mutual fund wholesalers and our international sales
force). We principally sell our products in all 50 of the United States, the
District of Columbia, the U.S. Virgin Islands, Guam and the Commonwealth of
Puerto Rico. We currently insure or provide financial services to more than one
million people.
Our corporate offices are located at 1740 Broadway, New York, New York
10019, and our telephone number is (212) 708-2000.
4
<PAGE> 19
RISK FACTORS
You should carefully consider the following factors, in addition to the
other information provided in this prospectus and any applicable prospectus
supplement, before purchasing any of the securities.
DIVIDENDS AND DEBT SERVICE PAYMENTS MAY BE AFFECTED BY LIMITATIONS IMPOSED ON
MONY LIFE INSURANCE COMPANY
Our company is an insurance holding company. The assets of our company
consist primarily of all of the outstanding shares of the common stock of MONY
Life Insurance Company. Our ongoing ability to pay dividends to our stockholders
and meet our obligations, including paying operating expenses and any debt
service, primarily depends upon the receipt of dividends from MONY Life
Insurance Company. Any inability of MONY Life Insurance Company to pay dividends
to us in the future in an amount sufficient for us to pay dividends to our
stockholders and meet our other obligations, including debt service obligations
such as payments of principal, premium, if any, and interest on any debt
securities issued pursuant to this prospectus, may materially adversely affect
our business, results of operations and financial condition.
The payment of dividends by MONY Life Insurance Company is regulated under
state insurance law. Under the New York Insurance Law, MONY Life Insurance
Company may pay a stockholder dividend to us only if it files notice of its
intention to declare a dividend and the amount of the dividend with the New York
Superintendent of Insurance. The New York Superintendent may prevent the payment
of the dividend. Under the New York Insurance Law, the New York Superintendent
has broad discretion in determining whether the financial condition of a stock
life insurance company would support the payment of that dividend. The New York
Insurance Department has established informal guidelines for the New York
Superintendent's determinations that focus on, among other things, an insurer's
overall financial condition and profitability under statutory accounting
practices. We cannot assure you that MONY Life Insurance Company will be able to
pay dividends to us in an amount sufficient to fund our cash requirements, pay
cash dividends and service our debt.
MONY Life Insurance Company of America is a subsidiary of MONY Life
Insurance Company and is regulated by the Arizona insurance laws. The Arizona
insurance laws contain similar restrictions on the ability of MONY Life
Insurance Company of America to pay dividends to MONY Life Insurance Company.
From time to time, the National Association of Insurance Commissioners and
various state insurance regulators have considered, and may in the future
consider and adopt, proposals to further restrict the making of dividend
payments by an insurer without regulatory approval. MONY Life Insurance
Company's ability to pay dividends to us will be further restricted if these
types of proposals are enacted.
THE DECLINE AND EXPIRATION OF PAYMENTS AND INCOME RELATED TO OUR GROUP PENSION
BUSINESS TRANSFERRED TO AEGON MAY REDUCE OUR PROFITS
On December 31, 1993, we entered into an agreement with AEGON USA, Inc.
Under the agreement, we transferred a substantial portion of our group pension
business to AEGON's wholly-owned subsidiary, AUSA Life Insurance Company, Inc.
The transaction was legally structured as a sale. However, for accounting
purposes, we continue to record the assets and liabilities comprising the
transferred business, and the related profits from the transferred business, in
our financial statements. The assets, liabilities and profits are recorded on
our financial statements because, pursuant to the terms of the agreement with
AEGON, we retained substantially all the risks and rewards of the transferred
business.
5
<PAGE> 20
On December 31, 1993, we also made a $200.0 million capital investment in
AEGON by purchasing $150.0 million face amount of Series A Notes and $50.0
million face amount of Series B Notes. The Series A Notes pay interest at 6.44%
per annum and the Series B Notes pay interest at 6.24% per annum. Both the
Series A and Series B Notes mature on December 31, 2002.
Pursuant to the AEGON agreement, we receive from AUSA:
(1) payments on an annual basis through December 31, 2002 equal to all of
the earnings from the deposits on contracts in force and transferred to
AEGON on December 31, 1993;
(2) a final payment at December 31, 2002 based on the remaining fair value
of the deposits on contracts in force and transferred to AEGON on
December 31, 1993; and
(3) a contingent payment at December 31, 2002 based on new business growth
subsequent to December 31, 1993. However, it is unlikely that we will
receive this payment because of the high level of new business growth
necessary in order to receive it.
With respect to the payments received in clause (1) above, the annual
earnings from the deposits are measured in accordance with an earnings formula
contained in the AEGON agreement. The earnings formula is substantially the same
as generally accepted accounting principals, except that:
- asset impairments on fixed maturity securities are only recognized when
such securities are designated with a rating of "6" by the National
Association of Insurance Commissioners, and
- no impairment losses are recognized on mortgage loans until those loans
are disposed of or at the time, and in the calculation, of the final
payment referred to in clause (2) above.
Earnings from the deposits on contracts in force and transferred to AEGON
on December 31, 1993 calculated pursuant to the application of the earnings
formula described above are recorded in our financial statements only after
adjustments. These adjustments primarily recognize asset impairments in
accordance with generally accepted accounting principles, specifically,
Statements of Financial Accounting Standards Nos. 114 and 115. As adjusted, the
earnings or "group pension profits" are reported in accordance with generally
accepted accounting principles. Losses which arise from the application of the
earnings formula for any annual period will be reflected in our results of
operations (after adjustments to reflect such losses in accordance with
generally accepted accounting principles) only up to the amount for which we are
at risk (as described below), which at any time is equal to the then outstanding
principal amount of the Series A Notes.
Operating losses reported in any annual period pursuant to the earnings
formula are carried forward to reduce any earnings in subsequent years reported
pursuant to the earnings formula. Any resulting deficit remaining at December
31, 2002 will be deducted from the final payment referred to in clause (2) above
and the contingent payment referred to in clause (3) above, if any. If a deficit
still remains, it will be applied as an offset against the principal payment we
are due upon maturity of the Series A Notes. The Series A Notes have been
allocated to the closed block.
The group pension profits have represented a significant portion of our net
income. For the nine-month periods ended September 30, 1999 and 1998 and the
years ended December 31, 1998, 1997 and 1996, AUSA reported earnings to us
pursuant to the application of the earnings formula of $21.4 million, $40.0
million, $49.8 million, $55.7 million and $66.7 million, respectively, and we
recorded group pension profits of $47.8 million, $34.1 million, $56.8 million,
$60.0 million and $59.5 million, respectively. The group pension profits
represented 23.0%, 13.1%, 19.3%, 32.0% and 59.2% of income before income taxes
and extraordinary item for those periods,
6
<PAGE> 21
respectively. In addition, we expect the annual payments referred to in clause
(1) above, and in turn the group pension profits, to decline in each succeeding
annual period consistent with the continuing run-off of the underlying business
until they terminate as of December 31, 2002. Accordingly, our financial
position and results of operations could be adversely affected unless we take
actions which will increase our revenue and net income in each succeeding year
and, particularly, subsequent to December 31, 2002, to replace the group pension
profits.
CHANGES IN INTEREST RATES MAY SIGNIFICANTLY AFFECT OUR PROFITABILITY
In periods of increasing interest rates, policy loans and surrenders and
withdrawals may tend to increase as policyholders seek investments with higher
perceived returns. This process may result in cash outflows requiring that we
sell invested assets at a time when the prices of those assets are adversely
affected by the increase in market interest rates, which may result in realized
investment losses. Conversely, during periods of declining interest rates, life
insurance and annuity products may be relatively more attractive investments,
resulting in increased premium payments on products with flexible premium
features, repayment of policy loans and increased persistency during a period
when our new investments carry lower returns. In addition, borrowers may prepay
or redeem mortgages and bonds in our investment portfolio as they seek to borrow
at lower market rates, and we might have to reinvest those funds in lower
interest-bearing investments. Accordingly, during periods of declining interest
rates, a decrease in the spread between interest and dividend rates to
policyholders and returns on our investment portfolio may adversely affect our
profitability.
OUR INVESTMENT PORTFOLIO RAISES POTENTIAL RISKS
THE VALUE OF OUR INVESTMENT PORTFOLIO WILL FLUCTUATE
Our investment portfolio consists primarily of fixed maturity securities,
equity securities, limited partnership interests, money market investments,
commercial mortgage loans, agricultural mortgage loans and real estate. The fair
value of these and our other invested assets fluctuates depending on general
economic and market conditions. In addition, we are also subject to credit risk
relating to the uncertainty associated with the continued ability of debtors to
make timely payments pursuant to the contractual terms underlying these
investments.
With respect to our investments in fixed maturity securities and commercial
and agricultural mortgage loans, the market value of these investments generally
increases or decreases in an inverse relationship with fluctuations in interest
rates, and our net investment income increases or decreases in direct
relationship with interest rate changes.
We may, from time to time, for business, regulatory or other reasons, elect
or be required to sell some of our general account invested assets at a time
when their fair values are less than their carrying values, resulting in
realized losses on investments, which would reduce net income.
WRITEDOWNS OF FIXED MATURITY SECURITIES MAY ADVERSELY AFFECT OUR PROFITABILITY
A portion of our invested assets consist of fixed maturity securities. We
write down to fair value fixed maturity securities whose value is deemed other
than temporarily impaired. We record these writedowns as realized investment
losses and, accordingly, we reflect those writedowns in our results of
operations and we permanently adjust the cost basis of the respective assets to
reflect the impairment. In the past we have recorded investment losses as a
result of writedowns. There can be no assurance that we will not need to make
additional writedowns for impairment with respect to our fixed maturity
securities. Any of these writedowns may have a material adverse effect on our
financial position and results of operations.
7
<PAGE> 22
PREPAYMENT OF OUR MORTGAGE BACKED SECURITIES MAY ADVERSELY AFFECT OUR
PROFITABILITY
Our fixed maturity securities include mortgage backed securities,
collateralized mortgage obligations and pass-through securities. These
securities are subject to prepayment risks that vary with, among other things,
interest rates. During periods of declining interest rates, mortgage backed
securities generally prepay faster as the underlying mortgages are prepaid and
are refinanced by the borrowers in order to take advantage of the lower rates.
Mortgage backed securities that we purchase at a premium because they have an
amortized cost that is greater than par, may experience a reduction in yield or
a loss as a result of these prepayments. In addition, during periods of
declining interest rates, we will generally be unable to reinvest the proceeds
of the prepayment at comparable yields. Conversely, during periods of rising
interest rates, prepayments are generally slow. Mortgage backed securities that
we purchase at a discount because they have an amortized value that is less than
par, may experience a decrease in yield or a loss as a result of slower
prepayments.
GENERAL MARKET CONDITIONS MAY ADVERSELY AFFECT OUR INVESTMENTS IN LIMITED
PARTNERSHIPS
We have investments in many limited partnerships. Investment results for
this portfolio are dependent upon, among other things, general market conditions
for initial and secondary offerings of common stock. In the past we earned
significant investment income from investments in limited partnership interests.
There can be no assurance that the recent level of investment returns achieved
on limited partnership investments can be sustained in the future, and the
failure to do so could have a material adverse effect on our financial position
and results of operations.
FLUCTUATIONS IN MARKET VALUE OF SEPARATE ACCOUNT ASSETS MAY RESULT IN
FLUCTUATIONS IN OUR REVENUE FROM POLICY CHARGES
The risk of fluctuations in market value of substantially all of our
separate account assets is borne by the separate account contract holders. A
number of our policy charges for administering these separate account assets,
however, are set as a percentage of market value of the assets. Accordingly,
fluctuations in the market value of separate account assets may result in
fluctuations in our revenue from policy charges.
WE MAY BE ADVERSELY AFFECTED BY THE DECLINE IN VALUE OF OUR REAL ESTATE
INVESTMENTS
WRITEDOWNS OF REAL ESTATE HELD FOR INVESTMENT WOULD REDUCE OUR NET INCOME
We are subject to the risk that our investments in real estate may decline
in value. We generally adjust the carrying value of real estate classified as
held for investment for declines in value whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. We record these writedowns as realized investment losses, which
would reduce our net income.
INCREASES IN VALUATION ALLOWANCES WOULD REDUCE OUR NET INCOME
Once we identify a real estate property to be sold and commence a plan for
marketing the property, the property is classified as "to be disposed of" and,
if necessary, a valuation allowance is established to the extent that its fair
value minus associated selling costs is less than its current carrying value.
These valuation allowances are periodically revised, if necessary, to reflect
changes in fair value, except that, in no case will the carrying value of the
real estate property exceed its original cost. Increases in valuation allowances
serve to reduce our net income.
8
<PAGE> 23
ANY FUTURE SALES OF REAL ESTATE COULD RESULT IN GAAP OR STATUTORY LOSSES
Because we adjust carrying values to reflect valuation allowances, we
expect the net proceeds from sales of real estate will not be materially
different from the carrying value of the real estate on a generally accepted
accounting principles basis. However, we cannot assure you that increases in
valuation allowances will not be required in the future or that future sales of
real estate will not be made at amounts below recorded GAAP carrying value,
which may have a material adverse effect on our financial position and results
of operations.
The accounting practices we use in our regulatory filings with the New York
Insurance Department are different from GAAP. The carrying value of real estate
on a statutory basis exceeds the carrying value of these investments on a GAAP
basis. Because of this difference in accounting treatment, we expect to incur
losses on a statutory basis as a result of anticipated real estate sales. These
losses could materially affect our statutory basis surplus and net income.
We cannot give you any assurance as to whether, when or for what amounts
any real estate that is classified as to be disposed of will actually be
disposed of.
WE MAY BE ADVERSELY AFFECTED BY THE DECLINE IN VALUE OF OUR COMMERCIAL MORTGAGE
LOAN INVESTMENTS
We are subject to the risk that our investments in commercial mortgage
loans will decline in value. Commercial mortgage loans are stated at their
unpaid principal balances, net of valuation allowances for decline in value. We
provide valuation allowances for commercial mortgage loans when it is probable
that we will be unable to collect all amounts due according to the contractual
terms of the loan agreement. Increases in valuation allowances are recorded as
realized investment losses and serve to reduce our net income.
THE EXPIRATION OF SURRENDER PENALTIES WITH RESPECT TO SOME OF OUR ANNUITIES
COULD RESULT IN SURRENDERS WHICH MAY REDUCE OUR PROFITS
We typically impose surrender charges on the annuities we sell. The
surrender charges enable us to recover unamortized policy acquisition costs in
the event that the annuity is surrendered before policy acquisition costs are
fully amortized. In addition, the surrender charges discourage contract
surrenders, which could require us to dispose of assets prematurely at a loss.
