<PAGE>
FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO. 333-50075
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 23, 1998)
[LOGO OF THE THE COASTAL CORPORATION
COASTAL CORPORATION
APPEARS HERE]
$400,000,000
$200,000,000 6.50% SENIOR DEBENTURES DUE JUNE 1, 2008
$200,000,000 6.95% SENIOR DEBENTURES DUE JUNE 1, 2028
The 6.50% Senior Debentures due June 1, 2008 (the "6.50% Debentures") and the
6.95% Senior Debentures due June 1, 2028 (the "6.95% Debentures") are being
offered by The Coastal Corporation (the "Company"). Interest on the 6.50%
Debentures and the 6.95% Debentures (collectively, the "Debentures") will be
payable semi-annually on June 1 and December 1 of each year, commencing
December 1, 1998. The Debentures will not be redeemable prior to maturity. The
Debentures will not be subject to any sinking fund. The Debentures will be
senior unsecured obligations of the Company.
Each series of the Debentures will be represented by one or more global
securities (the "Global Debentures") registered in the name of The Depository
Trust Company, New York, New York (the "Depository"), or its nominee.
Beneficial interests in the Global Debentures will be shown on, and transfers
thereof will be effected only through, records maintained by the Depository
(with respect to participants' interests) and its participants. Except as
described herein, Debentures in definitive form will not be issued.
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(3)
- ------------------------------------------------------------------------------------------
Per 6.50% Debenture 99.882% .650% 99.232%
Total $199,764,000 $1,300,000 $198,464,000
- ------------------------------------------------------------------------------------------
Per 6.95% Debenture 99.661% .875% 98.786%
Total $199,322,000 $1,750,000 $197,572,000
</TABLE>
(1) Plus accrued interest, if any, from the date of initial issuance.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses of the Company estimated at $250,000.
-------------------------------------------------
The Debentures offered by this Prospectus Supplement are being offered by the
Underwriters subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
Underwriters and to certain further conditions. It is expected that delivery
of Debentures will be made in book-entry form through the facilities of the
Depository on or about June 5, 1998.
CHASE SECURITIES INC. UBS SECURITIES
The date of this Prospectus Supplement is June 2, 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEBENTURES,
INCLUDING OVERALLOTMENT, STABILIZING TRANSACTIONS AND SYNDICATE SHORT COVERING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
----------------
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of the Company's earnings to fixed
charges, on a consolidated basis, for the periods indicated:
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------- -----------
1993 1994 1995 1996 1997 1997 1998
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio........................... 1.40x 1.72x 1.65x 2.56x 2.36x 2.57x 2.94x
</TABLE>
For purposes of calculating the ratio of earnings to fixed charges,
"earnings" are computed by adding to net earnings (loss) from continuing
operations the provision for income taxes and fixed charges net of interest
capitalized. "Fixed charges" consist of interest plus interest capitalized,
subsidiary preferred stock dividends and a portion of operating lease rent
expense deemed to be representative of interest.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Debentures
to repay floating rate indebtedness, including indebtedness of a subsidiary
under a revolving credit facility, with a weighted average interest rate of
5.96% per annum. See "Underwriting."
DESCRIPTION OF SECURITIES
GENERAL
The Debentures offered hereby by the Company are to be issued under an
Indenture dated as of February 24, 1997, between the Company and Harris Trust
and Savings Bank, as Trustee. The Indenture is more fully described in the
accompanying Prospectus under "Description of Debt Securities."
Each 6.50% Debenture will mature on June 1, 2008 and will bear interest from
the date of initial issuance at the rate of 6.50% per annum. Each 6.95%
Debenture will mature on June 1, 2028 and will bear interest from the date of
initial issuance at the rate of 6.95% per annum. Interest, in the case of both
the 6.50% Debentures and the 6.95% Debentures, will be payable semi-annually
on each June 1 and December 1, commencing December 1, 1998, to holders of
record as of the fifteenth day of the month preceding the month in which such
interest payment occurs. The Debentures will not be redeemable prior to
maturity. The Debentures will not be subject to any sinking fund.
BOOK-ENTRY SYSTEM
Each series of the Debentures will be issued in the form of one or more
fully registered Global Securities which will be deposited with, or on behalf
of, the Depository and registered in the name of the Depository or its
nominee. Except as described below, Debentures in definitive form will not be
issued.
S-2
<PAGE>
Upon the issuance of the Global Securities, the Depository will credit the
accounts of persons which have accounts with it ("participants") with the
respective principal amounts of the Debentures represented by such Global
Debentures. Such accounts shall be designated by the Underwriter. Ownership of
beneficial interests in the Global Debentures will be limited to participants
or persons that may hold interests through participants. Ownership of
beneficial interests by participants in a Global Debenture will be shown on,
and the transfer of that ownership interest will be effected only through,
records maintained by the Depository for such Global Debenture. Ownership of
beneficial interests in such Global Debenture by persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant. The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to acquire
or transfer beneficial interests in a Global Debenture.
Payment of principal of and interest on Debentures represented by any Global
Debenture will be made to the Depository or its nominee, as the case may be,
as the sole registered owner and the sole holder of the Debentures represented
thereby for all purposes under the Indenture. Neither the Company, the Trustee
nor any agent of the Company or the Trustee will have any responsibility or
liability for any aspect of the Depository's records relating to or payments
made on account of beneficial ownership interests in a Global Debenture
representing any Debentures or for maintaining, supervising or reviewing any
of the Depository's records relating to such beneficial ownership interests.
The Company expects that the Depository, upon receipt of any payment of
principal of or interest on any Global Debenture, will credit, on its book-
entry registration and transfer system, the accounts of participants with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Debenture as shown on the records of the
Depository. Payments by participants to owners of beneficial interests in a
Global Debenture held through such participants will be governed by standing
instructions and customary practices as is now the case with securities held
for customer accounts registered in "street name" and will be the sole
responsibility of such participants.
A Global Debenture may not be transferred except as a whole by the
Depository to a nominee of the Depository. A Global Debenture representing
Debentures is exchangeable for Debentures in certificated form only if (x) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for such Global Debenture or if at any time the Depository ceases
to be a clearing agency registered under the Securities Exchange Act of 1934,
as amended, and the Company fails within 90 days thereof to appoint a
successor, (y) the Company in its sole discretion determines that such Global
Debenture shall be exchangeable or (z) there shall have occurred and be
continuing an Event of Default (as defined in the Indenture) or an event which
with the giving of notice or lapse of time, or both, would constitute an Event
of Default with respect to the Debentures represented by such Global
Debenture. Any Global Debenture that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Debentures in certificated form issuable in
denominations of $1,000 and integral multiples thereof and registered in such
names as the Depository holding such Global Debenture shall direct. Subject to
the foregoing, a Global Debenture is not exchangeable, except for a Global
Debenture of like denomination to be registered in the name of the Depository
or its nominee.
So long as the Depository or its nominee is the registered owner of a Global
Debenture, such Depository or such nominee, as the case may be, will be
considered the sole owner or holder of the Debentures represented by such
Global Debenture for the purposes of receiving payment on the Debentures,
receiving notices and for all other purposes under the Indenture and the
Debentures. Beneficial interests in the Debentures will be evidenced only by,
and transfers thereof will be effected only through, records maintained by the
Depository and its participants. Except as provided herein,
S-3
<PAGE>
owners of beneficial interests in a Global Debenture will not be entitled to
and will not be considered the holders thereof for any purposes under the
Indenture. Accordingly, each person owning a beneficial interest in such a
Global Debenture must rely on the procedures of the Depository, and, if such
person is not a participant, on the procedures of the participant through
which such person owns its interest, to exercise any rights of a holder under
the Indenture.
The Indenture provides that the Depository may grant proxies and otherwise
authorize participants to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action which a holder is entitled
to give or take under the Indenture. The Company expects that, in the event
that the Company requests any action of holders or that an owner of a
beneficial interest in the Global Debentures desires to give or take any
action which a holder is entitled to give or take under the Indenture, the
Depository, under existing industry practices, would authorize the
participants holding the relevant beneficial interest to give or take such
action and such participants would authorize beneficial owners owning through
such participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
The Depository has advised the Company as follows: It is a limited-purpose
trust company which was created to hold securities for its participating
organizations (the "Participants") and to facilitate the clearance and
settlement of securities transactions between Participants in such securities
through electronic book-entry changes in accounts of its Participants.
Participants include securities brokers and dealers (including the
Underwriter), banks and trust companies, clearing corporations and certain
other organizations. Access to the Depository's system is also available to
others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly ("indirect participants"). Persons who are not Participants may
beneficially own securities held by the Depository only through Participants
or indirect participants.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement dated June
2, 1998, and the related Terms Agreements referred to therein, the
Underwriters have agreed to purchase, severally but not jointly, from the
Company, the respective principal amounts of the Debentures set forth opposite
its name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
DEBENTURES
-------------------------
6.50% 6.95%
DEBENTURES DEBENTURES
------------ ------------
<S> <C> <C>
Chase Securities Inc. ............................. $175,000,000 $175,000,000
UBS Securities LLC................................. 25,000,000 25,000,000
------------ ------------
Total............................................ $200,000,000 $200,000,000
============ ============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
thereunder are subject to approval of certain legal matters by counsel and to
various other conditions. The nature of the Underwriters' obligations is such
that the Underwriters are committed to purchase all of the Debentures of a
series if any of the Debentures of such series are purchased.
The Underwriters propose to offer the Debentures directly to the public at
the public offering prices set forth on the cover page of this Prospectus
Supplement and to certain dealers at such price less a concession not in
excess of 0.40% of principal amount with respect to the 6.50% Debentures and
0.50% with respect to the 6.95% Debentures. The Underwriters may allow and
such dealers may reallow a concession not in excess of 0.25% of principal
amount with respect to the 6.50% Debentures and 0.25% with respect to the
6.95% Debentures to certain other dealers. After the initial offerings, the
offering prices and other selling terms may be changed.
S-4
<PAGE>
The Debentures are new issues with no established trading market. The
Company has been advised by the Underwriters that it intends to make a market
in the Debentures, but it is not obligated to do so and may discontinue such
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Debentures.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments that the Underwriters may be required to make in
respect thereof.
The Underwriters or their affiliates engage in various general financing,
investment banking and banking transactions with the Company and its
affiliates from time to time. Affiliates of both Underwriters are lenders
under certain credit facilities of the Company and certain of its subsidiaries
and will receive a portion of the amounts repaid with the net proceeds of the
offering of the Debentures. See "Use of Proceeds."
S-5
<PAGE>
PROSPECTUS THE COASTAL CORPORATION
[LOGO OF THE DEBT SECURITIES
COASTAL CORPORATION PREFERRED STOCK
APPEARS HERE] COMMON STOCK
COMMON STOCK WARRANTS
SUBORDINATED DEFERRABLE INTEREST DEBENTURES
---------------
COASTAL FINANCE I
COASTAL FINANCE II
TRUST PREFERRED SECURITIES
GUARANTEED BY
THE COASTAL CORPORATION
---------------
The Coastal Corporation ("Coastal" or the "Company") may from time to time
offer (i) its unsecured senior debt securities (the "Senior Debt Securities"),
(ii) its unsecured subordinated debt securities (the "Subordinated Debt
Securities" and, together with the Senior Debt Securities, the "Debt
Securities"), which may be convertible into shares of common stock, par value
33 1/3c per share of the Company (the "Common Stock"), (iii) shares of its
preferred stock, par value 33 1/3c per share (the "Preferred Stock"), which
may be convertible into shares of Common Stock or exchangeable for Debt
Securities, (iv) shares of its Common Stock, (v) warrants to purchase shares
of its Common Stock (the "Common Stock Warrants"); (vi) its unsecured
subordinated deferrable interest debentures (the "Subordinated Deferrable
Interest Debentures") and (vii) the Trust Preferred Securities Guarantees (as
defined below).
Coastal Finance I and Coastal Finance II (each, a "Trust"), each a statutory
business trust formed under the laws of Delaware, may from time to time offer
preferred securities evidencing preferred undivided beneficial interests in
the assets of the respective Trust ("Trust Preferred Securities"). The payment
of periodic cash distributions ("distributions") with respect to Trust
Preferred Securities of each of the Trusts, out of moneys held by each of the
Trusts, and payments on liquidation, redemption or otherwise with respect to
such Trust Preferred Securities will be guaranteed by the Company as described
herein (each, a "Trust Preferred Securities Guarantee"). The Company's
obligations under the Trust Preferred Securities Guarantees will be
subordinate and junior in right of payment to all other liabilities of the
Company and pari passu (equally and ratably) with the most senior preferred
stock issued by the Company and with any guarantee that may be entered into by
the Company in respect of any preferred stock of any subsidiary or affiliate
of the Company. Subordinated Deferrable Interest Debentures may be issued and
sold from time to time in one or more series by the Company to a Trust in
connection with the investment of the proceeds from the offering of Trust
Preferred Securities and Trust Common Securities (as defined herein) of such
Trust. The Subordinated Deferrable Interest Debentures subsequently may be
distributed pro rata to holders of Trust Preferred Securities and Trust Common
Securities in connection with the termination of such Trust upon the
occurrence of certain events as may be described in the Prospectus Supplement.
The Preferred Stock and the Common Stock are collectively referred to as the
"Equity Securities," and the Debt Securities, the Equity Securities, the Trust
Preferred Securities, the Trust Preferred Securities Guarantee, the
Subordinated Deferrable Interest Debentures and the Common Stock Warrants are
collectively referred to as the "Securities."
The Securities offered pursuant to this Prospectus may be offered separately
or together in one or more series up to an aggregate public offering price of
$700,000,000 (or the equivalent thereof in foreign currency or currency units)
at individual prices and on terms to be determined at the time of the offering
and set forth in one or more supplements to this Prospectus (each, a
"Prospectus Supplement").
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and,
among other things, will include, where applicable, (i) in the case of Debt
Securities or Subordinated Deferrable Interest Debentures, the specific
designation, aggregate principal amount offered, ranking, rate or rates of
interest or the provisions for determining such rate or rates and the time of
payment thereof, maturity, currency of payment, terms relating to redemption
(whether mandatory, at the option of the Company or the holder), terms for
sinking fund payments, terms for conversion into Common Stock, additional
covenants and the initial public offering price, (ii) in the case of shares of
Preferred Stock or Trust Preferred Securities, the number of shares, specific
title and stated value, any dividend, liquidation, redemption, conversion,
exchange, voting and other rights and restrictions and the initial public
offering price, (iii) in the case of shares of Common Stock, the number of
shares of Common Stock and the terms of the offering and sale thereof and (iv)
in the case of Common Stock Warrants, the duration, aggregate amount, exercise
price and initial public offering price.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain U.S. Federal income taxes, accounting and other
considerations relating to, and any listing on a securities exchange of, the
Securities covered by such Prospectus Supplement.