As surrender penalties expire it is likely that surrenders of single premium
deferred annuities and flexible payment variable annuities will increase. A
substantial increase in surrenders may reduce our profits.
WE MAY BE REQUIRED TO ADD ASSETS TO THE CLOSED BLOCK IN THE EVENT THAT THE
ASSETS THEREIN ARE NOT SUFFICIENT TO PAY GUARANTEED BENEFITS
The plan of demutualization requires MONY Life Insurance Company to
establish and operate a closed block for the benefit of certain policyholders
holding participating insurance policies of MONY Life Insurance Company. The
closed block is designed to give reasonable assurance with respect to policies
included in the closed block that assets will be available to maintain
policyholder dividend scales payable at the time we funded the closed block if
the experience underlying such dividend scales continues. The amount of assets
we allocated to the closed block is expected to produce cash flows which,
together with anticipated revenues from the policies included in the closed
block, are reasonably expected to be sufficient:
- for the payment of claims and surrender benefits, certain expenses and
taxes, and
- to provide for the continuation of the policyholder dividend scales
payable in 1998, if the experience underlying those scales continues, and
for appropriate adjustments in those scales if the experience changes.
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<PAGE> 24
The closed block assets, the cash flows generated by the closed block
assets and the anticipated revenues from the policies in the closed block will
benefit only the holders of those policies, and will not be available to us or
our stockholders.
We cannot assure you that the closed block assets, the cash flows generated
by the closed block assets and the anticipated revenues from the policies
included in the closed block will be sufficient to provide for the benefits
guaranteed under these policies. If they are not sufficient, we must fund the
shortfall. Even if they are sufficient, we may choose, for competitive reasons,
to support policyholder dividend payments with our general account funds. As
described below, there is currently pending litigation against us which seeks to
require us to increase the assets in the closed block.
We have allocated the Series A Notes described above to the closed block.
We will reimburse the closed block from our general account assets for any
reduction in principal payments due on the Series A Notes pursuant to their
terms.
LITIGATION CHALLENGING THE NEW YORK SUPERINTENDENT'S ORDER APPROVING THE PLAN OF
DEMUTUALIZATION MAY HAVE A MATERIAL ADVERSE EFFECT ON US
On November 16, 1999, The MONY Group Inc. and MONY Life Insurance Company
were served with a complaint in an action entitled Calvin Chatlos, M.D., and
Alvin H. Clement, On Behalf of Themselves And All Others Similarly Situated v.
The MONY Life Insurance Company, The MONY Group Inc., and Neil D. Levin,
Superintendent, New York Department of Insurance, filed in the United States
District Court for the Southern District of New York. The action purports to be
brought as a class action on behalf of all individuals who had an ownership
interest in one or more in-force life insurance policies issued by MONY Life
Insurance Company as of November 16, 1998. The complaint alleges that (i) the
New York Superintendent of Insurance, Neil D. Levin, violated Section 7312 of
the New York Insurance Law by approving the plan of demutualization, which
plaintiffs claim was not fair and adequate, primarily because it allegedly
failed to provide for sufficient assets for the mechanism established under the
plan to preserve reasonable policyholder dividend expectations of the closed
block, and (ii) we violated Section 7312 by failing to develop and submit to the
Superintendent a plan of demutualization that was fair and adequate. The
plaintiffs seek equitable relief in the form of an order vacating and/or
modifying the Superintendent's order approving the plan of demutualization
and/or directing the Superintendent to order us to increase the assets in the
closed block, as well as unspecified monetary damages, attorneys' fees and other
relief.
In order to challenge successfully the New York Superintendent's approval
of the plan, plaintiffs would have to sustain the burden of showing that such
approval was arbitrary and capricious or an abuse of discretion, made in
violation of lawful procedures, affected by an error of law or not supported by
substantial evidence. In addition, Section 7312 provides that we may ask the
court to require the challenging party to give security for the reasonable
expenses, including attorneys' fees, which may be incurred by us or the
Superintendent or for which we may become liable, to which security we shall
have recourse in such amount as the court shall determine upon the termination
of the action.
Our time to answer or move to dismiss the complaint has not yet occurred.
We believe that there are substantial defenses to plaintiffs' claims and intend
to defend ourselves vigorously. An adverse outcome in this action could,
however, have a material adverse effect on us.
LITIGATION WITH RESPECT TO OUR SALES PRACTICES MAY AFFECT OUR PROFITABILITY
Since late 1995 a number of purported class actions have been commenced in
various state and federal courts against us alleging that we engaged in
deceptive sales practices in connection with the sale of whole and universal
life insurance policies from the early 1980s through the mid 1990s. Although the
claims asserted in each case are not identical, they seek substantially the
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<PAGE> 25
same relief under essentially the same theories of recovery (i.e., breach of
contract, fraud, negligent misrepresentation, negligent supervision and
training, breach of fiduciary duty, unjust enrichment and violation of state
insurance and/or deceptive business practice laws). Plaintiffs in these cases
seek primarily equitable relief (e.g., reformation, specific performance,
mandatory injunctive relief prohibiting us from canceling policies for failure
to make required premium payments, imposition of a constructive trust and
creation of a claims resolution facility to adjudicate any individual issues
remaining after resolution of all class-wide issues) as opposed to compensatory
damages, although they also seek compensatory damages in unspecified amounts. We
have answered the complaints in each action (except for one being voluntarily
held in abeyance). We have denied any wrongdoing and have asserted numerous
affirmative defenses.
On June 7, 1996, the New York State Supreme Court certified one of those
cases, Goshen v. The Mutual Life Insurance Company of New York and MONY Life
Insurance Company of America, the first of the class actions filed, as a
nationwide class consisting of all persons or entities who have, or at the time
of the policy's termination had, an ownership interest in a whole or universal
life insurance policy issued by us and sold on an alleged "vanishing premium"
basis during the period January 1, 1982 to December 31, 1995. On March 27, 1997,
we filed a motion to dismiss or, alternatively, for summary judgment on all
counts of the complaint. All of the other putative class actions have been
consolidated and transferred by the Judicial Panel on Multidistrict Litigation
to the United States District Court for the District of Massachusetts and/or are
being held in abeyance pending the outcome of the Goshen case.
On October 21, 1997, the New York State Supreme Court granted our motion
for summary judgment and dismissed all claims filed in the Goshen case against
us. On December 20, 1999, the New York State Court of Appeals affirmed the
dismissal of all but one of the claims in the Goshen case (a claim under New
York's General Business Law), which has been remanded back to the New York State
Supreme Court for further proceedings consistent with the opinion. We intend to
defend ourselves vigorously against the sole remaining claim. There can be no
assurance, however, that the present litigation relating to sales practices will
not have a material adverse effect on us.
VARIATIONS IN CLAIMS EXPERIENCE WILL AFFECT OUR RESULTS FROM PERIOD TO PERIOD
An insurance company's earnings significantly depend upon the claims paid
under its insurance contracts. Amounts paid will vary from period to period
depending upon the amount of claims incurred in the relevant periods. Therefore,
there is limited predictability of claims experience within any given month or
year. As a result, we anticipate that our financial results may vary from period
to period and that those variations may be material in any given period. We use
certain assumptions in pricing our products. There can be no assurance that
actual experience will match our assumptions made for pricing purposes and, to
the extent that they differ, our operating results could be materially adversely
affected.
WE OPERATE IN A HIGHLY REGULATED INDUSTRY
Our insurance business is subject to comprehensive state regulation and
supervision throughout the U.S. The primary purpose of such regulation is to
protect policyholders, not securityholders. The laws of the various states
establish insurance departments with broad powers with respect to:
- licensing companies to transact business;
- licensing agents;
- admitting statutory assets;
- mandating certain insurance benefits;
- regulating premium rates;
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<PAGE> 26
- approving policy forms;
- regulating unfair trade and claims practices;
- regulating advertising;
- establishing statutory reserve requirements and solvency standards;
- fixing maximum interest rates on life insurance policy loans and minimum
rates for accumulation of surrender values;
- restricting certain transactions between affiliates; and
- regulating the types, amounts and statutory valuation of investments.
The U.S. Federal government does not directly regulate the insurance
business. However, Federal legislation and administrative policies in certain
areas can significantly and adversely affect the insurance industry generally
and us in particular. These areas include employee benefit plan regulation,
financial services regulation and Federal taxation and securities laws.
MONY Life Insurance Company, some of its subsidiaries and some policies and
contracts offered by them are subject to various levels of regulation under the
Federal securities laws administered by the Securities and Exchange Commission.
These laws and regulations are primarily intended to protect investors in
securities and generally grant supervisory agencies broad administrative powers,
including the power to limit or restrict the conduct of business for failure to
comply with such laws and regulations. We may also be subject to similar laws
and regulations in the states we provide investment advisory services, offer
products or conduct other securities-related activities.
All of these regulations may limit our freedom of action.
CHANGES IN STATE AND FEDERAL REGULATION MAY AFFECT OUR PROFITABILITY
State insurance regulators and the National Association of Insurance
Commissioners continually reexamine existing laws and regulations, and may
impose changes in the future. Additionally, the passage from time to time of new
legislation may adversely affect our claims exposure on our policies. We cannot
predict the impact of future state or Federal laws or regulations on our
business. Future laws and regulations, or the interpretation thereof, may
materially adversely affect our business, results of operations and financial
condition.
WE MAY BE UNABLE TO ATTRACT AND RETAIN AGENTS TO SELL OUR PRODUCTS
We must attract and retain productive agents to sell our insurance and
annuity products. Strong competition exists among insurance companies for agents
with demonstrated ability. Our management believes that key bases of competition
among insurance companies for agents with demonstrated ability include a
company's financial position and the services provided to, and relationships
developed with, these agents in addition to compensation and product structure.
Changes arising from the realignment of our career agency sales force, the
restructuring of agent compensation and the ability to obtain state regulatory
approvals for new products may affect our ability to retain productive
distributors of our individual insurance and annuity products. Sales of
individual insurance and annuity products and our financial position and results
of operations could be materially adversely affected by those changes.
COMPETITIVE FACTORS MAY ADVERSELY AFFECT OUR BUSINESS
The insurance industry is highly competitive and has experienced severe
price competition over the last several years. We compete with a large number of
other insurers, as well as non-insurance financial services companies, such as
banks, broker-dealers and asset managers, for customers and agents and other
distributors of insurance and investment products. Some of these companies offer
a broader array of products, have more competitive pricing or, with
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<PAGE> 27
respect to other insurers, have higher claims paying ability ratings. Some may
also have greater financial resources with which to compete.
COMPETITION FROM NON-INSURANCE FINANCIAL SERVICES COMPANIES MAY ADVERSELY AFFECT
OUR BUSINESS
National banks, with their pre-existing customer bases for financial
services products, may increasingly compete with insurers, as a result of court
cases that permit national banks to sell annuity products of life insurance
companies in some circumstances.
In addition there has been recently-enacted legislation removing
restrictions on bank affiliations with insurers. This legislation, the
Gramm-Leach-Bliley Act of 1999, permits mergers that combine commercial banks,
insurers and securities firms under one holding company. Until passage of the
Gramm-Leach-Bliley Act, the Glass-Steagall Act of 1933 had limited the ability
of banks to engage in securities-related businesses, and the Bank Holding
Company Act of 1956 had restricted banks from being affiliated with insurance
companies. The ability of banks to affiliate with insurance companies and to
offer annuity products of life insurance companies may materially adversely
affect all of our product lines by substantially increasing the number, size and
financial strength of potential competitors.
A DOWNGRADE IN OUR RATINGS MAY ADVERSELY AFFECT OUR ABILITY TO MARKET OUR
PRODUCTS AND RETAIN OUR CURRENT POLICYHOLDERS
Claims-paying ability and financial strength ratings are an important
factor in establishing the competitive position of insurance companies. Ratings
are important to maintaining public confidence in our company and in our ability
to market our products. Rating organizations continually review the financial
performance and condition of insurance companies, including our company. Any
downgrade in our ratings could have a material adverse effect on our ability to
market our products and retain our current policyholders. These consequences
could, depending upon their extent, have a material adverse effect on our
liquidity and, under some situations, net income.
CHANGES IN FEDERAL INCOME TAXATION COULD ADVERSELY IMPACT SALES OF OUR
INSURANCE, ANNUITIES AND INVESTMENT PRODUCTS
Current Federal income tax laws generally defer income tax on any
accumulation of earnings on the premiums paid by the holders of annuities and
life insurance products. Taxes, if any, are payable when earnings are actually
paid. Congress has, from time to time, considered possible legislation that
would eliminate this deferral of taxation for certain annuities and life
insurance products. Enactment of other possible legislation, including a
simplified "flat tax" income structure with an exemption from taxation for
investment income and elimination of, or reduction in, the estate tax, could
also adversely affect purchases of life insurance. We cannot foresee whether
Congress will enact legislation or, whether such legislation, if enacted, will
contain provisions with possible adverse effects on our life insurance and
annuity products.
WE CANNOT ASSURE YOU THAT THE IMPACT OF THE YEAR 2000 DATE CHANGE ON COMPUTER
SYSTEMS WILL NOT HAVE A NEGATIVE IMPACT ON OUR BUSINESS OPERATIONS
Many computer systems and software products were coded to accept only two
digit entries in the year code field. These date code fields will need to accept
four digit entries to distinguish 21st century dates from 20th century dates. We
and third parties with whom we do business rely on numerous computer programs in
our day-to-day operations. Due to the proximity of the date of this prospectus
to January 1, 2000, we continue to monitor year 2000 issues as they relate to
our internal computer systems and third party computer systems with whom we
interact.
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We believe that completed and planned modifications and conversions of our
internal systems and equipment will allow us to be year 2000 compliant in a
timely manner. There can be no assurance, however, that our internal systems or
equipment will be entirely error-free, or those external parties on which we
rely will be year 2000 compliant in a timely manner, or that our or external
parties' contingency plans will mitigate sufficiently the effects of any
noncompliance. Based upon currently available information and considering our
year 2000 project status, management believes that the year 2000 issue will not
impact business operations. However, there is still the possibility that future
year 2000 related failures in our systems or equipment and/or failure of
external parties to achieve year 2000 compliance could have a material adverse
effect on us.
We retained outside consultants to assist in the development of business
continuity plans, which include identification of third party service providers,
information systems, equipment, facilities and other items which are
mission-critical to the operation of our business. In conjunction with this
effort, we developed a year 2000 contingency plan to address year 2000 related
failures of third parties, among other factors that are critical to the ongoing
operation of the business. Our contingency plan provides alternate means of
processing critical work and services, as well as a methodology for selection
and retention of alternate service providers, vendors, and suppliers, if
necessary. Additional maintenance and refinement of business continuity plans
will continue in 2000. We believe that due to the pervasive and evolving nature
of potential year 2000 issues, the contingency planning process is an ongoing
one that will require further modifications as we obtain additional information
regarding the status of third party year 2000 readiness.