The Securities may be sold directly by the Company or the applicable Trust,
through agents designated by the Company or the applicable Trust from time to
time or through underwriters or dealers designated by the Company or the
applicable Trust from time to time. If any agents of the Company or the
applicable Trust or any dealers or underwriters are involved in the sale of
the Securities in respect of which this Prospectus is being delivered, the
names of such agents, dealers or underwriters and any applicable agent's
commission, dealer's purchase price or underwriter's discount will be as set
forth in or may be calculated from the applicable Prospectus Supplement. The
net proceeds to the Company or the applicable Trust, as the case may be, from
such sale will be the purchase price of such Securities less such commission
in the case of an agent, the purchase price of such Securities in the case of
a dealer or the public offering price of such Securities less such discount in
the case of an underwriter and less, in each case, other attributable issuance
expenses. See "Plan of Distribution" for indemnification arrangements for
agents, dealers and underwriters.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
The date of this Prospectus is April 23, 1998
<PAGE>
AVAILABLE INFORMATION
The Trusts and the Company have filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Securities Act"), a combined registration statement on Form S-3 (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") relating to the Debt Securities, the Subordinated Deferrable
Interest Debentures, the Equity Securities, the Trust Preferred Securities and
the Trust Preferred Securities Guarantees.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements, information statements and other
information with the Commission. Such reports, proxy statements, information
statements and other information concerning the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Room of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, upon the payment of fees prescribed by the Commission.
The Commission maintains a site on the World Wide Web that contains reports,
proxy and information statements and other information regarding registrants
(including the Company) that file electronically with the Commission. The
address of the Commission's Web site is http://www.sec.gov. Reports, proxy
statements, information statements and other information concerning the
Company can also be inspected at the offices of the New York Stock Exchange,
Inc. located at 20 Broad Street, New York, New York 10005.
This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-3 (together with all amendments, exhibits and
schedules thereto, the "Registration Statement"), of which this Prospectus is
a part, which Coastal has filed with the Commission under the Securities Act
of 1933, as amended (the "Securities Act"). Statements contained herein
concerning the provisions of any contract or other document are necessarily
summaries of such contracts or documents, and each statement is qualified in
its entirety by reference to the copy of the applicable contract or document
filed with the Commission. Copies of the Registration Statement are on file at
the offices of the Commission and may be obtained, upon payment of fees
prescribed by the Commission, or may be examined without charge at the public
reference facilities of the Commission described above.
No separate financial statements of the Trusts have been included herein.
The Company does not believe that such financial statements would be material
to holders of the Trust Preferred Securities because (i) all of the voting
securities of the Trusts will be owned, directly or indirectly, by the
Company, a reporting company under the Exchange Act, (ii) the Trusts have no
independent operations and exist for the sole purpose of issuing securities
representing undivided beneficial interests in the assets of the applicable
Trust and investing the proceeds thereof in the Subordinated Deferrable
Interest Debentures issued by the Company and (iii) the obligations of the
Trusts under the Trust Securities are fully and unconditionally guaranteed by
the Company to the extent that the Trust has funds available to meet such
obligations. See "The Trusts," "Description of the Trust Preferred
Securities," "Description of the Trust Preferred Securities Guarantees" and
"Description of the Subordinated Deferrable Interest Debentures." The Trusts
intend to not file separate reports under the Exchange Act but must apply for
and be granted relief by the Commission to avoid the requirement to file such
reports.
INCORPORATION OF DOCUMENTS BY REFERENCE
Coastal hereby incorporates in this Prospectus by reference its Annual
Report on Form 10-K for the year ended December 31, 1997 (the "1997 Annual
Report"), which has been filed with the Commission pursuant to the Exchange
Act (File No. 1-7176).
2
<PAGE>
All reports and any definitive proxy or information statements filed by
Coastal pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of the offering
of the Securities offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein, or contained in this
Prospectus, shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
Any person, including any beneficial owner, receiving a copy of this
Prospectus may obtain without charge, upon request, a copy of any of the
documents incorporated by reference herein, except for the exhibits to such
documents (unless such exhibits are specifically incorporated by reference in
such documents). Such requests should be directed to The Coastal Corporation,
Coastal Tower, Nine Greenway Plaza, Houston, Texas 77046-0995, Attention:
Corporate Secretary, telephone number: (713) 877-1400.
3
<PAGE>
THE COMPANY
Coastal, acting through its subsidiaries, is a diversified energy holding
company with subsidiary operations in natural gas gathering, marketing,
processing, storage and transmission; petroleum refining, marketing and
distribution and chemicals; gas and oil exploration and production; coal
mining; and power. The Company was incorporated under the laws of Delaware in
1972 to become the successor parent, through a corporate restructuring, of a
corporate enterprise founded in 1955. The Company's principal office is
located at Coastal Tower, Nine Greenway Plaza, Houston, Texas 77046-0995
(telephone number (713) 877-1400).
THE TRUSTS
Each of Coastal Finance I and Coastal Finance II is a statutory business
trust formed under Delaware law pursuant to (i) a separate declaration of
trust, executed by the Company, as sponsor for such trust (the "Sponsor"), and
the Trustees (as defined herein) as of that date of such trust and (ii) the
filing of a separate certificate of trust with the Delaware Secretary of
State. The declaration of trust of each Trust will be amended and restated in
its entirety (as so amended and restated, the "Declaration") substantially in
the form filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. Each Trust exists for the exclusive purposes of (i)
issuing and selling the Trust Preferred Securities representing preferred
undivided beneficial interests in the assets of such Trust and Trust Common
Securities representing common undivided beneficial interests in the assets of
such Trust (the "Trust Common Securities" and, together with the Trust
Preferred Securities, the "Trust Securities"), (ii) investing the gross
proceeds of the Trust Securities in a series of Subordinated Debt Securities
and (iii) engaging in only those other activities necessary or incidental
thereto. All of the Trust Common Securities will be directly or indirectly
owned by the Company. The Trust Common Securities will rank pari passu, and
payments will be made thereon pro rata, with the Trust Preferred Securities
except that upon an event of default under the Declaration, the rights of the
holders of the Trust Common Securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise will be subordinated
to the rights of the holders of the Trust Preferred Securities. The Company
will, directly or indirectly, acquire Trust Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of each Trust. Each Trust
has a term of approximately 55 years, but may earlier terminate as provided in
the applicable Declaration. Each Trust's business and affairs will be
conducted by the trustees (the "Trustees") appointed by the Company, as the
direct or indirect holder of all the Trust Common Securities. The holder of
the Trust Common Securities will be entitled to appoint, remove or replace any
of, or increase or reduce the number of, the Trustees of a Trust. The duties
and obligations of such Trustees shall be governed by the Declaration of such
Trust, the Trust Indenture Act and the Trust Act. A majority of the Trustees
(the "Regular Trustees") of each Trust will be persons who are employees or
officers of or affiliated with the Company. One Trustee of each Trust will be
a financial institution which will be unaffiliated with the Company and which
shall act as property trustee and as indenture trustee for purposes of the
Trust Indenture Act of 1939 (the "Trust Indenture Act"), pursuant to the terms
set forth in a Prospectus Supplement (the "Property Trustee"). In addition,
unless the Property Trustee maintains a principal place of business in the
State of Delaware, and otherwise meets the requirements of applicable law,
another Trustee of each Trust will have its principal place of business or
reside in the State of Delaware (the "Delaware Trustee"). The Company will pay
all fees, expenses, debts and obligations (other than the Trust Securities)
related to the Trusts and the offering of Trust Securities. The office of the
Delaware Trustee for each Trust in the State of Delaware is The Bank of New
York (Delaware) 400 White Clay Center, Route 273, Newark, Delaware 19711. The
principal place of business of each Trust shall be c/o The Coastal
Corporation, Coastal Tower, Nine Greenway Plaza, Houston, Texas 77046-0995
(telephone number (713) 877-1400).
4
<PAGE>
USE OF PROCEEDS
Except as otherwise provided in an applicable Prospectus Supplement, the net
proceeds from the sale of the Securities will be used to repay short-term
borrowings and for the repayment of borrowings under various credit
agreements, including short-term borrowings and credit agreements of
subsidiaries, and for other general corporate purposes. Prior to such uses,
the net proceeds from the sale of Securities will be invested in certificates
of deposit or other highly liquid investments with short-term maturities.
ACCOUNTING TREATMENT RELATING TO TRUST SECURITIES
The financial statements of each Trust that has issued Trust Securities will
be consolidated with the Company's financial statements, with the Trust
Preferred Securities of each Trust shown on the Company's consolidated
financial statements as Company-obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely subordinated debt securities of
the Company. The Company's financial statements will include a footnote that
discloses, among other things, that the sole asset of each Trust included
therein consists of Subordinated Deferrable Interest Debentures of the
Company, and will specify the designation, principal amount, interest rate and
maturity date of such Subordinated Deferrable Interest Debentures.
RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
A description of the Company's ratio of earnings to fixed charges or
earnings to combined fixed charges and preferred stock dividends, as
applicable, on a consolidated basis, will appear in an applicable Prospectus
Supplement.
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DESCRIPTION OF DEBT SECURITIES
Debt Securities may be issued from time to time under one or more
indentures, each dated as of a date on or prior to the issuance of the Debt
Securities to which it relates. Senior Debt Securities and Subordinated Debt
Securities may be issued pursuant to separate indentures (respectively, a
"Senior Indenture" and a "Subordinated Indenture"), in each case between the
Company and Harris Trust and Savings Bank, as Trustee (the "Trustee"), and in
the form that has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part, subject to such amendments or supplements as
may be adopted from time to time. The Senior Indenture and the Subordinated
Indenture, as amended or supplemented from time to time, are sometimes
referred to individually as an "Indenture" and collectively as the
"Indentures." Each Indenture will be subject to and governed by the Trust
Indenture Act of 1939, as amended (the "TIA"). The statements made hereunder
relating to the Debt Securities and the Indentures are summaries of the
anticipated provisions thereof, do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all of the provisions
of the applicable Indenture, including the definitions therein of certain
terms and those terms made part of such Indenture by reference to the TIA, as
in effect on the date of such Indenture, and to such Debt Securities. Certain
capitalized terms used below and not defined have the respective meanings
assigned to them in the applicable Indenture.
TERMS
The Debt Securities will be unsecured obligations of the Company. The
Indebtedness represented by (i) Senior Debt Securities will rank pari passu in
right of payment with all other unsecured and unsubordinated Indebtedness of
the Company and (ii) Subordinated Debt Securities will be subordinated in
right of payment to the prior payment in full of all Senior Indebtedness (as
defined below) of the Company. See "--Ranking of Debt Securities." The
particular terms of the Debt Securities offered by a Prospectus Supplement
will be described in such Prospectus Supplement, along with any applicable
modifications of or additions to the general terms of the Debt Securities as
described herein and in the applicable Indenture and any applicable U.S.
Federal income tax considerations. Accordingly, for a description of the terms
of any Series of Debt Securities, reference must be made to both the
Prospectus Supplement relating thereto and the description of the Debt
Securities set forth in this Prospectus.
Each Indenture will provide for the issuance by the Company from time to
time of its Debt Securities in one or more Series. The aggregate principal
amount of Debt Securities which may be issued under each Indenture will be
unlimited and each Indenture will set forth the specific terms of any Series
of Debt Securities or provide that such terms shall be set forth in, or
determined pursuant to, an Authorizing Resolution and/or a supplemental
indenture, if any, relating to such Series.
The specific terms of each Series of Debt Securities will be set forth in
the applicable Prospectus Supplement relating thereto, including the
following, as applicable:
1. the title of such Debt Securities and whether such Debt Securities are
Senior Debt Securities or Subordinated Debt Securities;
2. the aggregate principal amount of such Debt Securities and any limit
on such aggregate principal amount;
3. the price (expressed as a percentage of the principal amount thereof)
at which such Debt Securities will be issued and, if other than the
principal amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity thereof, or, if
applicable, the portion of the principal amount of such Debt Securities
that is convertible into Common Stock or the method by which any such
portion shall be determined;
4. if convertible into Common Stock, the terms on which such Debt
Securities are convertible, including the initial conversion price, the
conversion period, any events requiring an adjustment of the applicable
conversion price and any requirements relating to the reservation of such
shares of Common Stock for purposes of conversion;
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5. the date or dates, or the method for determining such date or dates,
on which the principal of such Debt Securities will be payable and, if
applicable, the terms on which such maturity may be extended;
6. the rate or rates (which may be fixed or floating), or the method by
which such rate or rates shall be determined, at which such Debt Securities
will bear interest, if any;
7. the date or dates, or the method for determining such date or dates,
from which any such interest will accrue, the dates on which any such
interest will be payable, the record dates for such interest payment dates,
or the method by which such dates shall be determined, the persons to whom
such interest shall be payable, and the basis upon which interest shall be
calculated if other than that of a 360-day year of twelve 30-day months;
8. the place or places where the principal of and interest, if any, on
such Debt Securities will be payable, where such Debt Securities may be
surrendered for registration of transfer or exchange and where notices or
demands to or upon the Company in respect of such Debt Securities and the
applicable Indenture may be served;
9. the period or periods, if any, within which, the price or prices at
which and the other terms and conditions upon which such Debt Securities
may, pursuant to any optional or mandatory redemption provisions, be
redeemed, as a whole or in part, at the option of the Company;
10. the obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any Sinking Fund (as defined in the
applicable Indenture) or analogous provision or at the option of a holder
thereof, and the period or periods within which, the price or prices at
which and the other terms and conditions upon which such Debt Securities
will be redeemed, repaid or purchased, as a whole or in part, pursuant to
such obligations;
11. if other than U.S. dollars, the currency or currencies in which the
principal of and interest, if any, on such Debt Securities are denominated
and payable, which may be a foreign currency or units of two or more
foreign currencies or a composite currency or currencies, and the terms and
conditions relating thereto;
12. whether the amount of payments of principal of or interest, if any,
on such Debt Securities may be determined with reference to an index,
formula or other method (which index, formula or method may, but need not
be, based on the yield on or trading price of other securities, including
United States Treasury securities, or on a currency, currencies, currency
unit or units, or composite currency or currencies) and the manner in which
such amounts shall be determined;
13. whether the principal of or interest, if any, on the Debt Securities
of the Series are to be payable, at the election of the Company or a holder
thereof, in a currency or currencies, currency unit or units or composite
currency or currencies other than that in which such Debt Securities are
denominated or stated to be payable and the period or periods within which,
and the terms and conditions upon which, such election may be made;
14. provisions, if any, granting special rights to the holders of Debt
Securities of the Series upon the occurrence of such events as may be
specified;
15. any deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to Debt Securities of the
Series, whether or not such Events of Default (as defined below) or
covenants are consistent with the Events of Default or covenants described
herein;
16. whether Debt Securities of the Series are to be issuable initially in
temporary global form and whether any Debt Securities of the Series are to
be issuable in permanent global form and, if so, whether beneficial owners
of interests in any such security in permanent global form may exchange
such interests for Debt Securities of such Series and of like tenor of any
authorized form and denomination and the circumstances under which any such
exchanges may occur, if other than in the manner provided in the applicable
Indenture, and, if Debt Securities of the Series are to be issuable as a
Global Security (as defined below), the identity of the depository for such
Series;
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17. the applicability, if any, of the defeasance and covenant defeasance
provisions of the applicable Indenture to the Debt Securities of the
Series; and
18. any other terms of the Series (which terms shall not be inconsistent
with the provisions of the Indenture under which the Debt Securities are
issued).