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<PAGE> 29
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at its public reference facilities at:
<TABLE>
<S> <C> <C>
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Washington, D.C. 20549 Suite 1300 500 West Madison Street
New York, New York 10048 Suite 1400
Chicago, Illinois 60661
</TABLE>
You may also obtain copies of this information at prescribed rates by
writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C., 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference facilities.
Our SEC filings are also available at the office of the New York Stock
Exchange. For further information on obtaining copies of our public filings at
the New York Stock Exchange you should call (212) 656-5060.
No separate financial statements of MONY Capital Trust I or MONY Capital
Trust II are included in this prospectus. We do not believe that financial
statements of the Trusts would be material to holders of the trust preferred
securities because each Trust has no independent operations and exists for the
sole purpose of investing the proceeds of the sale of its trust preferred
securities in our junior subordinated notes.
The SEC allows us to "incorporate by reference" information into this
prospectus which we file with the SEC. This means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus and
information that we file later with the SEC will automatically update and
supersede the information in this prospectus.
We incorporate by reference the documents listed below that we previously
filed with the SEC. These documents contain important information about our
business and our financial performance.
<TABLE>
<CAPTION>
THE MONY GROUP INC.'S
SEC FILINGS PERIOD
--------------------- ------
<S> <C>
Quarterly Reports on Form 10-Q........... Quarters ended September 30, 1999, June
30, 1999 and March 31, 1999
Annual Report on Form 10-K............... Year ended December 31, 1998
</TABLE>
You may request a free copy of any of these filings or any other
information incorporated by reference in this prospectus from us by calling us
or writing to us at the following address and telephone number:
The MONY Group Inc.
1740 Broadway
New York, New York 10019
Attention: Derrick Vializ
Telephone: (212) 708-2000
We also incorporate by reference any future filings we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
(1) after the date of the filing of the registration statement and before its
effectiveness and (2) until we have sold all of the securities to which this
prospectus relates or the offering is otherwise terminated. Our
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<PAGE> 30
subsequent filings with the SEC will automatically update and supersede
information in this prospectus.
You should rely only on the information contained in this document,
incorporated by reference into this document or set forth in the applicable
prospectus supplement. We have not authorized anyone to give you different
information. Therefore, if anyone does provide you with different or
inconsistent information, you should not rely on it. We may only use this
prospectus to sell securities if it is accompanied by a prospectus supplement.
We are only offering these securities in states where the offer is permitted.
The information contained in this prospectus and the applicable prospectus
supplement speaks only as of the dates on the front of those documents.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information included and incorporated by reference in this
prospectus and other written and oral statements made from time to time by us
contain "forward-looking statements" as defined by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include, among other
things, discussions concerning our potential exposure to market risks, as well
as statements expressing our expectations, beliefs, estimates, forecasts,
projections and assumptions. Forward-looking statements can be identified by the
use of words such as "anticipate," "believe," "estimate," "expect," "intend,"
"may," "could," "possible," "plan," "project," "will," "forecast" and similar
words or expressions. Forward-looking statements are only predictions. Our
forward-looking statements generally relate to our operations, economic
performance and financial condition. You should carefully consider
forward-looking statements and understand that actual events or results may
differ materially as a result of a variety of risks and uncertainties, known and
unknown, and other factors facing our company. Many of those factors are noted
in conjunction with the forward-looking statements in the text. It is not
possible to foresee or identify all factors affecting our forward-looking
statements and investors therefore should not consider any list of factors
affecting our forward-looking statements to be an exhaustive statement of all
risks or uncertainties.
Although we cannot give a comprehensive list of all factors that may cause
actual results to differ from our forward-looking statements, the factors
include those noted in our SEC filings incorporated by reference into this
prospectus, those discussed in this prospectus under the caption "Risk Factors,"
any included in an accompanying prospectus supplement, as well as:
- losses with respect to our equity real estate, and the success of our
continuing process of selectively selling our equity real estate;
- the success of the restructuring of our career agency sales force, and
our ability to attract and retain productive agents;
- the success of the restructuring of agent compensation;
- our ability to control operating expenses;
- the outcome of pending litigation;
- deterioration in the experience of the "closed block" established in
connection with the demutualization of our subsidiary MONY Life Insurance
Company;
- the performance of the financial markets;
- the intensity of competition from other financial institutions;
- our mortality, morbidity, persistency and claims experience;
- our ability to develop, distribute and administer competitive products
and services in a timely, cost-effective manner;
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- our financial and claims paying ratings;
- the effect of changes in laws and regulations affecting our businesses,
including changes in tax laws affecting insurance and annuity products;
- market risks related to interest rates, equity prices, derivatives,
foreign currency exchange and credit; and
- our ability to identify and consummate on successful terms any future
acquisitions, and to successfully integrate acquired businesses with
minimal disruption.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------- --------------------------------
1999 1998 1998 1997 1996 1995 1994
----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges......................... 7.4 8.6 7.5 5.9 2.8 2.1 2.2
</TABLE>
For purposes of calculating the ratios, fixed charges consist of interest
on debt, accretion of discount on debt and the interest portion of rental
expense on operating leases.
The ratio of earnings to fixed charges is calculated as follows:
(income before extraordinary charges and income taxes) + (fixed
charges) - (capitalized interest)
--------------------------------------------------------------------------------
(fixed charges)
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<PAGE> 32
THE TRUSTS
MONY Capital Trust I and MONY Capital Trust II are statutory business
trusts created under Delaware law pursuant to the filing of a certificate of
trust with the Delaware Secretary of State on January 10, 2000. Each Trust's
business is defined in a trust agreement, executed by us, as depositor, and the
Delaware trustee of the Trust. The trust agreement of each Trust will be amended
and restated in its entirety substantially in the form filed as an exhibit to
the registration statement. Each trust agreement will be qualified as an
indenture under the Trust Indenture Act. We will own all the common securities
of each Trust.
The trust preferred securities will represent undivided beneficial
interests in the assets of the respective Trusts. Upon the effectiveness of the
amended and restated trust agreement, each Trust will exist for the exclusive
purposes of:
- selling and issuing its trust preferred securities to investors and its
common securities to us;
- investing the gross proceeds of its trust preferred securities in a
related series of our junior subordinated notes; and
- engaging in only those other activities which are necessary, appropriate,
convenient or incidental to the purpose set forth above.
The payment of periodic cash distributions on the trust preferred
securities and payments on liquidation and redemption with respect to the trust
preferred securities, in each case to the extent each Trust has funds legally
and immediately available, will be guaranteed by us to the extent set forth
under "Description of the Guarantees."
The common securities will represent an aggregate liquidation amount equal
to at least 3% of each Trust's total capitalization. The trust preferred
securities will represent the remaining approximately 97% of each Trust's
capitalization. The common securities will have terms substantially identical
to, and will rank equal in priority of payment with, the trust preferred
securities. Payment will be made on both the common securities and the trust
preferred securities when payments of interest are made on the junior
subordinated notes, upon redemption of the junior subordinated notes or in some
circumstances upon liquidation of a Trust. However, if we default on the
payments on the related junior subordinated notes, then cash distributions and
redemption, liquidation and other amounts payable on the common securities will
be subordinate in priority of payment to the amounts payable on the trust
preferred securities.
Each Trust's business and affairs will be conducted by the following
securities trustees, who will be appointed by us as the holder of the common
securities:
- two officers of our company as administrative trustees;
- The Chase Manhattan Bank as property trustee; and
- Chase Manhattan Bank Delaware as Delaware trustee.
We, as holder of all of the outstanding common securities of each Trust,
will have the right to appoint, remove or replace any trustee and to increase or
decrease the number of trustees, provided that each Trust always will have at
least one trustee. Furthermore, we, as issuer of the junior subordinated notes,
will pay all fees and expenses related to the Trust's ongoing affairs and
operations, including any taxes, duties, assessments or governmental charges of
whatever nature, other than withholding taxes and other than the Trust's
obligations under the trust preferred securities and the common securities.
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<PAGE> 33
The principal place of business of each Trust will be:
c/o The MONY Group Inc.
1740 Broadway
New York, New York 10019
Attention: David Weigel
Telephone (212) 708-2000
Please read the prospectus supplement relating to the trust preferred
securities for further information concerning the trust preferred securities.
ACCOUNTING TREATMENT OF TRUSTS
For financial reporting purposes,
- the Trusts will be treated as subsidiaries of our company, and
- the accounts of the Trusts will be included in our consolidated financial
statements.
The trust preferred securities will be presented as a separate line item in
our consolidated balance sheet, and appropriate disclosures concerning the trust
preferred securities, the junior subordinated notes and the guarantees will be
included in the notes to the consolidated financial statements. For financial
reporting purposes, we will record distributions payable on the trust preferred
securities as an expense.
USE OF PROCEEDS
Each Trust will invest the proceeds received from the sale of its trust
preferred securities in junior subordinated notes. Unless the applicable
prospectus supplement states otherwise, the net proceeds received by us from
this investment and any proceeds received from the sale of our senior notes,
junior subordinated notes, preferred stock or common stock will be added to our
general funds and may be used for general corporate purposes, including, without
limitation, for acquisitions.
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DESCRIPTION OF THE SENIOR NOTES
This section describes the general terms and provisions of our senior notes
that may be offered by this prospectus. When we offer to sell a particular
series of senior notes, we will describe the specific terms of the series in a
supplement to this prospectus. We will also indicate in the supplement whether
the general terms and provisions described in this section apply to that
particular series of senior notes.
The senior notes offered hereby will be issued under the Senior Note
Indenture, dated as of January 11, 2000, between us and The Chase Manhattan
Bank, as trustee. The senior note indenture is subject to, and governed by, the
Trust Indenture Act. We have filed a copy of the senior note indenture as an
exhibit to the registration statement. We have summarized selected portions of
the senior note indenture below. The summary is not complete. You should read
this description of the senior notes, the senior note indenture and the
prospectus supplement that relates to the applicable series of the senior notes
before you buy any senior notes.
GENERAL
The senior notes will be direct, unsecured obligations of our company. The
indebtedness represented by the senior notes will rank equal to all other
unsecured and unsubordinated senior indebtedness of our company. The senior
notes will be effectively subordinated to all secured debt, if any, of our
company. As of today, we have no secured debt outstanding. The senior note
indenture does not limit the total principal amount of senior notes that we may
issue under the senior note indenture and permits us to issue senior notes from
time to time. Senior notes issued under the prospectus supplement will be issued
as part of a series that has been established pursuant to the senior note
indenture.
A prospectus supplement relating to a series of senior notes being offered
will include specific terms relating to the offering. These terms will include
some or all of the following:
- the title;
- any limit on the total principal amount;
- to whom interest is payable if other than the person to whom the senior
note is registered;
- the date or dates on which the principal is payable and the right, if
any, to extend or advance maturity;
- if interest bearing:
- the interest rate;
- the method by which the interest rate will be determined;
- the date from which interest will accrue;
- interest payment dates;
- the regular record date for the interest payable on any interest
payment date;
- whether we may extend the interest payment periods and, if so, the
terms of any extensions;
- the basis on which interest will be calculated if other than that of a
360-day year consisting of twelve 30-day months; and
- the first interest payment date;
- the place or places where the principal of, premium, if any, and
interest, if any, will be payable;
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- the period or periods during which the price or prices at which and the
terms and conditions on which the senior notes may be redeemed, in whole
or in part, at the option of our company or at the option of the holder;
- the obligation, if any, of our company to redeem or purchase the senior
notes under any sinking fund or similar provision or at the option of a
holder and the details of that obligation;
- whether any of the terms of the senior note indenture described below
under "Defeasance and Covenant Defeasance" will apply to any of the
senior notes of a series;
- any index or formula for determining the amount of principal of premium,
if any, or interest and the manner of determining those amounts;
- the currency, currencies or currency units in which principal of premium,
if any, and interest will be payable, if other than U.S. dollars, and the
manner of determining the equivalent of those amounts in U.S. dollars for
any purpose;
- if the principal of, premium, if any, or interest is payable, at our
option or the option of the holders, in one or more currencies or
currency units other than those in which the senior notes are stated to
be payable, the currency, currencies or currency units in which the
principal of premium, if any, and interest may be payable and the terms
and conditions of the option;
- the denominations in which the senior notes will be issuable;
- if other than the principal amount, the portion of the principal amount
of the senior notes which will be payable upon declaration of
acceleration of the maturity;
- any deletions from, modifications of or additions to the events of
default or covenants of our company as provided in the senior note
indenture pertaining to the senior notes;
- any restrictions or conditions on transferability;
- whether the senior notes will be issued in whole or in part in the form
of a senior global security (a senior note that we may issue in
accordance with the senior note indenture to represent all or part of a
series of senior notes);
- if the principal amount payable on the maturity date will not be
determinable on any one or more dates prior to the maturity date, the
amount which will be deemed to be the principal amount as of any date for
any purpose, including the principal amount which will be due and payable
upon any maturity other than the maturity date, or the manner of
determining that amount; and
- any other terms of the senior notes.
The senior note indenture does not contain provisions that afford holders
of senior notes protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction involving our
company or our subsidiaries that may adversely affect holders of the senior
notes or that would limit our ability or our subsidiaries' ability to incur
indebtedness.
COVENANTS OF THE MONY GROUP INC.
LIMITATION ON LIENS ON STOCK OF MONY LIFE INSURANCE COMPANY
We covenant in the senior note indenture, for the benefit of the holders of
each series of senior notes, that we will not, and we will cause our
subsidiaries not to, assume, incur, or permit to exist any indebtedness secured
by any lien on the capital stock of MONY Life Insurance Company unless the
senior notes (and, if we so elect, any other of our indebtedness that is not
senior to the senior notes and with respect to which the governing instruments
require, or
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pursuant to which we are otherwise obligated, to provide such security) shall be
secured equally and ratably with such indebtedness for at least the time period
such other indebtedness is so secured.
"Indebtedness" is defined in the senior note indenture as the principal of
and premium, if any, and interest due on indebtedness of a person, whether
outstanding on the date of the senior note indenture or thereafter created,
incurred or assumed, which is (1) indebtedness for money borrowed, and (2) any
amendments, renewals, extensions, modifications and refundings of any such
indebtedness. For the purposes of this definition, "indebtedness for money
borrowed" means:
- any obligation of, or any obligation guaranteed by, such person for the
repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments;
- any obligation of, or any such obligation guaranteed by, such person
evidenced by bonds, debentures, notes or similar written instruments,
including obligations assumed or incurred in connection with the
acquisition of property, assets or businesses (except that the deferred
purchase price of any other business or property or assets shall not be
considered indebtedness if the purchase price thereof is payable in full
within 90 days from the date on which such indebtedness was created); and
- any obligations of such person as lessee under leases required to be
capitalized on the balance sheet of the lessee under generally accepted
accounting principles and leases of property or assets made as part of
any sale and lease-back transaction to which such person is a party.