If so provided in the applicable Prospectus Supplement, the Debt Securities
may be issued at a discount below their principal amount and provide for less
than the entire principal amount thereof to be payable upon declaration of
acceleration of the maturity thereof ("Original Issue Discount Securities").
In such cases, all material U.S. Federal income tax, accounting and other
considerations applicable to Original Issue Discount Securities will be
described in the applicable Prospectus Supplement.
Except as may be set forth in the applicable Prospectus Supplement, the Debt
Securities will not contain any provisions that would limit the ability of the
Company to incur Indebtedness or that would afford holders of Debt Securities
protection in the event of a highly leveraged transaction involving the
Company or in the event of a change of control. Reference is made to the
applicable Prospectus Supplement for information with respect to any deletions
from, modifications of or additions to the Events of Default or covenants of
the Company that are described below, including any addition of a covenant or
other provision providing event risk or similar protection.
DENOMINATION, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the Debt
Securities of each Series will be issued only in registered form, without
coupons, in denominations of $1,000 and integral multiples thereof, or in such
other currencies or denominations as may be set forth in the applicable
Indenture or specified in, or pursuant to, an Authorizing Resolution and/or
supplemental indenture, if any, relating to such Series of Debt Securities.
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of and interest, if any, on any Series of Debt Securities will be
payable at the corporate trust office of the Trustee, the address of which
will be stated in the applicable Prospectus Supplement; provided, however,
that, at the option of the Company, payment of interest may be made by check
mailed to the address of the person entitled thereto as it appears in the
applicable register for such Debt Securities.
Subject to certain limitations imposed upon Debt Securities issued in book-
entry form, the Debt Securities of any Series will be exchangeable for any
authorized denomination of other Debt Securities of the same Series and of a
like aggregate principal amount and tenor upon surrender of such Debt
Securities at the corporate trust office of the Trustee or at the office of
any registrar designated by the Company for such purpose. In addition, subject
to certain limitations imposed upon Debt Securities issued in book-entry form,
the Debt Securities of any Series may be surrendered for registration of
transfer or exchange thereof at the corporate trust office of the Trustee or
at the office of any registrar designated by the Company for such purpose. No
service charge will be made for any registration of transfer or exchange, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with certain transfers and
exchanges. The Company may act as registrar and may change any registrar
without notice.
CERTAIN COVENANTS
The applicable Prospectus Supplement will describe any material covenants in
respect of a Series of Debt Securities that are not described in this
Prospectus. Unless otherwise indicated in the applicable Prospectus
Supplement, Senior Debt Securities will include the covenants described below.
Definitions
"Attributable Debt" will mean, with respect to any Sale and Leaseback
Transaction as of any particular time, the present value (discounted at the
rate of interest implicit in the terms of the lease) of the obligations of the
lessee under such lease for net rental payments during the remaining term of
the lease (including any period for which such lease has been extended or may,
at the option of the Company, be extended).
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"Consolidated Net Tangible Assets" will mean the total assets appearing on a
consolidated balance sheet of the Company and its Subsidiaries, less, without
duplication: (i) current liabilities; (ii) reserves for estimated rate refunds
pending the outcome of a rate proceeding to the extent such refunds have not
been finally determined; (iii) all intangible assets; and (iv) deferred income
tax assets.
"Funded Debt" will mean all Indebtedness maturing one year or more from the
date of the creation thereof, all Indebtedness directly or indirectly
renewable or extendible, at the option of the debtor, by its terms or by the
terms of any instrument or agreement relating thereto, to a date one year or
more from the date of the creation thereof, and all Indebtedness under a
revolving credit or similar agreement obligating the lender or lenders to
extend credit over a period of one year or more, even though such Indebtedness
may also conform to the definition of Short-Term Borrowing (as defined in the
applicable Indenture).
"Indebtedness" will mean (i) any liability of any person (a) for borrowed
money, (b) evidenced by a note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
property or assets (other than inventory or similar property acquired in the
ordinary course of business), including securities, or (c) for the payment of
money relating to a Capitalized Lease Obligation (as defined in the applicable
Indenture); (ii) any guarantee by any person of any liability of others
described in the preceding clause (i); and (iii) any amendment, renewal,
extension or refunding of any liability of the types referred to in clauses
(i) and (ii) above.
"Lien" will mean any mortgage, lien, pledge, charge or other security
interest or encumbrance of any kind.
"Principal Domestic Property of the Company" will mean any property, plant,
equipment or facility of the Company which is located in the United States or
any territory or political subdivision thereof, except any property which the
Board of Directors or management of the Company shall determine to be not
material to the business or operations of the Company and its Subsidiaries,
taken as a whole.
"Sale and Leaseback Transaction" will have the meaning set forth in the
"Restrictions on Sales and Leasebacks" covenant described below.
"Significant Subsidiary" will mean a Subsidiary, including its Subsidiaries,
which meets any of the following conditions:
(a) the Company's and its other Subsidiaries' investments in and advances
to the Subsidiary exceed 10 percent of the total assets of the Company and
its Subsidiaries consolidated as of the end of any two of the three most
recently completed fiscal years;
(b) the Company's and its other Subsidiaries' proportionate share of the
total assets of the Subsidiary exceeds 10 percent of the total assets of
the Company and its Subsidiaries consolidated as of the end of any two of
the three most recently completed fiscal years; or
(c) the Company's and its other Subsidiaries' equity in the income from
continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principles of the Subsidiary
exceeds 10 percent of such income of the Company and its Subsidiaries
consolidated as of the end of any two of the three most recently completed
fiscal years.
"Stated Maturity" when used with respect to any security or any installment
of interest thereon will mean the date specified in such security as the fixed
date on which the principal of such security or such installment of interest
is due and payable.
"Subsidiary" will mean (i) a corporation a majority of whose Capital Stock
with voting power, under ordinary circumstances, to elect directors is at the
time, directly or indirectly, owned by the Company, by the Company and a
Subsidiary (or Subsidiaries) of the Company or by a Subsidiary (or
Subsidiaries) of the Company or (ii) any person (other than a corporation) in
which the Company, a Subsidiary (or Subsidiaries) of the
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Company or the Company and a Subsidiary (or Subsidiaries) of the Company,
directly or indirectly, at the date of determination thereof has at least
majority ownership interest; provided, however, that no corporation shall be
deemed a Subsidiary until the Company, a Subsidiary (or Subsidiaries) of the
Company or the Company and a Subsidiary (or Subsidiaries) of the Company
acquires more than 50% of the outstanding voting stock thereof and has elected
a majority of its board of directors.
Restrictions on Liens
The Company will not incur, create, assume or otherwise become liable with
respect to any Indebtedness secured by a Lien, or guarantee any Indebtedness
with a guarantee which is secured by a Lien, on any Principal Domestic
Property of the Company or any shares of stock or Indebtedness of any
Significant Subsidiary, without effectively providing that the Debt Securities
of each Series (together with, if the Company shall so determine, any other
Indebtedness of the Company then existing or thereafter created ranking
equally with the Debt Securities of each Series) shall be secured equally and
ratably with (or, at the option of the Company, prior to) such secured
Indebtedness, so long as such secured Indebtedness shall be so secured;
provided, however, that this covenant will not apply to Indebtedness secured
by: (a) Liens existing on the date of the Indenture; (b) Liens in favor of
governmental bodies to secure progress, advance or other payments; (c) Liens
existing on property, shares of stock or Indebtedness at the time of
acquisition thereof (including acquisition through lease, merger or
consolidation) or Liens to secure the payment of all or any part of the
purchase price thereof or the cost of construction, installation, renovation,
improvement or development thereon or thereof or to secure any Indebtedness
incurred prior to, at the time of, or within 360 days after the later of the
acquisition, completion of such construction, installation, renovation,
improvement or development or the commencement of full operation of such
property or within 360 days after the acquisition of such shares or
Indebtedness for the purpose of financing all or any part of the purchase
price thereof; (d) Liens securing Indebtedness in an aggregate amount which,
at the time of incurrence and together with all outstanding Attributable Debt
in respect of Sale and Leaseback Transactions permitted by clause (y) in the
"Restrictions on Sales and Leasebacks" covenant, does not exceed ten percent
of the Consolidated Net Tangible Assets of the Company; (e) Liens securing
Indebtedness other than Funded Debt; and (f) any extension, renewal or
replacement (or successive extensions, renewals or replacements), as a whole
or in part, of any Lien referred to in the foregoing clauses (a) through (e)
inclusive; provided that such extension, renewal or replacement of such Lien
is limited to all or any part of the same property, shares of stock or
Indebtedness that secured the Lien extended, renewed or replaced (plus
improvements on such property), and that such secured Indebtedness at such
time is not increased.
Restrictions on Sales and Leasebacks
The Company will not sell or transfer any Principal Domestic Property of the
Company, with the Company taking back a lease of such Principal Domestic
Property of the Company (a "Sale and Leaseback Transaction"), unless (i) such
Principal Domestic Property of the Company is sold within 360 days from the
date of acquisition of such Principal Domestic Property of the Company or the
date of the completion of construction or commencement of full operations of
such Principal Domestic Property of the Company, whichever is later, or (ii)
the Company, within 120 days after such sale, applies or causes to be applied
to the retirement of Funded Debt of the Company or any Subsidiary (other than
Funded Debt of the Company which by its terms or the terms of the instrument
pursuant to which it was issued is subordinate in right of payment to the Debt
Securities of each Series) an amount not less than the greater of (A) the net
proceeds of the sale of such Principal Domestic Property of the Company or (B)
the fair value (as determined in any manner approved by the Board of
Directors) of such Principal Domestic Property of the Company. The provisions
of this covenant shall not prevent a Sale and Leaseback Transaction (x) if the
lease entered into by the Company in connection therewith is for a period,
including renewals, of not more than 36 months or (y) if the Company would, at
the time of entering into such Sale and Leaseback Transaction, be entitled,
without equally and ratably securing the Debt Securities, to create or assume
a Lien on such Principal Domestic Property of the Company securing
Indebtedness in an amount at least equal to the Attributable Debt in respect
of such Sale and Leaseback Transaction pursuant to clause (d) above in the
"Restrictions on Liens" covenant.
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MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company shall not consolidate with or merge with or into any other
corporation or transfer all or substantially all of its property and assets as
an entirety to any person, unless (i) either the Company shall be the
continuing person, or the person (if other than the Company) formed by such
consolidation or into which the Company is merged or to which all or
substantially all of the properties and assets of the Company as an entirety
are transferred is a corporation organized and existing under the laws of the
United States or any State thereof or the District of Columbia which expressly
assumes all of the obligations of the Company under each Series of Debt
Securities and the Indenture with respect to each such Series and (ii)
immediately before and immediately after giving effect to such transaction, no
Event of Default and no event which, after notice or passage of time or both,
would become an Event of Default shall have occurred and be continuing.
Notwithstanding the foregoing, any Subsidiary may consolidate with, merge with
or into or transfer all or part of its properties and assets to the Company or
any other Subsidiary or Subsidiaries.
RANKING OF DEBT SECURITIES
Senior Debt Securities
The Senior Debt Securities will constitute unsecured senior obligations of
the Company and will rank pari passu in right of payment with all other Senior
Indebtedness (as defined below) of the Company. However, the Senior Debt
Securities will be effectively subordinated in right of payment to all secured
Indebtedness of the Company to the extent of the value of the assets securing
such Indebtedness and will be effectively subordinated to all indebtedness of
the Company's Subsidiaries and all mandatory redemption preferred stock of the
Company's Subsidiaries. Except as otherwise set forth in the applicable Senior
Indenture or specified in an Authorizing Resolution and/or supplemental
indenture, if any, relating to a Series of Senior Debt Securities to be
issued, there will be no limitations in any Senior Indenture on the amount of
additional Indebtedness which may rank pari passu with the Senior Debt
Securities or on the amount of Indebtedness, secured or otherwise, which may
be incurred or preferred stock which may be issued by any of the Company's
Subsidiaries; provided, however, that the incurrence of secured Indebtedness
by the Company is subject to the limitations set forth in the "Restrictions on
Liens" covenant.
Subordinated Debt Securities
The Subordinated Debt Securities will constitute unsecured obligations of
the Company. Unless otherwise provided in the applicable Prospectus
Supplement, the payment of principal of, interest on and all other amounts
owing in respect of the Subordinated Debt Securities will be subordinated in
right of payment to the prior payment in full in cash of principal of,
interest on and all other amounts owing in respect of all Senior Indebtedness
of the Company. Upon any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any total or partial liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors or marshaling of
assets of the Company or in a bankruptcy, reorganization, insolvency,
receivership or other similar proceeding relating to the Company or its
property, whether voluntary or involuntary, all principal of, interest on and
all other amounts due or to become due upon all Senior Indebtedness shall
first be paid in full in cash, or such payment duly provided for to the
satisfaction of the holders of Senior Indebtedness, before any payment or
distribution of any kind or character is made on account of any principal of,
interest on or other amounts owing in respect of the Subordinated Debt
Securities, or for the acquisition of any of the Subordinated Debt Securities
for cash, property or otherwise. If any default occurs and is continuing in
the payment when due, whether at maturity, upon any redemption, by declaration
or otherwise, of any principal of, interest on, unpaid drawings for letters of
credit issued in respect of, or regularly accruing fees with respect to, any
Senior Indebtedness, no payment of any kind or character shall be made by or
on behalf of the Company or any other person on its or their behalf with
respect to any principal of, interest on or other amounts owing in respect of
the Subordinated Debt Securities or to acquire any of the Subordinated Debt
Securities for cash, property or otherwise.