For purposes of this covenant only, indebtedness also includes any
obligation of, or any obligation guaranteed by, any person for the payment of
amounts due under a swap agreement or similar instrument or agreement, or under
a foreign currency hedge exchange or similar instrument or agreement.
LIMITATION ON DISPOSITION OF STOCK OF MONY LIFE INSURANCE COMPANY
The senior note indenture also provides that so long as any senior notes
are outstanding and except in a transaction otherwise governed by the senior
note indenture, we may not issue, sell, transfer or otherwise dispose of any
shares of, securities convertible into, or warrants, rights or options to
subscribe for or purchase shares of, capital stock (other than preferred stock
having no voting rights of any kind, except as required by law or in the event
of non-payment of dividends) of MONY Life Insurance Company, except to one of
our wholly-owned subsidiaries. In addition, we will not permit MONY Life
Insurance Company to issue (other than to us or to one of our wholly-owned
subsidiaries) any shares (other than director's qualifying shares) of, or
securities convertible into, or warrants, rights or options to subscribe for or
purchase shares of, capital stock (other than preferred stock having no voting
rights of any kind, except as required by law or in the event of non-payment of
dividends) of MONY Life Insurance Company, if, after giving effect to any such
transaction and the issuances of the maximum number of shares issuable upon the
conversion or exercise of all such convertible securities, warrants, rights or
options, we would own, directly or indirectly, less than 80% of the shares of
MONY Life Insurance Company (other than preferred stock having no voting rights
of any kind, except as required by law or in the event of non-payment of
dividends); except that:
- any issuance, sale, transfer or other disposition permitted by us may
only be made for at least a fair market value consideration as determined
by our board of directors pursuant to a board resolution adopted in good
faith; and
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- the foregoing shall not prohibit the issuance or disposition of
securities if required by any law or any regulation or order of any court
or governmental or insurance regulatory authority.
We may, however, merge or consolidate MONY Life Insurance Company into or
with another of our wholly-owned subsidiaries and, subject to the provisions set
forth in "Consolidation, Merger and Sale" below, sell, transfer or otherwise
dispose of the entire capital stock of MONY Life Insurance Company at one time
for at least a fair market value consideration as determined by our board of
directors pursuant to a board resolution adopted in good faith.
EVENTS OF DEFAULT
The senior note indenture provides that with respect to any series of
senior notes, an event of default includes:
- failure to pay interest on any senior note of that series after the
payment is due and payable and this default continues for 30 days;
- failure to pay the principal of or any premium on any senior note of that
series when due;
- failure to deposit any sinking fund payment when due;
- failure to perform or breach of any covenant or warranty of our company
in the senior note indenture, other than a covenant or warranty which has
expressly been included in the senior note indenture solely for the
benefit of one or more series of senior notes other than such series, for
60 days after we have received written notice from the senior note
indenture trustee or the holders of 25% or more in total principal amount
of the outstanding senior notes of that series;
- a default by us under any debt for money borrowed, including any other
series of debt securities, having an aggregate principal amount
outstanding of at least $25 million, or a default by us under any
mortgage, indenture or instrument under which there may be issued or may
be secured or evidenced any debt for money borrowed by us having an
aggregate principal amount outstanding of at least $25 million, whether
such debt exists now or is created later, which default (A) results
because we did not pay any part of the principal of such debt when the
principal was due after any applicable grace period expires or (B) causes
the debt to become due and payable before the date on which it would
otherwise have become due, without, in the case of clause (A), such debt
being discharged or without, in the case of clause (B), such debt being
discharged or such acceleration having been rescinded or annulled, both
within 10 days after the senior note trustee or the holders of at least
25% in principal amount of the senior notes give us notice of the default
and require that we remedy the breach;
- specified events of bankruptcy, insolvency, or reorganization of our
company; and
- any other event of default provided with respect to senior notes of that
series in the supplemental indenture authorizing such series.
The holders of 25% or more in total principal amount of the outstanding
senior notes of any series may direct the time, method and place of conducting
any proceeding for any remedy available to the senior note indenture trustee
with respect to the senior notes of that series.
If a senior note indenture event of default occurs and is continuing with
respect to the senior notes of any series, then the senior note indenture
trustee or the holders of 25% or more in total outstanding principal amount of
the senior notes of the series may declare the principal amount due and payable
immediately by notice in writing to us, and to the senior note indenture trustee
if given by the holders, and upon any such declaration the principal amount or
specified amount will become immediately due and payable.
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At any time after a declaration of acceleration with respect to the senior
notes of any series has been made and before a judgment or decree for payment of
the money due has been obtained as provided in Article Five of the senior note
indenture, the holders of 50% or more in total outstanding principal amount of
the senior notes of the series may rescind and annul the declaration and its
consequences if each of the following has occurred:
- the default has been cured or waived; and
- we have paid or deposited with the senior note indenture trustee
- a sum sufficient to pay all matured installments of interest,
including any additional interest, and principal, or premium, if any,
due otherwise than by acceleration, and
- all sums paid or advanced by the senior note indenture trustee,
including reasonable compensation and expenses of the senior note
indenture trustee.
The holders of 50% or more in total outstanding principal amount of the
senior notes of any series may, on behalf of the holders of all the senior notes
of the series, waive any past default with respect to the series, except:
- a default in the payment of principal, or premium, if any, or interest on
any senior notes of the series; or
- a default in respect of a covenant or provision which under Article Nine
of the senior note indenture cannot be modified or amended without the
consent of the holder of each outstanding senior note of the series
affected by it.
REGISTRATION AND TRANSFER
If the senior notes of a series are to be redeemed, we will not be required
to:
- issue, register the transfer of or exchange senior notes of any series
during a period of 15 days immediately prior to the date notice is given
identifying the senior notes of the series called for redemption; or
- issue, register the transfer of or exchange any senior notes selected for
redemption, in whole or in part, except the unredeemed portion of any
senior note being redeemed in part.
PAYMENT AND PAYING AGENT
Unless otherwise described in the prospectus supplement, we will pay the
principal of any senior notes only against surrender to the paying agent of the
senior notes. We will pay the principal of, premium, if any, and interest on
senior notes, subject to any applicable laws and regulations, at the office of
the paying agent or paying agents as we designate, except that at our option, we
will pay any interest by wire transfer or by check mailed to the address of the
person entitled to that payment at the address of that person which appears in
the security register with respect to the senior notes.
We will pay interest on senior notes on any interest payment date only to
the person in whose name the senior notes, or predecessor security, are
registered at the close of business on the record date for the interest payment
which is the 15th day before that interest payment date.
Unless otherwise indicated in the prospectus supplement, the senior
indenture trustee will be the paying agent with respect to the senior notes. We
may at any time designate additional paying agents or rescind the designation of
any paying agents or approve a change in the office through which any paying
agent acts.
All moneys paid by us to a paying agent for the payment of the principal
of, premium, if any, or interest on the senior notes of any series which remain
unclaimed at the end of two years
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after such principal, premium, if any, or interest has become due and payable
will be repaid to us, and after the repayment, the holder of the senior notes
may look only to us for payment of principal of, premium, if any, or interest on
the senior notes.
MODIFICATION
The senior note indenture provides that we may modify or amend our rights
and obligations and the rights and obligations of the holders of the senior
notes with the consent of the holders of 50% or more of the total principal
amount of the outstanding senior notes of each series affected by the
modification. However, we may not modify or amend the senior note indenture for
any of the following purposes without prior consent of each holder of the series
of senior notes:
- to change the stated maturity of the principal of or any installment of
principal of, premium, if any, or interest on any senior note;
- to reduce the principal amount of or the rate of interest of or premium,
if any, payable upon any redemption of, any senior notes;
- to change the method of calculating the rate of interest of, or impair
the right to institute suit for the enforcement of any payment on or
after the stated maturity of, any senior note, or, in the case of
redemption, on or after the redemption date;
- change the currency of payment of principal of, premium, if any, or
interest on, any senior note;
- to reduce the percentage in principal amount of the outstanding senior
notes of any series, the consent of whose holders is required for
- any supplemental indenture;
- any waiver of compliance with specified provisions of the senior note
indenture; or
- any waiver of specified defaults under the senior note indenture and
their consequences provided for in the senior note indenture; or
- to modify any of the provisions of the sections of the senior note
indenture relating to
- supplemental indentures,
- the waiver of past defaults, or
- the waiver of specified covenants,
except to increase any such percentage or to provide that specified other
provisions of the senior note indenture cannot be modified or waived
without the consent of the holder of each outstanding senior note affected
by that modification or waiver.
The senior note indenture provides that without the consent of any holder
of senior notes, we and the trustee may make modifications or amendments to the
senior note indenture in order to:
- evidence the succession of another person to us and the assumption by
that person of the covenants in the senior note indenture and the senior
notes;
- add to the covenants for the benefit of the holders or to surrender any
right or power conferred upon us by the indenture;
- add additional events of default;
- change or eliminate any restrictions on the payment of principal or
permit the issuance of senior notes in uncertificated form, provided that
any action may not adversely affect the interests of holders of senior
notes in any material respect;
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- change or eliminate any provisions of the senior note indenture with
respect to any series of senior notes to be created in the future;
- secure the senior notes;
- establish the form or terms of any series of senior notes;
- evidence the appointment of a successor trustee;
- cure any ambiguity, correct or supplement any provision which may be
inconsistent with another provision, or make any other provision with
respect to matters or questions arising under the senior note indenture,
provided that any action may not adversely affect the interests of the
holders of the senior notes in any material respect; and
- modify, eliminate or add to the provisions of the senior note indenture
as necessary to qualify the senior note indenture under the Trust
Indenture Act.
DEFEASANCE AND COVENANT DEFEASANCE
Under the senior note indenture, if the terms of the particular series of
senior notes so provide, we may cause ourselves to be:
- discharged from our obligations with respect to any senior notes or
series of senior notes, which we refer to as "defeasance"; and
- released from our obligations under any restrictive covenants described
in any prospectus supplement or included in the senior note indenture or
any supplemental indenture with respect to any senior notes or series of
senior notes, which we refer to as "covenant defeasance".
The senior note indenture permits defeasance with respect to any senior
notes of a series even if a prior covenant defeasance has occurred with respect
to the senior notes of that series. Following a defeasance, payment of the
senior notes defeased may not be accelerated because of an event of default.
Following a covenant defeasance, payment of the senior notes may not be
accelerated by reference to the covenants affected by the covenant defeasance.
However, if an acceleration were to occur, the realizable value at the
acceleration date of the money and government obligations in the defeasance
trust could be less than the principal and interest then due on the senior
notes, since the required deposit in the defeasance trust would be based upon
scheduled cash flows rather than market value, which would vary depending upon
interest rates and other factors.
Upon a defeasance, the following rights and obligations will continue: (1)
the rights of the holders of the senior notes of any series to receive from the
defeasance trust payments of the principal of, any premium and interest on the
senior notes when payments are due; (2) our obligations regarding the
registration, transfer and exchange of the senior notes of any series; (3) our
obligation to maintain an office or agency in each place of payment; and (4) the
survival of the senior note indenture trustee's rights, powers, trusts, duties
and immunities under the senior note indenture.
In connection with any defeasance or covenant defeasance, we must
irrevocably deposit with the senior note indenture trustee, in trust, money
and/or government obligations which, through the scheduled payment of principal
and interest on those obligations, would provide sufficient moneys to pay the
principal of, any premium and interest on the senior notes on the maturity dates
or upon redemption.
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In connection with a defeasance or covenant defeasance, we must deliver to
the senior note indenture trustee:
- an opinion of counsel to the effect that the holders of the senior notes
will not recognize income, gain or loss for United States federal income
tax purposes as a result of such defeasance or covenant defeasance and
will be subject to United States federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such defeasance or covenant defeasance had not occurred. This opinion, in
the case of a defeasance, must refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable federal income tax law
occurring after the date of the senior note indenture;
- an officers' certificate confirming that any senior notes then listed on
any securities exchange will not be delisted; and
- an officers' certificate and an opinion of counsel, each stating that all
conditions precedent have been complied with.
In addition, the following conditions must be true:
- no event will have occurred and be continuing which is or would become an
event of default;
- the defeasance or covenant defeasance will not cause the senior note
indenture trustee to have a conflicting interest under the Trust
Indenture Act;
- the defeasance or covenant defeasance will not cause the trust to become
an investment company under the Investment Company Act unless it is
properly registered under that act or exempt from registration;
- the defeasance or covenant defeasance will not cause a breach or
violation of or constitute a default under any other agreement or
instrument to which we are a party or are bound; and
- proper notice of the redemption date, if applicable, will have been
given.
CONSOLIDATION, MERGER AND SALE
The senior note indenture provides that we may not merge or consolidate or
sell, convey, transfer or lease all or substantially all of our properties and
assets unless:
- we are the successor corporation or the successor corporation is a
domestic corporation which assumes our company's obligations on the
senior notes and under the senior note indenture;
- after giving effect to the merger, consolidation, sale, conveyance,
transfer or lease of all or substantially all of our properties and
assets, no event of default, and no event which, after notice or lapse of
time or both, would become an event of default, will have happened and be
continuing; and
- we have delivered to the senior note indenture trustee an officer's
certificate and an opinion of counsel, each stating that the merger,
consolidation, sale, conveyance, transfer or lease of all or
substantially all of our properties and assets complies with the
provisions of the senior note indenture governing consolidation, merger,
conveyance, transfer or lease and that all conditions precedent have been
complied with.
INFORMATION CONCERNING THE SENIOR NOTE INDENTURE TRUSTEE
Prior to an event of default with respect to senior notes of any series and
after the curing or waiving of all events of default with respect to the senior
notes of any series, the senior note
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indenture trustee is to perform, with respect to senior notes of the series,
only the duties that are specifically set forth in the senior note indenture.
Once a senior note event of default has occurred and is continuing, the
senior note indenture trustee is to exercise, with respect to senior notes of
the series, the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Unless the senior note indenture trustee
is offered reasonable indemnity by a holder of senior notes of any series
against the costs, expenses and liabilities incurred by the senior indenture
trustee, the senior indenture trustee is not required to exercise any of the
powers under the senior indenture at the request of the holder. Additionally,
the senior note indenture trustee is not required to expend or risk its own
funds or otherwise incur any financial liability in the performance of its
duties if it reasonably believes that it is not assured repayment or adequate
indemnity.