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In addition, if any other event of default occurs and is continuing with
respect to any Senior Indebtedness, as such event of default is defined in the
instrument creating or evidencing such Senior Indebtedness, permitting the
holders of such Senior Indebtedness then outstanding to accelerate the
maturity thereof and if the Representative (as defined in the applicable
Indenture) for the respective issue of Senior Indebtedness gives written
notice of the event of default to the Trustee (a "Default Notice"), then,
unless and until all events of default have been cured or waived or have
ceased to exist or the Trustee receives notice from the Representative for the
respective issue of Senior Indebtedness terminating the Blockage Period (as
defined below), during the 180 days after the delivery of such Default Notice
(the "Blockage Period"), neither the Company nor any other person on its
behalf shall (x) make any payment of any kind or character with respect to any
principal of, interest on or other amounts owing in respect of the
Subordinated Debt Securities or (y) acquire any of the Subordinated Debt
Securities for cash, property or otherwise. Notwithstanding anything herein to
the contrary, in no event will a Blockage Period extend beyond 180 days from
the date the payment on the Subordinated Debt Securities was due and only one
such Blockage Period may be commenced within any 360 consecutive days. No
event of default which existed or was continuing on the date of the
commencement of any Blockage Period with respect to the Senior Indebtedness
shall be, or be made, the basis for commencement of a second Blockage Period
by the Representative of such Senior Indebtedness whether or not within a
period of 360 consecutive days, unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days (it being
acknowledged that any subsequent action, or any breach of any financial
covenants for a period commencing after the date of commencement of such
Blockage Period that, in either case, would give rise to an event of default
pursuant to any provisions under which an event of default previously existed
or was continuing shall constitute a new event of default for this purpose).
The Subordinated Indentures will not restrict the amount of Senior
Indebtedness or other Indebtedness of the Company or any Subsidiary. As a
result of the foregoing provisions, in the event of the Company's insolvency,
holders of the Subordinated Debt Securities may recover ratably less than
general creditors of the Company.
"Senior Indebtedness" will be defined in each Subordinated Indenture as
Indebtedness of the Company, whether outstanding on the date of issue of any
Subordinated Debt Securities or thereafter created, incurred, assumed or
guaranteed by the Company, other than the following: (i) any Indebtedness as
to which, by the terms of the instrument creating or evidencing such
Indebtedness, it is expressly provided that such Indebtedness is subordinated
in right of payment to all Indebtedness of the Company not expressly
subordinated to such Indebtedness, (ii) any Indebtedness which, by its terms,
expressly refers to the Subordinated Debt Securities and states that such
Indebtedness shall not be senior, shall be pari passu or shall be subordinated
in right of payment to the Subordinated Debt Securities, (iii) the
Subordinated Debt Securities of the same or another Series and (iv)
Indebtedness of or amounts owed by the Company for compensation to employees,
or for goods, materials and services purchased in the ordinary course of
business.
DISCHARGE
Unless otherwise provided in the applicable Prospectus Supplement, the
Company generally may terminate its obligations under any Series of Debt
Securities and the Indenture with respect to such Series, at any time, (a) by
delivering all outstanding Debt Securities of such Series to the Trustee for
cancellation and paying all sums payable by it under such Debt Securities and
the Indenture with respect to such Series or (b) after giving notice to the
Trustee of its intention to defease all of the Debt Securities of such Series,
by irrevocably depositing with the Trustee or a paying agent (other than the
Company or a Subsidiary) (i) in the case of any Debt Securities of any Series
denominated in U.S. dollars, cash or U.S. Government Obligations sufficient to
pay all principal of and interest on such Debt Securities and (ii) in the case
of any Debt Securities of any Series denominated in any currency other than
U.S. dollars, an amount of the Required Currency sufficient to pay all
principal of and interest on such Debt Securities; provided, however, that if
such irrevocable deposit pursuant to (b) above is made on or prior to one year
from the Stated Maturity for payment of principal of such Series of Debt
Securities, the Company shall have delivered to the Trustee either an opinion
of counsel with no material qualifications or a
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favorable ruling of the Internal Revenue Service, in either case to the effect
that holders of such Debt Securities (i) will not recognize income, gain or
loss for Federal income tax purposes as a result of such deposit (and the
defeasance contemplated in connection therewith) and (ii) will be subject to
Federal income tax on the same amounts and in the same manner and at the same
time as would have been the case if such deposit and defeasance had not
occurred.
MODIFICATION AND WAIVER
Modification and amendment of an Indenture will be permitted to be made by
the Company and the Trustee with the consent of the holders of not less than a
majority in principal amount of the outstanding Debt Securities of all Series
affected thereby (voting as a single class); provided, however, that such
modification or amendment may not, without the consent of each holder of the
Debt Securities affected thereby, (i) change the Stated Maturity of the
principal of or any installment of interest with respect to the Debt
Securities; (ii) reduce the principal amount of, or the rate of interest on,
the Debt Securities; (iii) change the currency of payment of principal of or
interest on the Debt Securities; (iv) impair the right to institute suit for
the enforcement of any payment on or with respect to the Debt Securities; (v)
reduce the above-stated percentage of holders of the Debt Securities of any
Series necessary to modify or amend the Indenture relating to such Series;
(vi) modify the foregoing requirements or reduce the percentage of outstanding
Debt Securities necessary to waive any covenant or past default; (vii) in the
case of any Subordinated Indenture, modify the subordination provisions
thereof in a manner adverse to the holders of Subordinated Debt Securities of
any Series then outstanding; or (viii) in the case of any convertible Debt
Securities, adversely affect the right to convert the Debt Securities into
Common Stock in accordance with the provisions of the applicable Indenture.
Holders of not less than a majority in principal amount of the outstanding
Debt Securities of all Series affected thereby (voting as a single class) may
waive certain past defaults and may waive compliance by the Company with any
provision of the Indenture relating to such Debt Securities (subject to the
immediately preceding sentence); provided, however, that, (i) without the
consent of each holder of Debt Securities affected thereby, no waiver may be
made of a default in the payment of the principal of or interest on any Debt
Security and (ii) only the holders of a majority in principal amount of Debt
Securities of a particular Series may waive compliance with a provision of the
Indenture relating to such Series or the Debt Securities of such Series having
applicability solely to such Series.
EVENTS OF DEFAULT AND NOTICE THEREOF
Unless otherwise provided in the applicable Prospectus Supplement, each
Indenture will provide that the following events are "Events of Default" with
respect to any Series of Debt Securities issued thereunder: (i) failure of the
Company to pay interest on any Debt Securities of such Series within 30 days
of when due or principal of any Debt Securities of such Series when due
(including any Sinking Fund installment); (ii) failure to perform any other
agreement contained in the Debt Securities of such Series or the Indenture
relating to such Series (other than an agreement relating solely to another
Series of Debt Securities) for 60 days after notice; (iii) certain events of
bankruptcy, insolvency or reorganization with respect to the Company.
Additional or different Events of Default, if any, applicable to the Series of
Debt Securities in respect of which this Prospectus is being delivered will be
specified in the applicable Prospectus Supplement.
Each Indenture will provide that the Trustee under such Indenture shall,
within 75 days after the occurrence of any default (the term "default" to
include the events specified above without grace or notice) with respect to
any Series of Debt Securities actually known to it, give to the holders of
such Debt Securities notice of such default; provided, however, that, except
in the case of a default in the payment of principal of or interest on any of
the Debt Securities of such Series or in the payment of any Sinking Fund
installment, the Trustee for such Series shall be protected in withholding
such notice if it in good faith determines that the withholding of such notice
is in the interest of the holders of such Debt Securities. Each Indenture will
require the Company to certify to the Trustee under such Indenture quarterly
as to whether any default exists.
In case an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization) with respect to any Series of Debt
Securities shall occur and be continuing, the Trustee for such
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Series or the holders of at least 25% in aggregate principal amount of the
Debt Securities of such Series then outstanding, by notice in writing to the
Company (and to the Trustee for such Series if given by the holders of the
Debt Securities of such Series), will be entitled to declare all unpaid
principal of and accrued interest on such Debt Securities then outstanding to
be due and payable immediately. In case an Event of Default resulting from
certain events of bankruptcy, insolvency or reorganization shall occur, all
unpaid principal of and accrued interest on all Debt Securities of such Series
then outstanding shall be due and payable immediately without any declaration
or other act on the part of the Trustee for such Series or the holders of any
Debt Securities of such Series. Such acceleration may be annulled and past
defaults (except, unless theretofore cured, a default in payment of principal
of or interest on the Debt Securities of such Series) may be waived by the
holders of a majority in principal amount of the Debt Securities of such
Series then outstanding upon the conditions provided in the applicable
Indenture.
Each Indenture will provide that no holder of the Debt Securities of any
Series issued thereunder may pursue any remedy under such Indenture unless the
Trustee for such Series shall have failed to act after, among other things,
notice of an Event of Default and request by holders of at least 25% in
principal amount of the Debt Securities of such Series of which the Event of
Default has occurred and the offer to the Trustee for such Series of indemnity
satisfactory to it; provided, however, that such provision does not affect the
right to sue for enforcement of any overdue payment on such Debt Securities.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities of any
Series will be convertible into Common Stock will be set forth in the
Prospectus Supplement relating thereto. Such terms will include the conversion
price (or manner of calculation thereof), the conversion period, provisions as
to whether conversion will be at the option of the holders of such Series of
Debt Securities or at the option of the Company, the events requiring an
adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of such Series of Debt Securities.
THE TRUSTEE
The Trustee for each Series of Debt Securities will be The Bank of New York.
Each Indenture will contain certain limitations on a right of the Trustee
thereunder, as a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; provided, however, that if it acquires any conflicting
interest, it must eliminate such conflict or resign.
The holders of a majority in principal amount of all outstanding Debt
Securities of a Series (or if more than one Series is affected thereby, of all
Series so affected, voting as a single class) will have the right to direct
the time, method and place of conducting any proceeding for exercising any
remedy or power available to the Trustee for such Series or all such Series so
affected.
In case an Event of Default shall occur (and shall not be cured) under any
Indenture relating to a Series of Debt Securities and is actually known to a
responsible officer of the Trustee for such Series, such Trustee shall
exercise such of the rights and powers vested in it by such Indenture and use
the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
Subject to such provisions, the Trustee will not be under any obligation to
exercise any of its rights or powers under the applicable Indenture at the
request of any of the holders of Debt Securities unless they shall have
offered to the Trustee security and indemnity satisfactory to it.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by the laws of the
State of New York.
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GLOBAL SECURITIES; BOOK-ENTRY SYSTEM
The Debt Securities of any Series may be issued in whole or in part in the
form of one or more global securities ("Global Securities") that will be
deposited with, or on behalf of, a depository (the "Depository") identified in
the Prospectus Supplement relating to such Series. Global Securities, if any,
issued in the United States are expected to be deposited with The Depository
Trust Company ("DTC"), as Depository. Global Securities will be issued in
fully registered form and may be issued in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for the individual Debt
Securities represented thereby, a Global Security may not be transferred
except as a whole by the Depository for such Global Security to a nominee of
such Depository or by a nominee of such Depository to such Depository or
another nominee of such Depository or by such Depository or any nominee of
such Depository to a successor Depository or any nominee of such successor.
The specific terms of the depository arrangement with respect to any Series
of Debt Securities will be described in the Prospectus Supplement relating to
such Series. The Company expects that unless otherwise indicated in the
applicable Prospectus Supplement, the following provisions will apply to
depository arrangements.
Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit on its book-entry registration and
transfer system the respective principal amounts of the individual Debt
Securities represented by such Global Security to the accounts of persons that
have accounts with such Depository ("Participants"). Such accounts will be
designated by the underwriters, dealers or agents with respect to such Debt
Securities or by the Company if such Debt Securities are offered directly by
the Company. Ownership of beneficial interests in such Global Security will be
limited to Participants or persons that may hold interests through
Participants.
The Company expects that, pursuant to procedures established by DTC,
ownership of beneficial interests in any Global Security with respect to which
DTC is the Depository will be shown on, and the transfer of that ownership
will be effected only through, records maintained by DTC or its nominee (with
respect to beneficial interests of Participants) and records of Participants
(with respect to beneficial interests of persons who hold through
Participants). Neither the Company nor the Trustee will have any
responsibility or liability for any aspect of the records of DTC or for
maintaining, supervising or reviewing any records of DTC or any of its
Participants relating to beneficial ownership interests in the Debt
Securities. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and laws may impair the ability to own, pledge or transfer beneficial
interest in a Global Security.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as described below or in the applicable
Prospectus Supplement, owners of beneficial interest in a Global Security will
not be entitled to have any of the individual Debt Securities represented by
such Global Security registered in their names, will not receive or be
entitled to receive physical delivery of any such Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the applicable Indenture. Beneficial owners of Debt Securities evidenced by a
Global Security will not be considered the owners or holders thereof under the
applicable Indenture for any purpose, including with respect to the giving of
any direction, instructions or approvals to the Trustee thereunder.
Accordingly, each person owning a beneficial interest in a Global Security
with respect to which DTC is the Depository must rely on the procedures of DTC
and, if such person is not a Participant, on the procedures of the Participant
through which such person owns its interests, to exercise any rights of a
holder under the applicable Indenture. The Company understands that, under
existing industry practice, if it requests any action of holders or if an
owner of a beneficial interest in a Global Security desires to give or take
any action which a holder is entitled to give or take under the applicable
Indenture, DTC would authorize the Participants holding the relevant
beneficial interest to give or take such action, and such Participants would
authorize beneficial owners through such Participants to give or take such
actions or would otherwise act upon the instructions of beneficial owners
holding through them.
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<PAGE>
Payments of principal of, and any interest on, individual Debt Securities
represented by a Global Security registered in the name of a Depository or its
nominee will be made to or at the direction of the Depository or its nominee,
as the case may be, as the registered owner of the Global Security under the
applicable Indenture. Under the terms of the applicable Indenture, the Company
and the Trustee may treat the persons in whose name Debt Securities, including
a Global Security, are registered as the owners thereof for the purpose of
receiving such payments. Consequently, neither the Company nor the Trustee has
or will have any responsibility or liability for the payment of such amounts
to beneficial owners of Debt Securities (including principal and interest).
The Company believes, however, that it is currently the policy of DTC to
immediately credit the accounts of relevant Participants with such payments,
in amounts proportionate to their respective holdings of beneficial interests
in the relevant Global Security as shown on the records of DTC or its nominee.
The Company also expects that payments by Participants to owners of beneficial
interests in such Global Security held through such Participants will be
governed by standing instructions and customary practices, as is the case with
securities held for the account of customers in bearer form or registered in
street name, and will be the responsibility of such Participants. Redemption
notices with respect to any Debt Securities represented by a Global Security
will be sent to the Depository or its nominee. If less than all of the Debt
Securities of any series are to be redeemed, the Company expects the
Depository to determine the amount of the interest of each Participant in such
Debt Securities to be redeemed to be determined by lot. None of the Company,
the Trustee, any Paying Agent or the Registrar for such Debt Securities will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Security for such Debt Securities or for maintaining any records with respect
thereto.
Neither the Company nor the Trustee will be liable for any delay by the
holders of a Global Security or the Depository in identifying the beneficial
owners of Debt Securities and the Company and the Trustee may conclusively
rely on, and will be protected in relying on, instructions from the holder of
a Global Security or the Depository for all purposes. The rules applicable to
DTC and its Participants are on file with the Securities and Exchange
Commission.
If a Depository for any Debt Securities is at any time unwilling, unable or
ineligible to continue as depository and a successor depository is not
appointed by the Company within 90 days, the Company will issue individual
Debt Securities in exchange for the Global Security representing such Debt
Securities. In addition, the Company may at any time and in its sole
discretion, subject to any limitations described in the Prospectus Supplement
relating to such Debt Securities, determine not to have any of such Debt
Securities represented by one or more Global Securities and in such event will
issue individual Debt Securities in exchange for the Global Security or
Securities representing such Debt Securities. Individual Debt Securities so
issued will be issued in denominations of $1,000 and integral multiples
thereof.
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DESCRIPTION OF EQUITY SECURITIES
GENERAL
The Restated Certificate of Incorporation of the Company (the "Certificate
of Incorporation") provides that the aggregate number of shares of all classes
of stock that the Company has authority to issue is 302,700,000 shares,
consisting of 250,000,000 shares of Common Stock, 50,000,000 shares of
Preferred Stock and 2,700,000 shares of Class A common stock, par value 33
1/3c per share ("Class A Common Stock").
As of March 31, 1998, the issued and outstanding Common Stock, Class A
Common Stock and Preferred Stock of the Company was as follows:
<TABLE>
<CAPTION>
CLASS OF STOCK SHARES
-------------- ------
<S> <C>
Common Stock....................................................... 105,815,843
Class A Common Stock............................................... 362,988
Preferred Stock:
$1.19 Cumulative Convertible Preferred Stock, Series A ("Series A
Preferred Stock")............................................... 57,537
$1.83 Cumulative Convertible Preferred Stock, Series B ("Series B
Preferred Stock")............................................... 66,636
$5.00 Cumulative Convertible Preferred Stock, Series C ("Series C
Preferred Stock")............................................... 29,204
$2.125 Cumulative Preferred Stock, Series H ("Series H Preferred
Stock")......................................................... 8,000,000
</TABLE>
All issued and outstanding shares are fully-paid and non-assessable.
PREFERRED STOCK
Terms
The following description of the Preferred Stock summarizes certain general
terms and provisions of each series of Preferred Stock to which any Prospectus
Supplement may relate. Certain other terms of a particular series of Preferred
Stock will be summarized in the Prospectus Supplement relating to such series.
The summaries of the terms of the Preferred Stock below and in any Prospectus
Supplement do not, and will not, purport to be complete and are subject to,
and qualified in their entirety by reference to, the Company's Certificate of
Incorporation and the certificate of designation establishing a series of
Preferred Stock (each, a "Certificate of Designation"), each of which will be
filed with the Commission at or prior to the time of the sale of such series
of Preferred Stock.
The Board of Directors is authorized to provide for issuance of the
Preferred Stock of the Company from time to time, in one or more series, and
to fix the dividend rate, conversion or exchange rights, voting rights, terms
of redemption, redemption price or prices, liquidation preferences and
qualifications, limitations and restrictions thereof with respect to each
series.
An applicable Prospectus Supplement will set forth or describe other
specific terms regarding each series of Preferred Stock offered thereby,
including:
1. the title and stated value of such Preferred Stock;
2. the number of shares of such Preferred Stock offered, the liquidation
preference per share and the initial offering price of such Preferred
Stock;
3. the dividend rate, period and/or payment date, or method of
calculation thereof, applicable to such Preferred Stock;
4. the date from which dividends on such Preferred Stock shall
accumulate, if applicable;
5. the provision for a sinking fund, if any, for such Preferred Stock;
6. the provision for redemption, if applicable, of such Preferred Stock;
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7. any listing of such Preferred Stock on any securities exchange;
8. the terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Common Stock or exchangeable for Debt
Securities, including the conversion price or exchange rate, as the case
may be (or the manner of calculation thereof);
9. a discussion of Federal tax considerations applicable to such
Preferred Stock;
10. the relative ranking and preference of such Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company;
11. any limitations on issuance of any series of Preferred Stock ranking
senior to or on a parity with such series or Preferred Stock as to dividend
rights and rights upon liquidation, dissolution or winding up of the
affairs of the Company;
12. the voting powers, if any, of such Preferred Stock, in addition to
those set forth below; and
13. any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
Dividends
The holders of the Preferred Stock of each series shall be entitled to
receive, when, as and if declared by the Board of Directors of the Company,
out of the funds of the Company legally available therefor, cash dividends at
the annual rate and on such dates as shall be set forth in the Prospectus
Supplement relating to such series. Each such dividend shall be paid to the
holders of record of shares of such series on such record date as shall be
fixed by the Board of Directors of the Company.
If dividends are not paid in full or declared in full and a sum set apart
for the payment thereof upon the Preferred Stock of a series and any other
Preferred Stock ranking on a parity as to dividends with the Preferred Stock
of such series, all dividends declared upon shares of Preferred Stock of such
series and any other Preferred Stock ranking on a parity as to dividends shall
be declared pro rata so that in all cases the amount of dividends declared per
share on the Preferred Stock of such series and any other Preferred Stock
ranking on a parity as to dividends shall be in the same proportion as the
amount of dividends that would be paid on all shares of Preferred Stock of
such series and such other parity Preferred Stock if all such dividends
(including dividends accrued or in arrears) were paid in full. Except as
provided in the preceding sentence, unless full cumulative dividends on the
Preferred Stock of a series have been paid or declared in full and a sum set
aside for the payment thereof, no dividends shall be declared or paid or set
aside for payment or other distribution made upon the Company's Common Stock,
Class A Common Stock or any other class or series of capital stock of the
Company ranking junior to or on a parity with the Preferred Stock of the
applicable series as to dividends or liquidation rights, nor shall any Common
Stock, Class A Common Stock or any other class or series of capital stock of
the Company ranking junior to or on a parity with the Preferred Stock of such
series as to dividends or liquidation rights be redeemed, purchased or
otherwise acquired for any consideration (or any payment made to or available
for a sinking fund for the redemption of any shares of such stock) by the
Company or any subsidiary of the Company (except by conversion into or
exchange for stock of the Company ranking junior to the Preferred Stock of the
applicable series as to dividends and liquidation rights). Unless otherwise
stated in the applicable Prospectus Supplement, no interest, or sum of money
in lieu of interest, will be payable in respect of any dividend payment or
payments on Preferred Stock of any series which may be in arrears.
Dividends payable on the Preferred Stock of a Series for any period less
than a full quarterly dividend period shall be computed on the basis of a 360-
day year of twelve 30-day months and the actual number of days elapsed in the
period for which payable.
Voting Rights
The holders of the Preferred Stock shall not, except as required by law or
as set forth in the applicable Prospectus Supplement, have any right or power
to vote on any question or in any proceeding or to be represented at, or to
receive notice of, any meeting of stockholders. On any matters on which the
holders of the Preferred Stock shall be entitled to vote, they shall be
entitled to one vote for each share held.
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<PAGE>
Unless otherwise stated in the applicable Prospectus Supplement, in case at
any time the equivalent of six or more full quarterly dividends (whether
consecutive or not) on any series of Preferred Stock shall be in arrears, then
during the period (the "Voting Period") commencing with such time and ending
with the time when all arrearages in dividends on the Preferred Stock of all
series shall have been paid and the full dividend on the Preferred Stock of
all series for the then current quarterly dividend period shall have been paid
or declared and set apart for payment, at any meeting of the stockholders of
the Company held for the election of directors during the Voting Period, the
holders of a majority of the outstanding shares of Preferred Stock of all
series represented in person or by proxy at said meeting shall be entitled, as
a class, to the exclusion of the holders of all other classes of stock of the
Company, to elect two directors of the Company, each share of Preferred Stock
entitling the holder thereof to one vote.
Any director who shall have been elected by holders of Preferred Stock, or
by any director so elected as herein contemplated, may be removed at any time
during a Voting Period, either for or without cause, by, and only by, the
affirmative votes of the holders of record of a majority of the outstanding
shares of Preferred Stock of all series given at a special meeting of such
stockholders called for the purpose, and any vacancy thereby created may be
filled during such Voting Period by the holders of Preferred Stock of all
series, present in person or represented by proxy at such meeting. Any
director elected by holders of Preferred Stock, or by any director so elected
as herein contemplated, who dies, resigns or otherwise ceases to be a director
shall, except as otherwise provided in the preceding sentence, be replaced by
the remaining director theretofore elected by the holders of Preferred Stock.
At the end of the Voting Period, the holders of Preferred Stock of all series
shall be automatically divested of all voting power vested in them under this
provision but subject always to the subsequent vesting of voting power in the
holders of Preferred Stock in the event of any similar cumulated arrearage in
payment of quarterly dividends occurring thereafter. The term of all directors
elected pursuant to this provision shall in all events expire at the end of
the Voting Period.
The approval of the holders of at least two-thirds of the then outstanding
shares of Preferred Stock of a series will be required to amend the applicable
Certificate of Designation to adversely change the preferences, special rights
or powers of the Preferred Stock of such series or to authorize, create or
increase the authorized amount of any class or series of capital stock of the
Company ranking prior to the Preferred Stock of such series either as to
dividend or liquidation rights; provided, however, that the creation or
issuance of any class or series of capital stock of the Company not ranking
prior to the Preferred Stock of a series as to dividend or liquidation rights
shall not require the consent of the holders of the Preferred Stock of such
series.
Ranking
The Preferred Stock to which any Prospectus Supplement may relate will rank
pari passu with the outstanding shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series H Preferred Stock of the
Company with respect to dividend rights and liquidation preference. The
Preferred Stock will rank prior to the Company's Common Stock and Class A
Common Stock. Without the requisite vote of holders of the Preferred Stock, as
described above under "--Voting Rights," no class or series of capital stock
can be created ranking senior to the Preferred Stock as to dividend rights or
liquidation preference.
Liquidation Rights
In the event of any liquidation, dissolution or winding up of the Company,
the holders of shares of the Preferred Stock of each series are entitled to
receive out of assets of the Company available for distribution to
stockholders, before any distribution of assets is made to holders of Common
Stock, Class A Common Stock or any other class or series of capital stock of
the Company (including any Preferred Stock) which is junior as to liquidation
rights to the Preferred Stock of such series, liquidating distributions in the
amount set forth in the applicable Prospectus Supplement, plus dividends
accrued and accumulated but unpaid to the date of such distribution. If, upon
any liquidation, dissolution or winding up of the Company, the amounts payable
with respect to the Preferred Stock of such series and any other Preferred
Stock of the Company ranking as to any such distribution on a parity with the
Preferred Stock of such series are not paid in full, the holders of the
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<PAGE>
Preferred Stock of such series and of such other Preferred Stock of the
Company will share ratably in any such distribution of assets in proportion to
the full respective preferential amounts to which they are entitled. After
payment of the full amount of the liquidating distribution to which they are
entitled, the holders of shares of the Preferred Stock will not be entitled to
any further participation in any distribution of assets by the Company.
Neither a consolidation or merger of the Company with another corporation nor
a sale or transfer of all or part of the Company's assets for cash or
securities shall be considered a liquidation, dissolution or winding up of the
Company.
Redemption Provisions
The Preferred Stock of each series will have such optional or mandatory
redemption terms, if any, as shall be set forth in the applicable Prospectus
Supplement.
Conversion and Exchange Rights
The terms and conditions, if any, upon which any series of Preferred Stock
is convertible into Common Stock or exchangeable into Debt Securities will be
set forth in the applicable Prospectus Supplement relating to such series of
Preferred Stock. Such terms will include (i) in the case such series of
Preferred Stock is convertible into Common Stock, (A) the number of shares of
Common Stock into which shares of such series of Preferred Stock are
convertible, (B) the conversion price (or manner of calculation thereof), (C)
the conversion period, (D) provisions as to whether conversion will be at the
option of the holders of such series of Preferred Stock or at the option of
the Company, (E) the events requiring an adjustment of the conversion price
and (F) provisions affecting conversion in the event of the redemption of such
series of Preferred Stock and (ii) in the case such series of Preferred Stock
is exchangeable into Debt Securities, (A) the principal amount of Debt
Securities into which shares of such series of Preferred Stock are
exchangeable, (B) the exchange period and (C) provisions as to whether
exchange will be at the option of the holders of such series of Preferred
Stock or at the option of the Company.
Miscellaneous
The Preferred Stock will have no preemptive rights. All of the Preferred
Stock, upon payment in full therefor, will be fully paid and nonassessable.
COMMON STOCK AND CLASS A COMMON STOCK
Dividends
Subject to the preferential rights of the holders of Preferred Stock, all
issued and outstanding shares of Common Stock are entitled to participate
equally in dividends when, as and if declared by the Board of Directors of the
Company out of funds legally available for such purposes. The Directors of the
Company may declare and pay dividends upon the shares of its capital stock
either out of surplus or if there is no surplus, out of net profits for the
fiscal year in which the dividend is declared and/or the preceding fiscal
year, subject to the restrictions contained in certain agreements.
The Board of Directors may fix, in advance, a date as the record date for
purposes of determining stockholders entitled to receive dividends. Such date
may not be more than 60 days prior to the payment of such dividends; however,
if no record date is fixed by the Board of Directors, the record date will be
at the close of business on the day which the Board of Directors adopts the
resolution relating to the dividend.
Meetings of Stockholders
A meeting of the stockholders of the Company for the election of Directors
and for the transaction of any other business of the Company as may lawfully
come before the meeting is held annually at a date, time and place designated
by the Board of Directors.