The Chase Manhattan Bank, the senior note indenture trustee, and its
affiliates also serve as subordinated note indenture trustee, as property
trustee, as Delaware trustee and as guarantee trustee. We and some of our
affiliates maintain deposit accounts and banking relationships with The Chase
Manhattan Bank.
GOVERNING LAW
The senior note indenture and the senior notes are governed by, and
construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
We have the right at all times to assign any of our rights or obligations
under the senior note indenture to one of our direct or indirect wholly-owned
subsidiaries. However, in the event of an assignment to one of our direct or
indirect wholly-owned subsidiaries, we will remain primarily responsible for all
of those obligations under the senior note indenture.
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
This section describes the general terms and provisions of our junior
subordinated notes that may be offered by this prospectus. When we offer to sell
a particular series of junior subordinated notes, we will describe the specific
terms of the series in a supplement to this prospectus. We will also indicate in
the supplement whether the general terms and provisions described in this
section apply to a particular series of junior subordinated notes.
The junior subordinated notes offered hereby will be issued under the
Subordinated Note Indenture, dated January 11, 2000, between us and The Chase
Manhattan Bank, as trustee. The subordinated note indenture is subject to, and
governed by, the Trust Indenture Act. We have filed a copy of the subordinated
note indenture as an exhibit to the registration statement. We have summarized
selected portions of the subordinated note indenture below. The summary is not
complete. You should read this description of the junior subordinated notes, the
subordinated note indenture and the prospectus supplement relating to the
applicable series of the junior subordinated notes before you buy any junior
subordinated notes.
GENERAL
The junior subordinated notes will be direct, unsecured obligations of our
company. The junior subordinated notes will be subordinated to all senior
indebtedness (as defined in the subordinated note indenture) of our company,
including, without limitation, any series of senior notes that have been issued,
and effectively subordinated to all secured debt of our company. The
subordinated note indenture does not limit the amount of junior subordinated
notes that we may issue and permits us to issue junior subordinated notes from
time to time. The junior
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subordinated notes issued under the prospectus supplement will be issued as part
of a series that has been established pursuant to the subordinated note
indenture.
A prospectus supplement relating to a series of junior subordinated notes
being offered will include specific terms relating to the offering. These terms
will include some or all of the following:
- the title;
- any limit on the total principal amount;
- to whom interest is payable if other than the person to whom the junior
subordinated note is registered;
- the date or dates on which the principal is payable and the right, if
any, to extend or advance maturity;
- if interest bearing:
- the interest rate;
- the method by which the interest rate will be determined;
- the date from which interest will accrue;
- interest payment dates;
- the regular record date for the interest payable on any interest
payment date;
- the basis on which interest will be calculated if other than that of a
360-day year consisting of twelve 30-day months; and
- the first interest payment date;
- the place or places where the principal of, premium, if any, and
interest, if any, will be payable;
- the period or periods during which the price or prices at which and the
terms and conditions on which the junior subordinated notes may be
redeemed, in whole or in part, at the option of our company or at the
option of the holder;
- the obligation, if any, of our company to redeem or purchase the junior
subordinated notes under any sinking fund or similar provision or at the
option of a holder and the details of that obligation;
- whether any of the terms of the subordinated note indenture described
below under "Defeasance and Covenant Defeasance" will apply to any of the
junior subordinated notes of the series;
- any index or formula for determining the amount of principal of, premium,
if any, or interest and the manner of determining those amounts;
- the currency, currencies or currency units in which principal of,
premium, if any, and interest will be payable, if other than U.S.
dollars, and the manner of determining the equivalent of those amounts in
U.S. dollars for any purpose;
- if the principal of, premium, if any, or interest is payable, at our
option or the option of the holders, in one or more currencies or
currency units other than those in which the junior subordinated notes
are stated to be payable, the currency, currencies or currency units in
which the principal of, premium, if any, and interest may be payable and
the terms and conditions of the option;
- the denominations in which the junior subordinated notes will be
issuable;
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- if other than the principal amount, the portion of the principal amount
which will be payable upon declaration of acceleration of maturity;
- any deletions from, modifications of or additions to the events of
default or covenants of our company as provided in the subordinated note
indenture pertaining to the junior subordinated notes;
- whether the junior subordinated notes will be issued in whole or in part
in the form of a junior global security (a junior subordinated note that
we may issue in accordance with the subordinated note indenture to
represent all or part of a series of the junior subordinated notes);
- the right, if any, of our company to extend the interest payment periods;
- if the principal amount payable on the maturity date of any of the junior
subordinated notes of the series will not be determinable on any one or
more dates prior to the maturity date, the amount which will be deemed to
be the principal amount as of any date for any purpose, including the
principal amount which will be due and payable upon any maturity other
than the maturity date, or the manner of determining that amount;
- any restrictions or conditions on transferability; and
- any other terms.
The terms of each series of junior subordinated notes issued to a Trust
will correspond to those of the related trust preferred securities as described
in the prospectus supplement relating to the trust preferred securities.
The subordinated note indenture does not contain provisions that would
afford holders of junior subordinated notes protection in the event of a highly
leveraged transaction, reorganization, restructuring, merger or similar
transaction involving our company or our subsidiaries that may adversely affect
holders of the junior subordinated notes or, except as described in "Covenants
of Junior Subordinated Notes," that would limit our ability or our subsidiaries'
ability to incur indebtedness.
SUBORDINATION
The junior subordinated notes are unsecured and subordinated in right of
payment to all existing and future senior indebtedness of our company. No
payment of principal of, including redemption payments, if any, or premium, if
any, or interest on, including additional interest, the junior subordinated
notes may be made if any of the following occur:
- any senior indebtedness is not paid when due and any applicable grace
period with respect to the default has ended with such default not being
cured or waived or otherwise ceasing to exist;
- the maturity of any senior indebtedness has been accelerated because of a
default; or
- notice has been given of the exercise of an option to require repayment,
mandatory payment or prepayment or otherwise on any senior indebtedness.
If we make any payments to the subordinated note indenture trustee or
holders of the junior subordinated notes which are not permitted under the terms
of the subordinated note indenture, then such payments must be held in trust and
immediately paid over to the holders of the senior indebtedness.
The holders of senior indebtedness will be entitled to receive payment in
full of all amounts due or to become due on or in respect of all senior
indebtedness before the holders of the junior subordinated notes are entitled to
receive or retain any payment or distribution if there is any
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payment or distribution of assets of our company to creditors pursuant to any of
the following events:
- liquidation;
- dissolution;
- winding-up;
- reorganization;
- assignment for the benefit of creditors;
- marshalling of assets or liabilities; or
- any bankruptcy, insolvency or similar proceedings of our company.
Subject to the prior payment of all senior indebtedness, the rights of the
holders of the junior subordinated notes will be subrogated to the rights of the
holders of senior indebtedness to receive payments and distributions applicable
to such senior indebtedness until all amounts owing on the junior subordinated
notes are paid in full.
As defined in the subordinated note indenture, senior indebtedness means:
(1) any payment due in respect of our indebtedness, whether outstanding at
the date of execution of the subordinated note indenture or incurred,
created or assumed afterwards
- in respect of money borrowed, including any financial derivative,
hedging or futures contract or similar instrument; and
- evidenced by securities, debentures, bonds, notes or other similar
instruments issued by our company that, by their terms, are senior or
senior subordinated debt securities, including all obligations under
our indentures with various trustees;
(2) all capital lease obligations;
(3) all obligations issued or assumed by us as the deferred purchase price
of property, all conditional sale obligations and all of our
obligations under any title retention agreement, excluding trade
accounts payable arising in the ordinary course of business and
long-term purchase obligations;
(4) all obligations for the reimbursement of any letter of credit, banker's
acceptance, security purchase facility or similar credit transaction;
(5) all obligations of the type referred to in clauses (1) through (4)
above of other persons, the payment of which we are responsible or
liable for as obligor, guarantor or otherwise; and
(6) all obligations of the type referred to in clauses (1) through (5)
above of other persons secured by any lien on any of our property or
asset of ours, whether or not such obligation is assumed by us,
except for:
- any such indebtedness that is by its terms subordinated to or equal to
the junior subordinated notes; and
- any unsecured indebtedness between or among us or our affiliates.
This senior indebtedness will continue to be senior indebtedness and be
entitled to the benefits of the subordination provisions contained in the
subordinated note indenture irrespective of any amendment, modification or
waiver of any term of the senior indebtedness.
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We are a non-operating holding company with no significant business
operations of our own. Most of our assets are owned by our subsidiaries.
Therefore, the junior subordinated notes will be effectively subordinated to all
existing and future liabilities of our subsidiaries, including the liabilities
of our subsidiaries under contracts of insurance and annuities written by our
subsidiaries. Holders of the junior subordinated notes should look only to the
assets of our company, and not our subsidiaries, for payment of interest and
principal and premium, if any.
The subordinated note indenture does not limit the total amount of senior
indebtedness that may be issued by us. We expect from time to time to incur
additional indebtedness constituting senior indebtedness.
ADDITIONAL INTEREST
As defined in the subordinated note indenture, additional interest means:
- additional amounts as may be required so that the net amounts received
and retained by a holder of junior subordinated notes, if the holder is a
Trust, after paying taxes, duties, assessments or governmental charges of
whatever nature, other than withholding taxes, imposed by the United
States or any other taxing authority will not be less than the amounts
the holder would have received had no such taxes, duties, assessments, or
other governmental charges been imposed; and
- any interest due and not paid on an interest payment date, together with
interest on those amounts from that interest payment date to the date of
payment, compounded quarterly, on each interest payment date.
COVENANTS OF THE MONY GROUP INC.
We covenant in the subordinated note indenture, for the benefit of the
holders of each series of junior subordinated notes, that (1) we will not
declare or pay any dividend or make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
our capital stock, and (2) we will not make any payment of interest, principal
or premium on, or repay, repurchase or redeem any debt securities, including
guarantees other than the guarantees referred to in this prospectus, issued by
us which rank equal to or junior to the junior subordinated notes, if at such
time:
- we will have given notice of our election to extend an interest payment
period for a series of junior subordinated notes and such extension is
continuing; or
- we will be in default with respect to our payment or other obligations
under the guarantee with respect to the trust preferred securities, if
any, related to such series of junior subordinated notes;
None of the foregoing, however, will restrict:
- any of the actions described in the preceding sentence resulting from any
reclassification of our capital stock or the exchange or conversion of
one class or series of our capital stock for another class or series of
our capital stock;
- the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of the capital stock or
the security being converted or exchanged; or
- repurchases, redemptions or other acquisitions of our capital stock in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of employees, officers, directors or
consultants.
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The subordinated note indenture also provides that, for so long as the
trust preferred securities of any Trust remain outstanding, we covenant:
- to directly or indirectly maintain 100% ownership of the common
securities of that Trust. However, any permitted successor of our company
under the subordinated note indenture may succeed to our ownership of the
common securities, and
- to use our reasonable efforts to cause the Trust:
- to remain a statutory business trust, except in connection with the
distribution of junior subordinated notes to the holders of trust
preferred securities in liquidation of the Trust, the redemption of
all of the trust preferred securities of the Trust, or specified
mergers, consolidations or amalgamations, permitted by the related
trust agreement; and
- to otherwise continue to be classified as a grantor trust for United
States federal income tax purposes.
LIMITATION ON LIENS ON STOCK OF MONY LIFE INSURANCE COMPANY
We covenant in the subordinated note indenture, for the benefit of the
holders of each series of junior subordinated notes, that we will not, and we
will cause our subsidiaries not to, assume, incur, or permit to exist any
indebtedness secured by any lien on the capital stock of MONY Life Insurance
Company unless the junior subordinated notes (and, if we so elect, any other of
our indebtedness that is not subordinated to the junior subordinated notes and
with respect to which the governing instruments require, or pursuant to which we
are otherwise obligated, to provide such security) shall be secured equally and
ratably with such indebtedness for at least the time period such other
indebtedness is so secured.
"Indebtedness" is defined in the subordinated note indenture as the
principal of and premium, if any, and interest due on indebtedness of a person,
whether outstanding on the date of the subordinated note indenture or thereafter
created, incurred or assumed, which is (1) indebtedness for money borrowed, and
(2) any amendments, renewals, extensions, modifications and refundings of any
such indebtedness. For the purposes of this definition, "indebtedness for money
borrowed" means:
- any obligation of, or any obligation guaranteed by, such person for the
repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments;
- any obligation of, or any such obligation guaranteed by, such person
evidenced by bonds, debentures, notes or similar written instruments,
including obligations assumed or incurred in connection with the
acquisition of property, assets or businesses (except that the deferred
purchase price of any other business or property or assets shall not be
considered indebtedness if the purchase price thereof is payable in full
within 90 days from the date on which such indebtedness was created); and
- any obligations of such person as lessee under leases required to be
capitalized on the balance sheet of the lessee under generally accepted
accounting principles and leases of property or assets made as part of
any sale and lease-back transaction to which such person is a party.
For purposes of this covenant only, indebtedness also includes any
obligation of, or any obligation guaranteed by, any person for the payment of
amounts due under a swap agreement or similar instrument or agreement, or under
a foreign currency hedge exchange or similar instrument or agreement.
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LIMITATION ON DISPOSITION OF STOCK OF MONY LIFE INSURANCE COMPANY
The subordinated note indenture also provides that so long as any junior
subordinated notes are outstanding and except in a transaction otherwise
governed by the subordinated note indenture, we may not issue, sell, transfer or
otherwise dispose of any shares of, securities convertible into, or warrants,
rights or options to subscribe for or purchase shares of, capital stock (other
than preferred stock having no voting rights of any kind, except as required by
law or in the event of non-payment of dividends) of MONY Life Insurance Company,
except to one of our wholly-owned subsidiaries. In addition, we will not permit
MONY Life Insurance Company to issue (other than to us or to one of our
wholly-owned subsidiaries) any shares (other than director's qualifying shares)
of, or securities convertible into, or warrants, rights or options to subscribe
for or purchase shares of, capital stock (other than preferred stock having no
voting rights of any kind, except as required by law or in the event of
non-payment of dividends) of MONY Life Insurance Company, if, after giving
effect to any such transaction and the issuances of the maximum number of shares
issuable upon the conversion or exercise of all such convertible securities,
warrants, rights or options, we would own, directly or indirectly, less than 80%
of the shares of MONY Life Insurance Company (other than preferred stock having
no voting rights of any kind, except as required by law or in the event of
non-payment of dividends); except that:
- any issuance, sale, transfer or other disposition permitted by us may
only be made for at least a fair market value consideration as determined
by our board of directors pursuant to a board resolution adopted in good
faith; and
- the foregoing shall not prohibit the issuance or disposition of
securities if required by any law or any regulation or order of any court
or governmental or insurance regulatory authority.
We may, however, merge or consolidate MONY Life Insurance Company into or
with another of our wholly-owned subsidiaries and, subject to the provisions set
forth in "Consolidation, Merger and Sale" below, sell, transfer or otherwise
dispose of the entire capital stock of MONY Life Insurance Company at one time
for at least a fair market value consideration as determined by our board of
directors pursuant to a board resolution adopted in good faith.
EVENTS OF DEFAULT
The subordinated note indenture provides that with respect to any series of
junior subordinated notes, an event of default includes:
- failure to pay interest on the junior subordinated notes of the series
when due and payable including any additional interest in respect of that
failure to pay and continuance of this default for 30 days. However, a
valid extension of the interest payment period by us will not constitute
a default in the payment of interest for this purpose;
- failure to pay other additional interest and this default continues for
30 days;
- failure to pay principal or premium, if any, or interest on the junior
subordinated notes of the series when due at maturity or upon earlier
redemption, including additional interest in respect of that failure to
pay;
- failure to deposit any sinking fund payment when due;
- failure to perform or breach of any of our covenants or warranties in the
subordinated note indenture, other than a covenant or warranty which has
expressly been included in the subordinated note indenture solely for the
benefit of one or more series of junior subordinated notes other than
such series, for 60 days after we receive written notice from the
subordinated note indenture trustee or the holders of 25% or more in
total principal amount of the outstanding junior subordinated notes of
the series;
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- a default by us under any debt for money borrowed, including any other
series of debt securities, having an aggregate principal amount
outstanding of at least $25 million, or a default by us under any
mortgage, indenture or instrument under which there may be issued or may
be secured or evidenced any debt for money borrowed by us having an
aggregate principal amount outstanding of at least $25 million, whether
such debt exists now or is created later, which default (A) results
because we did not pay any part of the principal of such debt when the
principal was due after any applicable grace period expires or (B) causes
the debt to become due and payable before the date on which it would
otherwise have become due, without, in the case of clause (A), such debt
being discharged or without, in the case of clause (B), such debt being
discharged or such acceleration having been rescinded or annulled, both
within 10 days after the senior note trustee or the holders of at least
25% in principal amount of the senior notes give us notice of the default
and require that we remedy the breach;
- specified events of bankruptcy, insolvency, or reorganization of our
company; and
- any other event of default provided with respect to junior subordinated
notes of that series in the supplemental indenture authorizing that
series.
The holders of 25% or more in total principal amount of the outstanding
junior subordinated notes of any series may direct the time, method and place of
conducting any proceeding for any remedy available to the subordinated note
indenture trustee with respect to the junior subordinated notes of that series.
If a subordinated note indenture event of default occurs and is continuing
with respect to the junior subordinated notes of any series, then the
subordinated note indenture trustee or the holders of 25% or more in total
outstanding principal amount of the junior subordinated notes of the series may
declare the principal amount due and payable immediately by notice in writing to
us, and to the subordinated note indenture trustee if given by the holders, and
upon any such declaration the principal amount will become immediately due and
payable.
At any time after a declaration of acceleration with respect to the junior
subordinated notes of any series has been made and before a judgment or decree
for payment of the money due has been obtained as provided in Article Five of
the subordinated note indenture, the holders of 50% or more in total outstanding
principal amount of the junior subordinated notes of the series may rescind and
annul the declaration and its consequences if each of the following has
occurred:
- the default has been cured or waived; and
- we have paid or deposited with the subordinated note indenture trustee
- a sum sufficient to pay overdue interest, including any additional
interest, and principal, or premium, if any, due otherwise than by
acceleration, and
- all sums paid or advanced by the subordinated note indenture trustee,
including reasonable compensation and expenses of the subordinated
note indenture trustee.
A holder of trust preferred securities may institute a legal proceeding
directly against us, without first instituting a legal proceeding against the
property trustee or any other person or entity, for enforcement of payment to
the holder of principal of, premium, if any, or interest on the junior
subordinated notes of the related series having a principal amount equal to the
total stated liquidation amount of the trust preferred securities of the holder
on or after the due dates specified in the junior subordinated notes of the
series.
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The holders of 50% or more in total outstanding principal amount of the
junior subordinated notes of any series may, on behalf of the holders of all the
junior subordinated notes of the series, waive any past default with respect to
the series, except:
- a default in the payment of principal, or premium, if any, or interest on
any junior subordinated notes of the series; or
- a default in respect of a covenant or provision which under Article Nine
of the subordinated note indenture cannot be modified or amended without
the consent of the holder of each outstanding junior subordinated note of
the series affected by it.
REGISTRATION AND TRANSFER
If the junior subordinated notes of a series are to be redeemed, we are not
required to:
- issue, register the transfer of or exchange junior subordinated notes of
any series during a period of 15 days immediately prior to the date
notice is given identifying the junior subordinated notes of the series
called for redemption; or
- issue, register the transfer of or exchange any junior subordinated notes
selected for redemption, in whole or in part, except the unredeemed
portion of any junior subordinated note being redeemed in part.
PAYMENT AND PAYING AGENT
Unless otherwise described in the prospectus supplement, we will pay the
principal of any junior subordinated notes only against surrender to the paying
agent of the junior subordinated notes. We will pay the principal of, premium,
if any, and interest on junior subordinated notes, subject to any applicable
laws and regulations, at the office of the paying agent or paying agents as we
designate, except that at our option, we may pay any interest by wire transfer
or by check mailed to the address of the person entitled thereto as the address
appears in the security register with respect to the junior subordinated notes.
We will pay interest on junior subordinated notes on any interest payment
date only to the person in whose name the junior subordinated notes, or
predecessor security, are registered at the close of business on the record date
for such interest payment, which is the 15th day before that interest payment
date.
Unless otherwise described in the prospectus supplement, the subordinated
note indenture trustee will be the paying agent with respect to the junior
subordinated notes. We may at any time designate additional paying agents or
rescind the designation of any paying agents or approve a change in the office
through which any paying agent acts.
All moneys paid by us to a paying agent for the payment of the principal
of, premium, if any, or interest on the junior subordinated notes of any series
that remain unclaimed at the end of two years after the principal, premium, if
any, or interest became due and payable will be repaid to us, and after a
repayment, the holder of the junior subordinated notes may look only to us for
payment of that principal of, premium, if any or interest.
MODIFICATION
The subordinated note indenture provides that we may modify or amend our
rights and obligations and the rights of holders of the junior subordinated
notes with the consent of the holders of 50% or more of the total principal
amount of the outstanding junior subordinated notes of each series affected by
the modification. However, we may not, modify or amend the
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subordinated note indenture for any of the following purposes without prior
consent of each holder of the series of junior subordinated notes:
- to change the stated maturity of the principal of or any installment of
principal of, premium, if any, or interest on, any junior subordinated
note;
- to reduce the principal amount of or the rate of interest of or any
premium payable upon any redemption of, any junior subordinated notes;
- to change the method of calculating the rate of interest of, or impair
the right to institute suit for the enforcement of any payment on or
after the stated maturity of, any junior subordinated note, or, in the
case of redemption, on or after the redemption date;
- change the currency of payment of principal of, premium, if any, or
interest on, any junior subordinated note;
- to reduce the percentage in principal amount of the outstanding junior
subordinated notes of any series, the consent of whose holders is
required for
- any supplemental indenture,
- any waiver of compliance with specified provisions of the subordinated
note indenture, or
- any waiver of specified defaults thereunder and their consequences
provided for in the subordinated note indenture; or
- to modify any of the provisions of the sections of the subordinated note
indenture relating to
- supplemental indentures,
- the waiver of past defaults, or
- the waiver of specified covenants,
except to increase any such percentage or to provide that additional
provisions of the subordinated note indenture cannot be modified or waived
without the consent of the holder of each outstanding junior subordinated
note affected thereby; or
- to modify the provisions of the subordinated note indenture with respect
to the subordination of the junior subordinated notes in a manner
materially adverse to the holder of the junior subordinated notes.
The subordinated note indenture provides that without the consent of any
holder of junior subordinated notes, we and the trustee may make modifications
or amendments to the subordinated note indenture in order to:
- evidence the succession of another person to us and the assumption by
that person of the covenants in the subordinated note indenture and the
junior subordinated notes;
- add to the covenants for the benefit of the holders or to surrender any
right or power conferred upon us by the subordinated note indenture;
- add additional events of default;
- change or eliminate any restrictions on the payment of principal or
permit the issuance of junior subordinated notes in uncertificated form,
provided that any action may not adversely affect the interests of
holders of junior subordinated notes in any material respect;
- change or eliminate any provisions of the subordinated note indenture
with respect to any series of junior subordinated notes to be created in
the future;
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- secure the junior subordinated notes;
- establish the form or terms of any series of junior subordinated notes;
- evidence the appointment of a successor trustee;
- cure any ambiguity, correct or supplement any provision which may be
inconsistent with another provision, or make any other provision with
respect to matters or questions arising under the subordinated note
indenture, provided that any action may not adversely affect the
interests of the holders of the junior subordinated notes in any material
respect; and
- modify, eliminate or add to the provisions of the subordinated note
indenture as necessary to qualify the subordinated note indenture under
the Trust Indenture Act.
DEFEASANCE AND COVENANT DEFEASANCE
Under the subordinated note indenture, if the terms of the particular
series of junior subordinated notes so provide, we may cause ourselves to be:
- discharged from our obligations with respect to any junior subordinated
notes or any series of junior subordinated notes, which we refer to as
"defeasance"; and
- released from our obligations under any restrictive covenants described
in any prospectus supplement or included in the subordinated note
indenture or any supplemental indenture with respect to any junior
subordinated notes or series of junior subordinated notes, which we refer
to as "covenant defeasance".
The subordinated note indenture permits defeasance with respect to any
junior subordinated notes of a series even if a prior covenant defeasance has
occurred with respect to the junior subordinated notes of that series. Following
a defeasance, payment of the junior subordinated notes defeased may not be
accelerated because of an event of default. Following a covenant defeasance,
payment of the junior subordinated notes defeased may not be accelerated by
reference to the covenants affected by the covenant defeasance. However, if an
acceleration were to occur, the realizable value at the acceleration date of the
money and government obligations in the defeasance trust could be less than the
principal and interest then due on the junior subordinated notes since the
required deposit in the defeasance trust would be based upon scheduled cash
flows rather than market value, which would vary depending upon interest rates
and other factors.
Upon a defeasance, the following rights and obligations will continue: (1)
the rights of the holders of the junior subordinated notes of any series to
receive from the defeasance trust payments of the principal of, any premium and
interest on the junior subordinated notes when payments are due, (2) our
obligations regarding the registration, transfer and exchange of the junior
subordinated notes of any series, (3) our obligation to maintain an office or
agency in each place of payment and (4) the survival of the subordinated note
indenture trustee's rights, powers, trusts, duties and immunities under the
subordinated note indenture.
In connection with any defeasance or covenant defeasance, we must
irrevocably deposit with the subordinated note indenture trustee, in trust,
money and/or government obligations which, through the scheduled payment of
principal and interest on those obligations, would provide sufficient moneys to
pay the principal of, any premium and interest on the junior subordinated notes
on the maturity dates or upon redemption.
In connection with a defeasance or covenant defeasance, we must deliver to
the subordinated note indenture trustee:
- an opinion of counsel to the effect that the holders of the junior
subordinated notes will not recognize income, gain or loss for United
States federal income tax purposes as a result of the defeasance or
covenant defeasance and will be subject to United States federal
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income tax on the same amounts, in the same manner and at the same times
as would have been the case if the defeasance or covenant defeasance had
not occurred. This opinion, in the case of a defeasance, must refer to
and be based upon a ruling of the Internal Revenue Service or a change in
applicable federal income tax law occurring after the date of the
subordinated note indenture.
- an officers' certificate confirming that any junior subordinated notes
then listed on any securities exchange will not be delisted; and
- an officers' certificate and an opinion of counsel, each stating that all
conditions precedent have been complied with.
In addition, the following conditions must be true:
- no event will have occurred and be continuing which is or would become an
event of default;
- any defeasance or covenant defeasance will not cause the subordinated
note indenture trustee to have a conflicting interest under the Trust
Indenture Act;
- any defeasance or covenant defeasance will not cause the trust to become
an investment company under the Investment Company act unless it is
properly registered under that act or exempt from registration;
- the defeasance or covenant defeasance will not cause a breach or
violation of or constitute a default under any other agreement or
instrument to which we are a party or are bound; and
- proper notice of the redemption date, if applicable, will have been
given.
CONSOLIDATION, MERGER AND SALE
The subordinated note indenture provides that we may not merge or
consolidate or sell, convey, transfer or lease all or substantially all of our
properties and assets unless:
- we are the successor corporation or the successor corporation is a
domestic corporation which assumes our company's obligations on the
junior subordinated notes and under the subordinated note indenture;
- after giving effect to the merger, consolidation, sale, conveyance,
transfer or lease of all or substantially all of our properties and
assets, no event of default, and no event which, after notice or lapse of
time or both, would become an event of default, will have happened and be
continuing; and
- we have delivered to the subordinated note indenture trustee an officer's
certificate and an opinion of counsel, each stating that the merger,
consolidation, sale, conveyance, transfer or lease of all or
substantially all of our properties and assets, complies with the
provisions of the subordinated note indenture governing consolidation,
merger, conveyance, transfer or lease and that all conditions precedent
have been complied with.
INFORMATION CONCERNING THE SUBORDINATED NOTE INDENTURE TRUSTEE
Prior to an event of default with respect to junior subordinated notes of
any series and after the curing or waiving of all events of default with respect
to the junior subordinated notes of any series, the subordinated note indenture
trustee is to perform, with respect to junior subordinated notes of the series,
only the duties that are specifically set forth in the subordinated note
indenture.
Once a junior subordinated note event of default has occurred and is
continuing, the subordinated note indenture trustee is to exercise, with respect
to junior subordinated notes of
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the series, the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Unless the subordinated note indenture
trustee is offered reasonable indemnity by a holder of junior subordinated notes
of any series against the costs, expenses and liabilities incurred by the
subordinated indenture trustee, the subordinated note indenture trustee is not
required to exercise any of its powers under the subordinated note indenture at
the request of the holder. Additionally, the subordinated note indenture trustee
is not required to expend or risk its own funds or otherwise incur any financial
liability in the performance of its duties if the subordinated note indenture
trustee reasonably believes that it is not assured repayment or adequate
indemnity.
The Chase Manhattan Bank, the subordinated note indenture trustee, and its
affiliates also serve as senior note indenture trustee, as property trustee, as
Delaware trustee and as guarantee trustee. Our company and some of our
affiliates maintain deposit accounts and banking relationships with The Chase
Manhattan Bank.