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<PAGE>
In addition, a special meeting of the stockholders of the Company may be
called by the Board of Directors, the Chairman of the Board or the President
at any time. The Certificate of Incorporation provides that any action
required or permitted to be taken at a meeting of stockholders may be taken
only at a meeting of stockholders.
Voting Rights
A majority of the voting power of all outstanding shares of the Company
entitled to vote at a meeting of stockholders constitutes a quorum. Except as
otherwise provided by law or by the Certificate of Incorporation or the By-
laws of the Company, a resolution can be adopted at a meeting provided a
quorum is present.
The holders of Common Stock are entitled to one vote per share on all
matters upon which stockholders generally have the right to vote, while
holders of Class A Common Stock are entitled to 100 votes per share on all
matters on which such holders have the right to vote. All shares presently
outstanding are fully paid and nonassessable.
The shares of Common Stock do not have cumulative voting rights. At every
meeting of the stockholders called for the election of directors, the holders
of Common Stock, voting as a class with the holders of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and any other Series
of Preferred Stock generally entitled to vote therefor (collectively, the
"Voting Preferred"), shall be entitled to elect one-quarter of the number of
directors to be elected at such meeting, and if one-quarter of such number of
directors is not a whole number, then the holders of Common Stock, voting as a
class with the holders of Voting Preferred Stock, shall be entitled to elect
the next higher whole number of directors to be elected at such meeting, and
the holders of Class A Common Stock shall have no voting rights with respect
to the election of such directors. The holders of Class A Common Stock, Common
Stock and Voting Preferred Stock, voting as a single class, shall be entitled
to elect the remaining directors to be elected at such meeting. If, during the
interval between annual meetings of stockholders for the election of
directors, the number of directors who have been elected by either the holders
of Common Stock voting as a class with the holders of Voting Preferred Stock
or by the holders of Class A Common Stock, Common Stock and Voting Preferred
Stock, shall, by reason of resignation, death, retirement, disqualification or
removal, be reduced, the vacancy or vacancies in the directors so created may
be filled by a majority vote of the remaining directors then in office, even
if less than a quorum, or by a sole remaining director. Any director elected
by the remaining directors then in office to fill any vacancy in the
directorships designated by the holders of Common Stock and Voting Preferred
Stock may be removed from office by vote of the holders of a majority of the
shares of Common Stock voting as a class with the holders of Voting Preferred
Stock.
Notice of a stockholders' meeting, stating the place, date, time and the
purpose thereof, must be delivered either personally or by mail to each
stockholder at his address as it appears on the books of the Company unless
otherwise provided by law or the Certificate of Incorporation at least 10 days
but not more than 50 days prior to the date set for the meeting. Stockholders
may exercise their voting rights through proxies as provided in the By-laws.
Provisions Relating to Control of the Company
The Class A Common Stock carries certain rights, and the Certificate of
Incorporation of the Company contains certain provisions, which affect the
control of the Company, and are described below.
(i) Class A Common Stock
The Class A Common Stock is non-transferable. Each share of Class A Common
Stock carries the right to exercise 100 votes and may be converted into one
share of Common Stock. The Board of Directors may declare and pay dividends in
respect of the Class A Common Stock provided that a greater dividend is, at
the same time, declared and paid in respect of the Common Stock.
As conversions into shares of Common Stock carrying only one vote per share
occur and the amount of outstanding Class A Common Stock is accordingly
reduced, the voting power attaching to the Class A Common
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Stock will become consolidated in the hands of those who continue to hold such
stock and effectively strengthen their ability to influence the composition of
the Board of Directors (subject always to the right of the holders of Common
Stock and Voting Preferred Stock entitled to vote to elect one-quarter of the
total number of directors).
(ii) Board of Directors
(a) The Certificate of Incorporation of the Company provides for a Board of
Directors consisting of a minimum of three and a maximum of eighteen directors
to be divided into three classes (with each of the three classes required to
be as nearly equal as possible) serving staggered three-year terms. The effect
of this provision is that, at each annual meeting of the Company,
approximately one-third of the Board of Directors is elected to succeed those
whose terms expire. The total number of directors and the number of directors
constituting each class may be varied, from time to time, by the Board of
Directors within the authorized limits.
(b) Notwithstanding that the maximum of directors is established at
eighteen, the rights of any holders of Preferred Stock or any other class or
series of stock (other than Common Stock) to elect a specified number of
directors, are governed by the terms of the Certificate of Incorporation
applicable thereto, and such directors shall not be classified as described
above unless so provided.
(c) The directors are also empowered to fill casual vacancies occurring on
the Board. Any director so appointed by the Board would hold office for the
unexpired portion of the term of the director whose place he or she had taken.
Where the Board appoints a director to fill a newly created directorship
resulting from an increase in the number of directors, that director would
hold office until the next election of the class for which he or she was
chosen. If the size of the Board was increased, the additional director or
directors would be apportioned among the three classes to make all classes as
nearly equal as possible.
(d) No person (except a person nominated by or on behalf of the Board) is
eligible for election as a director at any annual or special meeting of
stockholders unless a written request that such person's name be placed in
nomination is received from a stockholder of record by the Secretary of the
Company not less than 30 days prior to the date fixed for the meeting,
together with the written consent of such person to serve as a director.
(iii) Meetings of Stockholders
Stockholder action may be taken only at a stockholders' meeting. Coastal's
stockholders do not have the power to call a special meeting and it may
therefore be more difficult for stockholders to take action opposed by the
Board of Directors. This may have the effect of deterring persons from seeking
to acquire substantial stock positions in or control of the Company, including
an attempt to acquire control of the Company made in response to any attempt
by the Company to acquire securities of, or control of, another corporation.
(iv) Business Combinations
The approval of the holders of 85% of the voting power of the outstanding
shares of stock of the Company is required, in certain circumstances, for the
adoption or authorization of a business combination with any controlling
company (being an entity which either owns, or is controlled by any entity
which owns, 20% of the voting power of the outstanding shares of Coastal's
stock). Delaware law provides that, unless the certificate of incorporation
specifies otherwise, the votes of the holders of a majority of the outstanding
voting stock are sufficient to approve a business combination.
A proposed business combination will not have to meet the 85% vote
requirement where certain fair price and other procedural requirements are
satisfied. These requirements are designed to ensure that the cash or market
value of any other consideration to be received by Coastal's stockholders in
such business combination is fair, to preserve the rights of the public
stockholders of Coastal by ensuring that appropriate representation on the
Board of Directors of the Company will be maintained, to keep public
stockholders fully informed as to the
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advisability of the proposed business combination and to ensure that there is
no major change in the business or capital structure of the Company and no
reduction in the rate of dividends payable on the Company's stock without the
approval of the Board of Directors.
Pre-emptive Rights
Neither stockholders nor any other person have any pre-emptive subscription
rights.
Liquidation, Dissolution and Reorganization
All shares of Common Stock and Class A Common Stock rank equally upon
liquidation or dissolution of the Company, after payment of all debts and
expenses and satisfaction of the interests of the holders of any shares of
Preferred Stock of the Company then outstanding.
The Certificate of Incorporation provides that if a majority in number
representing three-fourths in value of the creditors or class or creditors,
and/or of the stockholders or class of stockholders of the Company, as the
case may be, agree to any compromise or arrangement and to any reorganization
of the Company at a meeting properly called by a Delaware court, such action,
if sanctioned by the court will be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of the
Company as the case may be and also on the Company.
Transferability of Shares of Common Stock and Class A Common Stock
There are no restrictions in the Certificate of Incorporation or By-Laws of
the Company on the transferability of shares of Common Stock. Shares of Class
A Common Stock are not transferable and upon any attempted transfer or upon
death of the holder thereof are automatically converted into shares of Common
Stock.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants which may be issued
independently or together with any Securities offered by any Prospectus
Supplement and may be attached to or separate from such Securities. Each
series of Common Stock Warrants will be issued under a separate warrant
agreement (a "Warrant Agreement") to be entered into between the Company and a
bank or trust company, as Warrant Agent (the "Warrant Agent"), all as set
forth in the applicable Prospectus Supplement. The Warrant Agent will act
solely as an agent of the Company in connection with the certificates
representing the Common Stock Warrants (the "Common Stock Warrant
Certificates") and will not assume any obligation or relationship of agency or
trust for or with any holders of Common Stock Warrant Certificates or
beneficial owners of Common Stock Warrants. The Warrant Agreement, including
the form of Common Stock Warrant Certificate representing each series of
Common Stock Warrants, will be filed with the Commission at or prior to the
time of sale of any such series of Common Stock Warrants. The following
summaries of certain provisions of the Warrant Agreement and Common Stock
Warrant Certificate do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the Warrant
Agreement relating to, and the Common Stock Warrant Certificate representing,
a Series of Common Stock Warrants.
GENERAL
An applicable Prospectus Supplement will set forth and describe other
specific terms regarding each series of Common Stock Warrants offered hereby,
including:
1. the offering price;
2. the number of shares of Common Stock purchasable upon exercise of each
such Common Stock Warrant and the price at which such number of shares of
Common Stock may be purchased upon such exercise;
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3. the date on which the right to exercise such Common Stock Warrants
shall commence and the date on which such right shall expire (the
"Expiration Date"); and
4. any other terms of such Common Stock Warrants (and the applicable
Prospectus Supplement may state that any of the terms set forth herein are
inapplicable to such series).
Common Stock Warrants for the purchase of Common Stock will be offered and
exercisable for U.S. dollars only and will be in registered form only.
Common Stock Warrant Certificates may be exchanged for new Common Stock
Warrant Certificates of different denominations, may be presented for
registration or transfer, and may be exercised at the corporate trust office
of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement. Prior to the exercise of any Common Stock Warrants,
holders of such Common Stock Warrants will not have any rights of holders of
the Common Stock purchasable upon such exercise, including the right to
receive payments of dividends, if any, on the Common Stock purchasable upon
such exercise or to exercise any applicable right to vote.
EXERCISE OF COMMON STOCK WARRANTS
Each Common Stock Warrant will entitle the holder thereof to purchase such
shares of Common Stock at such exercise price as shall in each case be set
forth in, or calculable from, the Prospectus Supplement relating to the
offered Common Stock Warrants. After the close of business on the Expiration
Date (or such later date to which such Expiration Date may be extended by the
Company) unexercised Common Stock Warrants will become void.
Common Stock Warrants may be exercised by delivering to the Warrant Agent
payment as provided in the applicable Prospectus Supplement of the amount
required to purchase the Common Stock purchasable upon such exercise, together
with certain information set forth on the reverse side of the Common Stock
Warrant Certificate. Upon receipt of such payment and the Common Stock Warrant
Certificate properly completed and duly executed at the corporate trust office
of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement, the Company will, as soon as practicable, issue and
deliver the Common Stock purchasable upon such exercise. If fewer than all of
the Common Stock Warrants represented by such Common Stock Warrant Certificate
are exercised, a new Common Stock Warrant Certificate will be issued for the
remaining amount of Common Stock Warrants.
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENT
The Warrant Agreement for a series of Common Stock Warrants may be amended
or supplemented without the consent of the holders of the Common Stock
Warrants issued thereunder to effect changes that are not inconsistent with
the provisions of the Common Stock Warrants and that do not adversely affect
the interests of the holders of the Common Stock Warrants.
COMMON STOCK WARRANT ADJUSTMENTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of Common Stock covered by, a
Common Stock Warrant are subject to adjustment in certain events, including:
(i) the issuance of Common Stock as a dividend or distribution on the Common
Stock; (ii) subdivisions and combinations of the Common Stock; (iii) the
issuance to all holders of Common Stock of certain rights or warrants
entitling them to subscribe for or purchase Common Stock, at less than the
Current Market Value (as defined in the Warrant Agreement for such series of
Common Stock Warrants); and (iv) the distribution to all holders of Common
Stock of evidences of indebtedness or assets of the Company (excluding certain
cash dividends and distributions described below).
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No adjustment in the exercise price of, and the number of shares of Common
Stock covered by, a Common Stock Warrant will be made for regular quarterly or
other periodic or recurring cash dividends or distributions or for cash
dividends or distributions to the extent paid from retained earnings. No
adjustment will be required unless such adjustment would require a change of
at least one percent in the exercise price and exercise rate then in effect;
provided, however, that any such adjustment not so made will be carried
forward and taken into account in any subsequent adjustment; provided further,
that any such adjustment not so made shall be made no later than three years
after the occurrence of the event requiring such adjustment to be made or
carried forward. Except as stated above, the exercise price of, and the number
of shares of Common Stock covered by, a Common Stock Warrant will not be
adjusted for the issuance of Common Stock or any securities convertible into
or exchangeable for Common Stock, or securities carrying the right to purchase
any of the foregoing.
In the case of (i) a reclassification or change of the Common Stock, (ii) a
consolidation or merger involving the Company or (iii) a sale or conveyance to
another corporation of the property and assets of the Company as an entirety
or substantially as an entirety, in each case as a result of which holders of
the Company's Common Stock shall be entitled to receive stock, securities,
other property or assets (including cash) with respect to or in exchange for
such Common Stock, the holders of the Common Stock Warrants then outstanding
will be entitled thereafter to convert such Common Stock Warrants into the
kind and amount of shares of stock and other securities or property which they
would have received upon such reclassification, change, consolidation, merger,
sale or conveyance had such Common Stock Warrants been exercised immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance.