GOVERNING LAW
The subordinated note indenture and the junior subordinated notes will be
governed by, and construed in accordance with, the internal laws of the State of
New York.
MISCELLANEOUS
We will have the right at all times to assign any of our rights or
obligations under the subordinated note indenture to one of our direct or
indirect wholly-owned subsidiaries. However, in the event of an assignment to
one of our direct or indirect wholly-owned subsidiaries, we will remain
primarily liable for all such obligations under the subordinated note indenture.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
This section describes the general terms and provisions of the trust
preferred securities that may be offered by this prospectus. When the Trusts
offer to sell a particular series of the trust preferred securities, we will
describe the specific terms of the series in a supplement to this prospectus. We
will also indicate in the supplement whether the general terms described in this
section apply to that particular series of trust preferred securities.
We have summarized specified terms and provisions of the trust preferred
securities in this section. The summary is not complete. We refer you to the
amended and restated trust agreement, the form of which is filed as an exhibit
to the registration statement. You should read this description of the trust
preferred securities and the amended and restated trust agreement and prospectus
supplement relating to the applicable series of the trust preferred securities
before you buy any trust preferred securities.
GENERAL
Each Trust may issue only one series of trust preferred securities having
terms described in the prospectus supplement. The trust agreement of each Trust
will authorize the administrative trustees, on behalf of the Trust, to issue the
trust preferred securities of the Trust. The trust preferred securities of each
Trust will have such terms, including as relates to distributions, redemption,
voting, liquidation rights and the other preferred, deferral and special rights
and restrictions as is set forth in the trust agreement of the Trust.
A prospectus supplement relating to the trust preferred securities being
offered will include specific terms relating to the offering. These terms will
include some or all of the following:
- the distinctive designation of the trust preferred securities;
- the number of trust preferred securities issued by the Trust;
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- the annual distribution rate, or method of determining such rate, for
trust preferred securities of the Trust;
- the date or dates on which distributions will be payable and the record
date used to determine the holders who are to receive distributions;
- whether distributions on the trust preferred securities will be
cumulative;
- if the trust preferred securities have cumulative distribution rights,
the date or dates, or method of determining the date or dates, from which
distributions on the trust preferred securities will be cumulative;
- the amount or amounts that will be paid out of the assets of the Trust to
the holders of the trust preferred securities of the Trust upon voluntary
or involuntary dissolution, winding-up or termination of the Trust;
- the terms and conditions, if any, upon which the trust preferred
securities may be redeemed at our option or at the option of the holder;
- the terms and conditions, if any, upon which the applicable series of
junior subordinated notes may be distributed to the holders of the trust
preferred securities;
- the voting rights, if any, of the trust preferred securities in addition
to those required by law, including:
- the number of votes per trust preferred security; and
- any requirement for the approval by the holders of trust preferred
securities as a condition to specified action or amendments to the
trust agreement of the Trust;
- the rights, if any, to defer distributions on the trust preferred
securities by extending the interest payment period on the related junior
subordinated notes; and
- any other relative rights, preferences, privileges, limitations or
restrictions of the trust preferred securities not inconsistent with the
trust agreement of the Trust or applicable law.
The prospectus supplement relating to the trust preferred securities being
offered may specify that the trust preferred securities may be converted into
our common stock upon the terms set forth in the prospectus supplement.
All trust preferred securities offered will be guaranteed by us to the
extent set forth under "Description of the Guarantees." Any material United
States federal income tax considerations applicable to an offering of trust
preferred securities will be described in the applicable prospectus supplement.
DESCRIPTION OF THE GUARANTEES
This section describes the general terms and provisions of the guarantees.
We will execute and deliver the guarantees for the benefit of the holders of the
trust preferred securities. The prospectus supplement will describe the specific
terms of the guarantees offered through that prospectus supplement and any
general terms outlined in this section that will not apply to those guarantees.
Each guarantee will be qualified as an indenture under the Trust Indenture
Act. The Chase Manhattan Bank will act as indenture trustee under each guarantee
for purposes of the Trust Indenture Act.
We have summarized specified terms and provisions of the guarantees in this
section. The summary is not complete. We refer you to the form of the guarantees
which is filed as an exhibit
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to the registration statement and the Trust Indenture Act. Each guarantee will
be held by the guarantee trustee for the benefit of holders of the trust
preferred securities to which it relates.
GENERAL
Pursuant to each guarantee, we will irrevocably and unconditionally agree,
to the extent set forth in the guarantee, to pay in full, to the holders of the
related trust preferred securities, the guarantee payments, to the extent these
guarantee payments are not paid by, or on behalf of, the related Trust. These
payments will be made by us regardless of any defense, right of set-off or
counterclaim that we may have or assert against any person.
The following payments or distributions relating to the trust preferred
securities of any Trust to the extent not paid or made by, or on behalf of, the
Trust are guaranteed payments which will be subject to the guarantee related to
it:
- any accrued and unpaid distributions required to be paid on the trust
preferred securities of the Trust, but if and only if and to the extent
that the Trust has funds legally and immediately available to make those
payments;
- the redemption price, including all accrued and unpaid distributions to
the date of redemption, with respect to any trust preferred securities
called for redemption by the Trust, but if and only to the extent the
Trust has funds legally and immediately available to make that payment;
and
- upon a dissolution, winding-up or termination of the Trust, other than in
connection with the distribution of junior subordinated notes to the
holders of trust preferred securities of the Trust or the redemption of
all of the trust preferred securities of the Trust, the lesser of:
- the total of the liquidation amount and all accrued and unpaid
distributions on the trust preferred securities of the Trust to the
date of payment, to the extent the Trust has funds legally and
immediately available to make that payment; and
- the amount of assets of the Trust remaining available for distribution
to holders of trust preferred securities of the Trust in liquidation
of the Trust.
We may satisfy our obligation to make a guarantee payment by our company
directly paying the required amounts to the holders of the related trust
preferred securities or by causing the related Trust to pay such amounts to such
holders.
Each guarantee will be a guarantee of the guarantee payments with respect
to the related trust preferred securities from the time of issuance of the trust
preferred securities. The guarantees will not apply to the payment of
distributions and other payments on the trust preferred securities when the
related Trust does not have sufficient funds legally and immediately available
to make the distributions or other payments. IF WE DO NOT MAKE INTEREST PAYMENTS
ON THE JUNIOR SUBORDINATED NOTES HELD BY THE PROPERTY TRUSTEE UNDER ANY TRUST,
THE TRUST WILL NOT MAKE DISTRIBUTIONS ON ITS TRUST PREFERRED SECURITIES.
SUBORDINATION
Our obligation under each guarantee to make the guarantee payments will be
an unsecured obligation of our company and will rank:
- subordinate and junior in right of payment to all other liabilities of
our company, including the junior subordinated notes, except those
obligations or liabilities ranking equal to or subordinate by their
terms;
- equal with the most senior preferred or preference stock now outstanding
or issued by us after the date of this prospectus and with any guarantee
entered into by us now or after
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the date of this prospectus in respect of any preferred or preference
securities of any of our affiliates; and
- senior to all of our common stock.
The terms of the trust preferred securities will provide that each holder
of trust preferred securities by accepting the trust preferred securities agrees
to the subordination provisions and other terms of the guarantee related to
subordination.
Each guarantee will constitute a guarantee of payment and not of
collection. This means that the holder of trust preferred securities may
institute a legal proceeding directly against us to enforce its rights under the
guarantee without first instituting a legal proceeding against any other person
or entity.
AMENDMENTS AND ASSIGNMENT
For any changes that materially and adversely affect the rights of holders
of the related trust preferred securities, each guarantee may be amended only if
there is prior approval of the holders of more than 50% in liquidation amount of
the outstanding trust preferred securities. All guarantees and agreements
contained in each guarantee will bind the successors, assigns, receivers,
trustees and representatives of our company and will inure to the benefit of the
holders of the related trust preferred securities then outstanding. We may only
assign our obligations under a guarantee in connection with a consolidation,
merger, conveyance, transfer or lease that is permitted under the applicable
subordinated note indenture.
TERMINATION
Each guarantee will terminate and will have no further force and effect as
to the related trust preferred securities upon:
- full payment of the redemption price of all trust preferred securities;
- distribution of junior subordinated notes to the holders of all trust
preferred securities; or
- full payment of the amounts payable upon liquidation of the related
Trust.
Each guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any holder of the related trust preferred securities
must restore payment of any sums paid with respect to the trust preferred
securities or under the guarantee.
EVENTS OF DEFAULT
Each guarantee provides that an event of default under a guarantee occurs
upon our failure to perform any of our payment obligations under the applicable
guarantee.
The holders of 50% or more in liquidation amount of the trust preferred
securities to which any guarantee relates may direct the time, method and place
of conducting any proceeding for any remedy available to the guarantee trustee
with respect to the guarantee or may direct the exercise of any trust or power
conferred upon the guarantee trustee in respect of the guarantee.
Any holder of the related trust preferred securities may institute a legal
proceeding directly against our company to enforce its rights under such
guarantee without first instituting a legal proceeding against the guarantee
trustee or any other person or entity.
The holders of 50% or more in liquidation amount of trust preferred
securities of any series may, by vote, on behalf of the holders of all the trust
preferred securities of the series, waive any past event of default and its
consequences.
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INFORMATION CONCERNING THE GUARANTEE TRUSTEE
Prior to an event of default with respect to any guarantee and after the
curing or waiving of all events of default with respect to the guarantee, the
guarantee trustee may perform only the duties that are specifically set forth in
the guarantee.
Once a guarantee event of default has occurred and is continuing, the
guarantee trustee is to exercise, with respect to the holder of the trust
preferred securities of the series, the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Unless the
guarantee trustee is offered reasonable indemnity against the costs, expenses
and liabilities which may be incurred by the guarantee trustee by a holder of
the related trust preferred securities, the guarantee trustee is not required to
exercise any of its powers under any guarantee at the request of the holder.
Additionally, the guarantee trustee is not required to expend or risk its own
funds or otherwise incur any financial liability in the performance of its
duties if the guarantee trustee reasonably believes that it is not assured
repayment or adequate indemnity.
The Chase Manhattan Bank, the guarantee trustee, and its affiliates also
serve as property trustee, as senior note indenture trustee, as Delaware trustee
and as subordinated note indenture trustee. Our company and some of our
affiliates maintain deposit accounts and banking relationships with The Chase
Manhattan Bank.
GOVERNING LAW
Each guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
THE AGREEMENTS AS TO EXPENSES AND LIABILITIES
Under an agreement as to expenses and liabilities to be entered into by us
under each trust agreement, we will irrevocably and unconditionally guarantee to
each person or entity to whom each Trust becomes indebted or liable the full
payment of any indebtedness, expenses or liabilities of the Trust, other than
obligations of the Trust to pay to the holders of the related trust preferred
securities or other similar interests in the Trust the amounts due such holders
pursuant to the terms of such trust preferred securities or such other similar
interests, as the case may be.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED NOTES AND THE GUARANTEES
As long as payments of interest and other payments are made when due on
each series of junior subordinated notes issued to a Trust, these payments will
be sufficient to cover distributions and payments due on the related trust
preferred securities of each Trust primarily because of the following factors:
- the total principal amount of each series of junior subordinated notes
will be equal to the sum of the total stated liquidation amount of the
related trust preferred securities;
- the interest rate and interest and other payment dates on each series of
junior subordinated notes will match the distribution rate and
distribution and other payment dates for the related trust preferred
securities;
- based on the agreements as to expenses and liabilities, we, as issuer of
the junior subordinated notes, will pay, directly or indirectly, all
costs, expenses, debts and obligations of each Trust other than with
respect to the trust preferred securities; and
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- each trust agreement provides that the securities trustees thereunder
will not cause or permit the Trust to, among other things, engage in any
activity that is not consistent with the purposes of the Trust.
Payments of distributions and other payments due on the trust preferred
securities, to the extent funds are legally and immediately available, will be
guaranteed by us as to the extent set forth under "Description of the
Guarantees."
If we do not make interest payments on any series of junior subordinated
notes, the related Trust will not have sufficient funds to pay distributions on
its trust preferred securities. Each guarantee is a guarantee from the time of
its issuance, but does not apply to any payment of distributions unless and
until the related Trust has sufficient funds legally and immediately available
for the payment of such distributions.
If we fail to make interest or other payments on any series of junior
subordinated notes when due (taking into account any extension period as
described in the applicable prospectus supplement), the holders of the related
trust preferred securities may direct the property trustee to enforce its rights
under the junior subordinated notes of the series.
If the property trustee fails to enforce its rights under any series of
junior subordinated notes, to the fullest extent permitted by applicable law,
any holder of related trust preferred securities may institute a legal
proceeding directly against us to enforce the property trustee's rights under
such series of junior subordinated notes without first instituting any legal
proceeding against the property trustee or any other person or entity.
Notwithstanding the foregoing, a holder of trust preferred securities may
institute a legal proceeding directly against us, without first instituting a
legal proceeding against the property trustee or any other person or entity, for
enforcement of payment to the holder of principal of premium, if any, or
interest on junior subordinated notes of the related series having a principal
amount equal to the total stated liquidation amount of the trust preferred
securities of such holder on or after the due dates specified in the junior
subordinated notes of such series.
If we fail to make interest or other payments under any guarantee, the
guarantee provides that the holders of the trust preferred securities to which
the guarantee relates may direct the guarantee trustee to enforce its rights
thereunder. In addition, any holder of trust preferred securities may institute
a legal proceeding directly against us to enforce the guarantee trustee's rights
under the related guarantee without first instituting a legal proceeding against
the guarantee trustee or any other person or entity.
Each guarantee, the subordinated note indenture, the junior subordinated
notes of the related series, the related trust agreement and the related
agreement as to expenses and liabilities, constitute a full and unconditional
guarantee by our company of the payments due on the related series of trust
preferred securities.
Upon any voluntary or involuntary dissolution, winding-up or termination of
any Trust, unless junior subordinated notes of the related series are
distributed in connection therewith, the holders of trust preferred securities
will be entitled to receive, out of assets legally available for distribution to
holders, a liquidation distribution in cash as described in the applicable
prospectus supplement.
Upon any voluntary or involuntary liquidation or bankruptcy of our company,
the property trustee, as holder of the related series of junior subordinated
notes, would be a subordinated creditor of our company, subordinated in right of
payment to all senior indebtedness, but entitled to receive payment in full of
principal premium, if any, and interest, before any of our stockholders receive
payments or distributions. Because we are guarantor under each guarantee and
have agreed to pay for all costs, expenses and liabilities of each Trust, other
than the Trust's obligations to holders of the trust preferred securities,
pursuant to the related agreement
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as to expenses and liabilities, the positions of a holder of trust preferred
securities and a holder of junior subordinated notes of the related series
relative to other creditors and to our stockholders in the event of liquidation
or bankruptcy of our company would be substantially the same.