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DESCRIPTION OF THE TRUST PREFERRED SECURITIES
Each Trust may issue only one series of Trust Preferred Securities having
terms described in the Prospectus Supplement relating thereto. The Declaration
of each Trust authorizes the Regular Trustees of such Trust to issue on behalf
of such Trust one series of Trust Preferred Securities. Each Declaration will
be qualified as an indenture under the Trust Indenture Act. The Trust
Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in each
Declaration or made part of each Declaration by the Trust Indenture Act and
the Trust Act. Reference is made to the Prospectus Supplement relating to the
Trust Preferred Securities of a Trust for specific terms, including (i) the
distinctive designation of such Trust Preferred Securities; (ii) the number of
Trust Preferred Securities issued by such Trust; (iii) the annual distribution
rate (or method of determining such rate) for Trust Preferred Securities
issued by such Trust and the date or dates upon which such distributions shall
be payable; provided, however, that distributions on such Trust Preferred
Securities shall be payable on a quarterly basis to holders of such Preferred
Securities as of a record date in each quarter during which such Trust
Preferred Securities are outstanding; (iv) whether distributions on Trust
Preferred Securities issued by such Trust shall be cumulative, and, in the
case of Trust Preferred Securities having such cumulative distribution rights,
the date or dates or method of determining the date or dates from which
distributions on Trust Preferred Securities issued by such Trust shall be
cumulative; (v) the amount or amounts which shall be paid out of the assets of
such Trust to purchase or redeem Trust Preferred Securities issued by such
Trust and the price or prices at which, the period or periods within which,
and the terms and conditions upon which, Trust Preferred Securities issued by
such Trust shall be purchased or redeemed, in whole or in part, pursuant to
such obligation; (vi) the voting rights, if any, of Trust Preferred Securities
issued by such Trust in addition to those required by law, including any
requirement for the approval by the holders of Trust Preferred Securities, or
of Trust Preferred Securities issued by one or more Trusts, or of both, as a
condition to specified action or amendments to the Declaration of such Trust;
and (vii) any other relevant rights, preferences, privileges, limitations or
restrictions of Trust Preferred Securities issued by such Trust not
inconsistent with the Declaration of such Trust or with applicable law. All
Trust Preferred Securities offered hereby will be guaranteed by the Company as
described under "Description of the Trust Preferred Securities Guarantees"
below. Any applicable United States federal income tax considerations
applicable to any offering of Trust Preferred Securities will be described in
the Prospectus Supplement relating thereto.
In connection with the issuance of Trust Preferred Securities, each Trust
will issue one series of Trust Common Securities. The Declaration of each
Trust authorizes the Regular Trustees of such Trust to issue on behalf of such
Trust one series of Trust Common Securities having such terms including
distributions, redemption, voting, liquidation rights or such restrictions as
shall be set forth therein. The terms of the Trust Common Securities issued by
a Trust will be substantially identical to the terms of the Trust Preferred
Securities issued by such Trust and the Trust Common Securities will rank pari
passu, and payments will be made thereon pro rata, with the Trust Preferred
Securities except that, upon an event of default under the Declaration, the
rights of the holders of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Trust Preferred Securities.
All of the Trust Common Securities of a Trust will be directly or indirectly
owned by the Company.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Trust Preferred
Securities Guarantees which will be executed and delivered by the Company for
the benefit of the holders from time to time of Trust Preferred Securities.
Each Trust Preferred Securities Guarantee will be qualified as an indenture
under the Trust Indenture Act. The Bank of New York will act as indenture
trustee under each Trust Preferred Securities Guarantee (the "Preferred
Guarantee Trustee"). The terms of each Preferred Securities Guarantee will be
those set forth in such Trust Preferred Securities Guarantee and those made
part of such Preferred Securities Guarantee by the Trust Indenture Act. The
following summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference
to, the form of Trust Preferred Securities Guarantee,
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which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, and the Trust Indenture Act. Each Trust Preferred
Securities Guarantee will be held by the Preferred Guarantee Trustee for the
benefit of the holders of the Trust Preferred Securities of the applicable
Trust.
GENERAL
Pursuant to each Trust Preferred Securities Guarantee, the Company will
irrevocably and unconditionally agree to pay in full, to the holders of the
Trust Preferred Securities issued by a Trust, the Guarantee Payments (as
defined herein) (except to the extent paid by such Trust), as and when due,
regardless of any defense, right to set-off or counterclaim which such Trust
may have or assert. The following payments with respect to Preferred
Securities issued by a Trust, to the extent not paid by such Trust (the
"Guarantee Payments"), will be subject to the Trust Preferred Securities
Guarantee thereon (without duplication): (i) any accrued and unpaid
distributions which are required to be paid on such Trust Preferred
Securities, to the extent such Trust shall have funds available therefor, (ii)
the redemption price, including all accrued and unpaid distributions to the
redemption date (the "Redemption Price"), to the extent such Trust has funds
available therefor, with respect to any Preferred Securities called for
redemption by such Trust and (iii) upon a voluntary or involuntary
termination, dissolution or winding-up of such Trust (other than in connection
with the distribution of Subordinated Deferrable Interest Debentures to the
holders of Trust Preferred Securities in exchange for their Trust Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on such Trust Preferred Securities to the
date of payment and (b) the amount of assets of such Trust remaining available
for distribution to holders of such Trust Preferred Securities in liquidation
of such Trust. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of Trust Preferred Securities or by causing the applicable Trust to
pay such amounts to such holders.
Each Trust Preferred Securities Guarantee will be a full and unconditional
guarantee with respect to the Trust Preferred Securities issued by the
applicable Trust from the time of issuance of such Trust Preferred Securities,
but will not apply to any payment of distributions when the Trust does not
have sufficient funds available to make such payment or distributions. If the
Company does not make interest payments on the Subordinated Deferrable
Interest Debentures purchased by a Trust, such Trust will not pay
distributions on the Trust Preferred Securities issued by such Trust and will
not have funds available therefor. See "Description of the Subordinated
Deferrable Interest Debentures--Certain Covenants."
The Company has also agreed separately to guarantee the obligations of the
Trusts with respect to the Trust Common Securities (the "Trust Common
Securities Guarantees") to the same extent as the Trust Preferred Securities
Guarantee, except that upon the occurrence and during the continuation of an
event of default under the Indenture (as hereinafter defined), holders of
Trust Preferred Securities shall have priority over holders of Trust Common
Securities with respect to distributions and payments on liquidation,
redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In each Trust Preferred Securities Guarantee, the Company will covenant
that, so long as any Trust Preferred Securities issued by the applicable Trust
remain outstanding, if any event that would constitute an event of default
shall exist under such Trust Preferred Securities Guarantee or the Declaration
of such Trust, then (a) the Company shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase or make a
liquidation payment with respect to, any of its capital stock, (b) the Company
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by the Company which
rank pari passu with or junior to such Subordinated Deferrable Interest
Debentures and (c) the Company shall not make any guarantee payments (other
than pursuant to the Trust Preferred Security Guarantees) with respect to the
foregoing. However, each Trust Preferred Security Guarantee will except from
the foregoing covenant any dividend, redemption, liquidation, interest,
principal or guarantee payment by the Company where the payment is made by way
of securities (including capital stock) that rank junior to the securities on
which such dividend, redemption, liquidation, interest, principal or guarantee
payment is being made.
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MODIFICATION OF THE TRUST PREFERRED SECURITIES GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Trust Preferred Securities (in which case no vote will be
required), each Trust Preferred Securities Guarantee may be amended only with
the prior approval of the holders of not less than a majority in aggregate
liquidation amount of the outstanding Trust Preferred Securities issued by the
applicable Trust. The manner of obtaining any such approval of holders of such
Trust Preferred Securities will be as set forth in an accompanying Prospectus
Supplement. All guarantees and agreements contained in a Trust Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Company and shall inure to the benefit of the
holders of the Trust Preferred Securities then outstanding of the applicable
Trust.
TERMINATION
Each Trust Preferred Securities Guarantee will terminate as to the Trust
Preferred Securities issued by the applicable Trust upon full payment of the
Redemption Price of all Trust Preferred Securities of such Trust, upon
distribution of the Subordinated Deferrable Interest Debentures held by such
Trust to the holders of the Trust Preferred Securities of such Trust in
liquidation of such holders' interest in such Trust Preferred Securities or
upon full payment of the amounts payable in accordance with the Declaration of
such Trust upon liquidation of such Trust. Each Trust Preferred Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Trust Preferred Securities issued by the
applicable Trust must restore payment of any sums paid under such Trust
Preferred Securities or such Trust Preferred Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Trust Preferred Securities Guarantee will occur
upon the failure of the Company to perform any of its payment or other
obligations thereunder.
The holders of a majority in liquidation amount of the Trust Preferred
Securities relating to such Trust Preferred Securities Guarantee have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Preferred Guarantee Trustee in respect of such
Trust Preferred Securities Guarantee or to direct the exercise of any trust or
power conferred upon the Trust Preferred Guarantee Trustee under such Trust
Preferred Securities Guarantee. If the Preferred Guarantee Trustee fails to
enforce such Trust Preferred Securities Guarantee, any holder of Trust
Preferred Securities relating to such Trust Preferred Securities Guarantee may
institute a legal proceeding directly against the Company to enforce the
Preferred Guarantee Trustee's rights under such Trust Preferred Securities
Guarantee, without first instituting a legal proceeding against the relevant
Trust, the Preferred Guarantee Trustee or any other person or entity. In
addition, any record holder of Trust Preferred Securities relating to such
Trust Preferred Securities Guarantee shall have the right, which is absolute
and unconditional, to proceed directly against the Company to obtain Guarantee
Payments thereunder, without first waiting to determine if the Preferred
Guarantee Trustee has enforced such Trust Preferred Security Guarantee or
instituting a legal proceeding against the Trust which issued such Trust
Preferred Securities, the Preferred Guarantee Trustee or any other person or
entity.
STATUS OF THE TRUST PREFERRED SECURITIES GUARANTEES
The Trust Preferred Securities Guarantees will constitute unsecured
obligations of the Company and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Company, (ii) pari passu with the
most senior preferred or preference stock now or hereafter issued by the
Company and with any guarantee now or hereafter entered into by the Company in
respect of any preferred or preference stock of any subsidiary or affiliate of
the Company and (iii) senior to the Company's common stock. The terms of the
Trust Preferred Securities provide that each holder of Trust Preferred
Securities issued by such Trust by acceptance thereof agrees to the
subordination provisions and other terms of the Trust Preferred Securities
Guarantee relating thereto.
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The Trust Preferred Securities Guarantees will constitute a guarantee of
payment and not of collection (that is, the guaranteed party may institute a
legal proceeding directly against the guarantor to enforce its rights under
the guarantee without instituting a legal proceeding against any other person
or entity).
The Company's obligations under the Declaration for each Trust, the Trust
Preferred Securities Guarantee with respect to the Trust Preferred Securities
issued by such Trust, the Subordinated Deferrable Interest Debentures
purchased by such Trust and the Indenture, in the aggregate, will provide a
full and unconditional guarantee by the Company of payments due on the Trust
Preferred Securities issued by such Trust.
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Trust Preferred Securities Guarantee, undertakes to perform only
such duties as are specifically set forth in such Trust Preferred Securities
Guarantee and, after default, shall exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provisions, the Preferred Guaranteed Trustee is under no
obligation to exercise any of the powers vested in it by the Trust Preferred
Securities Guarantee at the request of any holder of Trust Preferred
Securities, unless offered reasonable indemnity against the costs, expenses
and liabilities which might be incurred thereby.
The Company and certain of its affiliates maintain deposit accounts and
banking relationships with the Preferred Guarantee Trustee. The Preferred
Guarantee Trustee serves as trustee under other indentures pursuant to which
unsecured debt securities of the Company are outstanding.
GOVERNING LAW
The Trust Preferred Securities Guarantees will be governed by and construed
in accordance with the internal laws of the State of New York.
DESCRIPTION OF THE SUBORDINATED DEFERRABLE INTEREST DEBENTURES
Subordinated Deferrable Interest Debentures may be issued from time to time
in one or more series under an Indenture (the "Indenture") to be entered into
among the Company and The Bank of New York, as Trustee (the "Subordinated Debt
Trustee"). The terms of the Subordinated Deferrable Interest Debentures will
include those stated in the Indenture and in a Supplemental Indenture (as
defined below) and those made part of the Indenture by reference to the Trust
Indenture Act. The following summary does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the Indenture, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the Trust
Indenture Act. Whenever particular provisions or defined terms in the
Indenture are referred to herein, such provisions or defined terms are
incorporated by reference herein.
GENERAL
The Subordinated Deferrable Interest Debentures will be unsecured,
subordinated obligations of the Company. The Indenture does not limit the
aggregate principal amount of Subordinated Deferrable Interest Debentures
which may be issued thereunder and provides that the Subordinated Deferrable
Interest Debentures may be issued from time to time in one or more series. The
Subordinated Deferrable Interest Debentures are issuable in one or more series
pursuant to an indenture supplemental to the Indenture or a resolution of the
Company's Board of Directors or a special committee thereof (each, a
"Supplemental Indenture").
In the event Subordinated Deferrable Interest Debentures are issued to a
Trust or a trustee of such Trust in connection with the issuance of Trust
Securities by such Trust, such Subordinated Deferrable Interest Debentures
subsequently may be distributed pro rata to the holders of such Trust
Securities in connection with the
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termination of such Trust upon the occurrence of certain events described in
the Prospectus Supplement relating to such Trust Securities. Only one series
of Subordinated Deferrable Interest Debentures will be issued to a Trust or a
trustee of such Trust in connection with the issuance of Trust Securities by
such Trust.
Reference is made to the accompanying Prospectus Supplement for the
following terms of the series of Subordinated Deferrable Interest Debentures
being offered thereby: (i) the specific title of such Subordinated Deferrable
Interest Debentures; (ii) any limit on the aggregate principal amount of such
Subordinated Deferrable Interest Debentures; (iii) the date or dates on which
the principal of such Subordinated Deferrable Interest Debentures is payable
and the right, if any, to extend such date or dates; (iv) the rate or rates at
which such Subordinated Deferrable Interest Debentures will bear interest or
the method of determination of such rate or rates; (v) the date or dates from
which such interest shall accrue, the interest payment dates on which such
interest will be payable or the manner of determination of such interest
payment dates and the record dates for the determination of holders to whom
interest is payable on any such interest payment dates; (vi) the right, if
any, to extend the interest payment periods and the duration of such
extension; (vii) the period or periods within which, the price or prices at
which, and the terms and conditions upon which, such Subordinated Deferrable
Interest Debentures may be redeemed, in whole or in part, at the option of the
Company; (viii) the right and/or obligation, if any, of the Company to redeem
or purchase such Subordinated Deferrable Interest Debentures pursuant to any
sinking fund or analogous provisions or at the option of the holder thereof
and the period or periods during which, the price or prices at which, and the
terms and conditions upon which, such Subordinated Deferrable Interest
Debentures shall be redeemed or purchased, in whole or part, pursuant to such
right and/or obligation; (ix) the terms of subordination; (x) if other than
denominations of $25 or any integral multiple thereof, the denominations in
which such Subordinated Deferrable Interest Debentures shall be issuable; (xi)
any and all other terms with respect to such series; and (xii) whether such
Subordinated Deferrable Interest Debentures are issuable as a global security,
and in such case, the identity of the depositary.
The Indenture does not contain any provisions that afford holders of
Subordinated Deferrable Interest Debentures protection in the event of a
highly leveraged transaction involving the Company.
SUBORDINATION
The Subordinated Deferrable Interest Debentures will be subordinated and
junior in right of payment to certain other indebtedness of the Company to the
extent set forth in the accompanying Prospectus Supplement.