A default or event of default under any senior indebtedness would not
constitute a default or event of default under the subordinated note indenture.
In the event of payment defaults under, or acceleration of, senior indebtedness,
the subordination provisions of the junior subordinated notes provide that no
payments may be made in respect of the junior subordinated notes until such
senior indebtedness has been paid in full or any payment default has been cured
or waived. Failure to make required payments on the junior subordinated notes of
any series would constitute an event of default under the subordinated note
indenture with respect to the junior subordinated notes of such series, except
that failure to make interest payments on the junior subordinated notes of such
series will not be an event of default during an extension period as described
in the applicable prospectus supplement.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
This section describes the general terms and provisions of our stock
purchase contracts and stock purchase units that may be offered by this
prospectus. When we offer to sell a particular series of the stock purchase
contracts or stock purchase units, we will describe the specific terms of the
series in a supplement to this prospectus. The description in the applicable
supplement to this prospectus will be a summary and reference will be made to
the stock purchase contracts, and, if applicable, collateral arrangements and
depositary arrangements, relating to the stock purchase contracts or stock
purchase units.
GENERAL
We may issue and sell, from time to time, stock purchase contracts,
representing contracts obligating holders to purchase from us, and for us to
sell to the holders, a specified number of shares of our common stock at a
future date or dates. The price per share of our common stock may be fixed at
the time the stock purchase contracts are issued or may be determined by
reference to a specified formula set forth in the stock purchase contracts. The
stock purchase contracts may be issued separately or as part of units. The stock
purchase units will consist of the following:
- a stock purchase contract; and
- one or more of the following, each of which secures the holders'
obligations to purchase the common stock under the stock purchase
contracts:
- senior notes;
- junior subordinated notes;
- trust preferred securities; or
- debt obligations of third parties, including U.S. treasury securities.
The stock purchase contracts may require (1) us to make periodic payments
to holders of the stock purchase units or (2) the holders of the stock purchase
units to make periodic payments to us. The stock purchase contracts may require
holders to secure their obligations under the stock purchase contracts in a
specified manner.
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DESCRIPTION OF THE PREFERRED STOCK
We are authorized by our Amended and Restated Certificate of Incorporation
to issue 100 million shares of preferred stock having a par value of $0.01 per
share.
As of today, we have not issued any shares of preferred stock. Subject to
limitations prescribed by the Delaware General Corporation Law, our Amended and
Restated Certificate of Incorporation and our Amended and Restated Bylaws, our
board of directors is authorized to fix the number of shares constituting each
class or series of preferred stock and the designations and powers, preferences
and relative, participating, optional or other special rights, including those
provisions as may be desired concerning voting, redemption, dividends,
dissolution or the distribution of assets, conversion or exchange, and such
other subjects or matters as may be fixed by resolution of our board of
directors or a committee authorized by our board of directors. The preferred
stock when offered by this prospectus will, when issued, be fully paid and
nonassessable and will not have, or be subject to, any preemptive or similar
rights. The board of directors can authorize the issuance of shares of preferred
stock with terms and conditions which could have the effect of discouraging a
takeover or other transaction which holders of some, or a majority, of such
shares might believe to be in their best interest or in which holders of some,
or a majority, of such shares might receive a premium for their shares over the
then-market price of such shares.
We will describe in a prospectus supplement some or all of the following
terms of the class or series of preferred stock being offered:
- title;
- stated value;
- the number of shares offered;
- the liquidation preference per share;
- the purchase price;
- the dividend rates, periods and/or payment dates or methods of
calculation of the dividend rates;
- whether dividends will be cumulative or non-cumulative and, if
cumulative, the date from which dividends will accumulate;
- the procedures for any auction or remarketing, if any;
- the provisions for a sinking fund, if any;
- the provisions for redemption, if applicable;
- any listing of the preferred stock on any securities exchange or market;
- the terms and conditions, if applicable, upon which the preferred stock
will be convertible into our common stock, including the conversion
price, or manner of calculation of the conversion price, and conversion
period;
- the terms and conditions, if applicable, upon which preferred stock will
be exchanged into debt securities, including the exchange price, or
manner of calculating the exchange price, and the exchange period;
- voting rights, if any;
- any material and/or special United States federal income tax
considerations;
- the relative ranking and preferences of the preferred stock as to
dividend rights upon liquidation, dissolution or winding up of our
affairs;
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- any limitations on issuance of any class or series of preferred stock
ranking senior to or equal to the series of preferred stock as to
dividend rights upon liquidation, dissolution or winding up of our
affairs; and
- any other specific terms, preferences, rights, limitations or
restrictions.
Unless otherwise specified in the prospectus supplement, the preferred
stock will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of our company, rank:
- senior to all classes or series of our common stock, and to all equity
securities issued by us the terms of which specifically provide that such
equity securities rank junior to the preferred stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up of
our company;
- equal to all equity securities issued by us, the terms of which
specifically provide that those equity securities will rank equal to the
preferred stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of our company; and
- junior to all equity securities issued by us, the terms of which
specifically provide that those equity securities rank senior to the
preferred stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of our company.
DESCRIPTION OF THE COMMON STOCK
GENERAL
Pursuant to our Amended and Restated Certificate of Incorporation, we are
authorized to issue 400 million shares of common stock having a par value of
$0.01 per share. Our common stock is listed on the New York Stock Exchange under
the trading symbol "MNY." The transfer agent and registrar for our common stock
is EquiServe Trust Company.
DIVIDENDS
Subject to the preferential rights of any holders of any outstanding series
of our preferred stock, each holder of common stock is entitled to receive
dividends, if declared by our board of directors, out of funds that we can
legally use to pay dividends. Dividends may be paid in cash, property or shares
of our capital stock.
Our board of directors adopted a resolution expressing our intention to
declare in lieu of quarterly dividends, an annual cash dividend of $0.40 per
share, plus an enhancement to fairly compensate shareholders from a cash-flow
perspective, on the common stock commencing in 2000. The declaration of
dividends will be reviewed periodically by our board of directors in light of
our earnings, financial condition and capital requirements. A dividend may be
adjusted or eliminated at the discretion of our board of directors on the basis
of these or other considerations. We can not promise you that our board of
directors will declare dividends in the future and if dividends are declared by
our board of directors, the amount of those dividends.
As a holding company, our ability to meet our cash requirements and pay
dividends on the common stock will depend in large part upon the receipt of
dividends and other payments from our subsidiaries. The payment of dividends by
our subsidiaries to us is regulated under state insurance law.
VOTING RIGHTS
The holders of common stock will possess exclusive voting rights in our
company, except to the extent that our board of directors will have designated
voting power with respect to any
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preferred stock issued. Each holder of common stock is entitled to one vote for
each share of stock registered in that holder's name on our books on each matter
submitted for a vote of holders of common stock.
Generally, the presence in person or by proxy of the holders of record
entitled to exercise at least one-third of the voting power of our company at a
meeting of stockholders constitutes a quorum for the transaction of business of
that meeting. Generally, all matters to be voted on by stockholders must be
approved by a majority vote, or, in the case of the election of directors, by a
plurality. Stockholders will not have any right to cumulate votes in the
election of directors.
LIQUIDATION RIGHTS
In the event of liquidation, dissolution or winding-up of our company, the
holders of the common stock will be entitled to share proportionately in the
distribution of all assets of our company remaining after payment of all of our
company's debts and liabilities and of all sums to which holders of any
preferred stock may be entitled.
PREEMPTIVE RIGHTS
Holders of the common stock will not generally be entitled to preemptive
rights with respect to any shares of capital stock which may be issued by us.
RIGHTS AGREEMENT
Each share of our common stock, including those that may be issued in an
offering under this prospectus, carries with it one preferred share purchase
right. If these rights become exercisable, each right entitles the registered
holder to purchase one one-hundredth of a share of our Series A Junior Preferred
Stock (subject to a proportionate decrease in the fractional number of shares of
Series A Junior Preferred Stock that may be purchased if a stock split, stock
dividend or similar transaction occurs with respect to the common stock and a
proportionate increase in the event of a reverse stock split). Until a right is
exercised, the holder of the right has no right to vote or receive dividends or
any other rights as a shareholder as a result of holding the right. The
description and terms of the rights are described in the Rights Agreement, dated
as of November 10, 1998, between us and First Chicago Trust Company of New York,
as rights agent. The Rights Agreement is filed as an exhibit to the registration
statement.
The rights trade automatically with shares of our common stock. A holder of
common stock may exercise the rights only under the circumstances described
below. The rights are designed to protect the interests of our company and
shareholders against coercive takeover tactics. The rights are also designed to
encourage potential acquirors to negotiate with our board of directors before
attempting a takeover and to increase the ability of our board of director to
negotiate terms of any proposed takeover that benefit our shareholders. The
rights may, but are not intended to, deter takeover proposals that may be in the
interests of our shareholders.
Shares of Series A Junior Preferred Stock will rank junior to all other
series of our preferred stock, including any preferred shares offered under this
prospectus, if our board of directors, in creating such preferred stock,
provides that they will rank senior to the Series A Junior Preferred Stock.
The purchase price for each one one-hundredth of a share of Series A Junior
Preferred Stock is $96. We must adjust the purchase price if specified events
occur, such as:
- if we pay stock dividends on the Series A Junior Preferred Stock or
effect a stock split or reverse stock split with respect to the Series A
Junior Preferred Stock; or
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- if we issue any shares of our capital stock in a reclassification of the
Series A Junior Preferred Stock.
Holders may exercise their rights only following a distribution date. A
distribution date will occur on the earlier of the following: (1) a person or
group acquires 15% or more of the outstanding shares of our common stock or (2)
a person or group makes or announces an offer to purchase our common stock,
which, if successful, would result in the acquisition of 15% or more of the
outstanding shares of our common stock. However, a distribution date will not
occur, and the rights cannot be exercised, as long as our board of directors has
the ability to redeem the rights, as described below.
The rights have some additional features that will be triggered upon the
occurrence of specified events, including:
- if a person or group acquires 15% or more of the outstanding shares of
our common stock, holders of the rights, other than such person or group,
may purchase our common stock (instead of our Series A Junior Preferred
Stock) at 50% of the market value of the purchased common stock;
- if a person or group acquires 15% or more of the outstanding shares of
our common stock, our board of directors may, at any time before the
person or group acquires 50% or more of the outstanding shares of common
stock, exchange all or part of the rights (other than rights held or
previously held by the 15% or greater shareholder) for common stock at an
exchange ratio equal to one common share per right, subject to
adjustment; and
- if our company is involved in specified business combinations or the sale
of 50% or more of our assets or earning power, the holders of the rights
may purchase common stock of the acquiror or an affiliated company at 50%
of market value.
Any time before a person or group acquires 15% or more of the outstanding
shares of common stock, our board of directors may redeem the rights in whole,
but not in part, at a rights redemption price of $0.01 per right, subject to
adjustment for stock dividends, stock splits and similar transactions. Our board
of directors in its sole discretion may establish the effective time, basis and
conditions of the redemption. Immediately upon redemption of the rights, the
holder (1) can no longer exercise such rights and (2) can only receive the
redemption price.
The rights will expire on November 10, 2008, unless we redeem them before
then. Our board of directors may amend the terms of the rights without the
consent of the holders of the rights at any time before the distribution date in
any manner our board of directors deems desirable. Our board of directors may
amend the terms of the rights without the consent of the holders of the rights
after the distribution date only if the amendment does not adversely affect the
interests of the holders of the rights.
PLAN OF DISTRIBUTION
We and each Trust may sell the senior notes, junior subordinated notes,
trust preferred securities, preferred stock or common stock offered pursuant to
this prospectus in one or more of the following ways from time to time:
- through underwriters or dealers;
- directly to institutional purchasers or to a single purchaser; or
- through agents.
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The prospectus supplement with respect to each series of securities will
set forth the terms of the offering of the securities, including:
- the name or names of any underwriters or agents;
- the purchase price of the securities and the proceeds to us or the
applicable Trust from the sale;
- any underwriting discounts or agency fees and other items constituting
underwriters' or agents' compensation;
- any initial public offering price; and
- any discounts or concessions allowed or realized or paid to dealers and
any securities exchange on which the securities may be listed.
If underwriters are used in the sale, the securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or directly by one or more underwriters
acting alone.
Unless otherwise set forth in the applicable prospectus supplement, the
obligations of the underwriters to purchase any series of securities described
in the applicable prospectus supplement will be subject to conditions precedent
and the underwriters will be obligated to purchase all of the series of the
securities, if any are so purchased by them. Any public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
Underwriters, dealers, agents and remarketing firms may be entitled, under
agreements entered into with us and/or the applicable Trust, or both, to
indemnification against specified civil liabilities, including liabilities under
the Securities Act. Underwriters, dealers, agents and remarketing agents may
engage in transactions with, or perform services for, us and/or any Trust in the
ordinary course of business.
Each series of securities, except for the common stock which is traded on
the New York Stock Exchange, will be a new issue of securities and will have no
established trading market. Any underwriters to whom those securities are sold
for public offering and sale may make a market in them, but the underwriters
will not be obligated to do so and may discontinue any market making at any time
without notice. The securities, except for the common stock which are traded on
the New York Stock Exchange, may or may not be listed on a national securities
exchange.
LEGAL MATTERS
Richards, Layton & Finger, P.A., Wilmington, Delaware, will issue an
opinion to the Trusts regarding specified matters of Delaware law in connection
with this offering including the validity of the trust preferred securities.
Dewey Ballantine LLP, New York, New York, will issue an opinion to us regarding
specified matters relating to the senior notes, the junior subordinated notes,
the guarantees, the common stock and the preferred stock. Specified legal
matters will be passed on behalf of the underwriters by a law firm to be chosen
by the underwriters at the time of the offering.
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EXPERTS
The consolidated financial statements of The MONY Group Inc. and our
subsidiaries, included in our report on Form 10-K for the fiscal year ended
December 31, 1998 referred to above have been audited by PricewaterhouseCoopers
LLP, independent accountants, as set forth in their report dated February 15,
1999, except for Note 18(b), as to which the date is March 22, 1999,
accompanying such financial statements, and are incorporated herein by reference
in reliance upon the report of such firm, which report is given upon their
authority as experts in accounting and auditing.
Any financial statements and schedules hereafter incorporated by reference
in the registration statement of which this prospectus is a part that have been
audited and are the subject of a report by independent accountants will be so
incorporated by reference in reliance upon such reports and upon the authority
of such firms as experts in accounting and auditing to the extent covered by
consents filed with the Securities and Exchange Commission.
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