CERTAIN COVENANTS
If Subordinated Deferrable Interest Debentures are issued to a Trust or a
trustee of such Trust in connection with the issuance of Trust Securities by
such Trust and (i) there shall have occurred and be continuing any event that
would constitute an Event of Default under the Indenture or (ii) the Company
shall be in default with respect to its payment of any obligations under the
related Trust Preferred Securities Guarantee or Trust Common Securities
Guarantee, and such default shall be continuing, then (a) the Company shall
not declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase or make a liquidation payment with respect to, any of its
capital stock, (b) the Company shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Company which rank pari passu with or junior to such
Subordinated Deferrable Interest Debentures and (c) the Company shall not make
any guarantee payments (other than pursuant to the Trust Preferred Security
Guarantees) with respect to the foregoing.
If Subordinated Deferrable Interest Debentures are issued to a Trust or a
trustee of such Trust in connection with the issuance of Trust Securities by
such Trust and the Company shall have given notice of its election to defer
payments of interest on such Subordinated Deferrable Interest Debentures by
extending the interest payment period as provided in the Indenture and such
period, or any extension thereof, shall be continuing, then (a) the Company
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase or make a liquidation payment with respect to, any of
its capital stock, (b) the Company shall not make
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any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities issued by the Company which rank pari passu with
or junior to such Subordinated Deferrable Interest Debentures and (c) the
Company shall not make any guarantee payments (other than pursuant to the
Trust Preferred Security Guarantees) with respect to the foregoing.
Notwithstanding the foregoing restrictions, the Company will be permitted,
in any event, to make dividend, redemption, liquidation and guarantee payments
on capital stock, and interest, principal, redemption and guarantee payments
on debt securities issued by the Company ranking pari passu with or junior to
Subordinated Deferrable Interest Debentures, where the payment is made by way
of securities (including capital stock) that rank junior to the securities on
which such payment is being made.
In the event Subordinated Deferrable Interest Debentures are issued to a
Trust or a trustee of such Trust in connection with the issuance of Trust
Securities of such Trust, for so long as such Trust Securities remain
outstanding, the Company will covenant (i) to directly or indirectly maintain
100% ownership of the Trust Common Securities of such Trust; provided,
however, that any permitted successor of the Company under the Indenture may
succeed to the Company's ownership of such Trust Common Securities, (ii) not
to cause, as sponsor of such Trust, or to permit, as holder of the Trust
Common Securities of such Trust, the termination, dissolution or winding-up of
such Trust, except in connection with a distribution of the Subordinated
Deferrable Interest Debentures as provided in the Declaration and in
connection with certain mergers, consolidations or amalgamations, (iii) to use
its reasonable efforts to cause such Trust (a) to remain a statutory business
trust, except in connection with the distribution of Subordinated Deferrable
Interest Debentures to the holders of Trust Securities in liquidation of such
Trust, the redemption of all of the Trust Securities of such Trust, or certain
mergers, consolidations or amalgamations, each as permitted by the Declaration
of such Trust, and (b) to otherwise continue not to be classified as an
association taxable as a corporation or partnership for United States federal
income tax purposes and (iv) to use reasonable efforts to cause each holder of
Trust Securities of such Trust to be treated as owning an undivided beneficial
interest in the Subordinated Deferrable Interest Debentures issued to such
Trust.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Subordinated Deferrable Interest Debentures of each series will be issued in
registered form and in either certificated form or represented by one or more
global securities. If not represented by one or more global securities,
Subordinated Deferrable Interest Debentures may be presented for registration
of transfer (with the form of transfer endorsed thereon duly executed) or
exchange at the office of the Debt Registrar or at the office of any transfer
agent designated by the Company for such purpose with respect to any series of
Subordinated Deferrable Interest Debentures and referred to in an applicable
Prospectus Supplement, without service charge and upon payment of any taxes
and other governmental charges as described in the Indenture. Such transfer or
exchange will be effected upon the Debt Registrar or such transfer agent, as
the case may be, being satisfied with the documents of title and identity of
the person making the request. The Company has appointed the Subordinated Debt
Trustee as Debt Registrar with respect to each series of Subordinated
Deferrable Interest Debentures. If a Prospectus Supplement refers to any
transfer agents (in addition to the Debt Registrar) initially designated by
the Company with respect to any series of Subordinated Deferrable Interest
Debentures, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that the Company will be required to maintain a
transfer agent in each Place of Payment for such series. The Company may at
any time designate additional transfer agents with respect to any series of
Subordinated Deferrable Interest Debentures.
In the event of any redemption in part, the Company shall not be required to
(i) issue, register the transfer of or exchange any Subordinated Deferrable
Interest Debentures during a period beginning at the opening of business 15
days before any selection for redemption of Subordinated Deferrable Interest
Debentures of like tenor and of the series of which such Subordinated
Deferrable Interest Debentures are a part, and ending at the close of business
on the earliest date on which the relevant notice of redemption is deemed to
have been given to all holders of Subordinated Deferrable Interest Debentures
of like tenor and of such series to be redeemed and
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(ii) register the transfer of or exchange any Subordinated Deferrable Interest
Debentures so selected for redemption, in whole or in part, except the
unredeemed portion of any Subordinated Deferrable Interest Debentures being
redeemed in part.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium, if any, on any Subordinated Deferrable Interest
Debentures will be made only against surrender to the Paying Agent of such
Subordinated Deferrable Interest Debentures. Unless otherwise indicated in an
applicable Prospectus Supplement, principal of, any premium, if any, and
interest, if any, on Subordinated Deferrable Interest Debentures will be
payable, subject to any applicable laws and regulations, at the office of such
Paying Agent or Paying Agents as the Company may designate from time to time,
except that at the option of the Company, payment of any interest may be made
by check mailed to the address of the person entitled thereto as such address
as shall appear in the Debt Register with respect to such Subordinated
Deferrable Interest Debentures. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of interest on a Subordinated Deferrable
Interest Debenture on any Interest Payment Date will be made to the person in
whose name such Subordinated Deferrable Interest Debenture (or predecessor
security) is registered at the close of business on the Regular Record Date
for such interest payment.
The Subordinated Debt Trustee will act as Paying Agent with respect to each
series of Subordinated Deferrable Interest Debentures. The Company 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, except that the Company will be required to maintain a Paying Agent in
each Place of Payment for each series of Subordinated Deferrable Interest
Debentures.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or premium or interest, if any, on any Subordinated Deferrable
Interest Debentures of any series which remain unclaimed at the end of two
years after such principal or premium or interest, if any, shall have become
due and payable will be repaid to the Company and the holder of such
Subordinated Deferrable Interest Debentures will thereafter look only to the
Company for payment thereof.
GLOBAL SECURITIES
If any Subordinated Deferrable Interest Debentures of a series are
represented by one or more global securities (each, a "Global Security"), the
applicable Prospectus Supplement will describe the circumstances, if any,
under which beneficial owners of interests in any such Global Security may
exchange such interests for Subordinated Deferrable Interest Debentures of
such series and of like tenor and principal amount in any authorized form and
denomination. Principal of and any premium, if any, and interest on a Global
Security will be payable in the manner described in the applicable Prospectus
Supplement.
The specific terms of the depositary arrangement with respect to any portion
of a series of Subordinated Deferrable Interest Debentures to be represented
by a Global Security will be described in the applicable Prospectus
Supplement.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the
Subordinated Debt Trustee, with the consent of the holders of not less than a
majority in principal amount of the Subordinated Deferrable Interest
Debentures of each series which are affected by the modification, to modify
the Indenture or any supplemental indenture affecting that series or the
rights of the holders of that series of Subordinated Deferrable Interest
Debentures; provided, however, that no such modification may, without the
consent of the holder of each outstanding Subordinated Deferrable Interest
Debenture affected thereby, (i) extend the fixed maturity of any Subordinated
Deferrable Interest Debentures of any series, or reduce the principal amount
thereof, or reduce the
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rate or extend the time of payment of interest thereon, or reduce any premium
payable upon the redemption thereof, without the consent of the holder of each
Subordinated Deferrable Interest Debenture so affected or (ii) reduce the
percentage of Subordinated Deferrable Interest Debentures the holders of which
are required to consent to any such supplemental indenture, without the
consent of the holders of each then outstanding Subordinated Deferrable
Interest Debenture affected thereby.
In addition, the Company and the Subordinated Debt Trustee may execute,
without the consent of any holder of Subordinated Deferrable Interest
Debentures, any supplemental indenture for certain other usual purposes
including the creation of any new series of Subordinated Deferrable Interest
Debentures.
EVENTS OF DEFAULT
With respect to a particular series of Subordinated Deferrable Interest
Debentures, the Indenture provides (or the Supplemental Indenture for such
series will provide) that any one or more of the following described events
which has occurred and is continuing constitutes an "Event of Default" with
respect to such series of Subordinated Deferrable Interest Debentures:
(a) failure for 30 days to pay interest on the Subordinated Deferrable
Interest Debentures of that series, including any Additional Interest in
respect thereof, when due; provided, however, that a valid extension of the
interest payment period by the Company shall not constitute a default in
the payment of interest for this purpose; or
(b) failure to pay principal or premium, if any, on the Subordinated
Deferrable Interest Debentures of that series when due whether at maturity,
upon redemption, by declaration or otherwise, or to make any sinking fund
payment with respect to that series; or
(c) failure to observe or perform any other covenant (other than those
specifically relating to another series) contained in the Indenture for 90
days after written notice to the Company from the Subordinated Debt Trustee
or the holders of at least 25% in principal amount of the outstanding
Subordinated Deferrable Interest Debentures of that series; or
(d) certain events of bankruptcy, insolvency or reorganization of the
Company; or
(e) in the event Subordinated Deferrable Interest Debentures are issued
to a Trust or a trustee of such Trust in connection with the issuance of
Trust Securities by such Trust, the voluntary or involuntary dissolution,
winding-up or termination of such Trust, except in connection with the
distribution of Subordinated Deferrable Interest Debentures to the holders
of Trust Securities in liquidation of such Trust, the redemption of all of
the Trust Securities of such Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration of such Trust.
The holders of a majority in aggregate outstanding amount of any series of
Subordinated Deferrable Interest Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Subordinated Debt Trustee for the series. The Subordinated Debt Trustee or the
holders of not less than 25% in aggregate outstanding principal amount of any
particular series of the Subordinated Deferrable Interest Debentures may
declare the principal immediately due and payable upon an Event of Default
with respect to such series, but the holders of a majority in aggregate
outstanding principal amount of such series may annul such declaration and
waive the default with respect to such series if the Event of Default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration and any applicable premium has
been deposited with the Subordinated Debt Trustee. If an Event of Default
results from the failure of the Company to pay when due principal of or
interest on the Subordinated Deferrable Interest Debentures issued to a Trust,
during the continuance of such an Event of Default a holder of Trust Preferred
Securities issued by such Trust may immediately institute a legal proceeding
directly against the Company to obtain payment of such principal or interest
on Subordinated Deferrable Interest Debentures having a principal amount equal
to the aggregate liquidation amount of the Trust Preferred Securities owned of
record by such holder.
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The holders of a majority in aggregate outstanding principal amount of any
series of Subordinated Deferrable Interest Debentures affected thereby may, on
behalf of the holders of all the Subordinated Deferrable Interest Debentures
of such series, waive any past default, except (i) a default in the payment of
principal, premium, if any, or interest (unless such default has been cured
and a sum sufficient to pay all matured installments of interest and principal
due otherwise than by acceleration and any applicable premium has been
deposited with the Subordinated Debt Trustee) or (ii) a default in the
covenants described in the first or second paragraph under "--Certain
Covenants" above.
CONSOLIDATION, MERGER AND SALE
The Indenture does not contain any covenant which restricts the ability of
the Company to merge or consolidate with or into any other corporation, sell
or convey all or substantially all of its assets to any person, firm or
corporation or otherwise engage in restructuring transactions.
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, the Company will be discharged from any
and all obligations in respect of the Subordinated Deferrable Interest
Debentures of any series (except in each case for certain obligations to
register the transfer or exchange of Subordinated Deferrable Interest
Debentures, replace, stolen, lost or mutilated Subordinated Deferrable
Interest Debentures, maintain paying agencies and hold moneys for payment in
trust) if the Company deposits with the Subordinated Debt Trustee, in trust,
moneys or U.S. Government Obligations in an amount sufficient to pay all the
principal of, and interest on, the Subordinated Deferrable Interest Debentures
of such series on the dates such payments are due in accordance with the terms
of such Subordinated Deferrable Interest Debentures.
GOVERNING LAW
The Indenture and the Subordinated Deferrable Interest Debentures will be
governed by, and construed in accordance with, the internal laws of the State
of New York.
INFORMATION CONCERNING THE SUBORDINATED DEBT TRUSTEE
The Subordinated Debt Trustee, prior to default, undertakes to perform only
such duties as are specifically set forth in the Indenture and, after default,
shall exercise the same degree of care as a prudent individual would exercise
in the conduct of his or her own affairs. Subject to such provision, the
Subordinated Debt Trustee is under no obligation to exercise any of the powers
vested in it by the Indenture at the request of any holder of Subordinated
Deferrable Interest Debentures, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The Subordinated Debt Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance
of its duties if the Subordinated Debt Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
The Company and certain of its affiliates maintain a deposit account and
banking relationship with the Subordinated Debt Trustee. The Subordinated Debt
Trustee serves as trustee under other indentures pursuant to which unsecured
debt securities of the Company are outstanding.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly-owned
subsidiary of the Company; provided, however, that in the event of any such
assignment, the Company will remain liable for all of its obligations
thereunder. Subject to the foregoing, the Indenture will be binding upon and
inure to the benefit of the parties thereto and their respective successors
and assigns. The Indenture provides that it may not otherwise be assigned by
the parties thereto.
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PLAN OF DISTRIBUTION
The Company may sell Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to a limited number of institutional
purchasers or to a single purchaser; or (iii) through agents. Any such dealer
or agent, in addition to any underwriter, may be deemed to be an underwriter
within the meaning of the Securities Act. The terms of the offering of the
Securities with respect to which this Prospectus is being delivered will be
set forth in the applicable Prospectus Supplement, including the name or names
of any underwriters, dealers or agents, the purchase price of such Securities
and the proceeds to the Company from such sale, any underwriting discounts and
other items constituting underwriters' compensation, the public offering price
and any discounts or concessions which may be allowed or reallowed or paid to
dealers and any securities exchanges on which the Securities may be listed.
If underwriters are used in the sale of Securities, such 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 the
Securities described in the applicable Prospectus Supplement will be subject
to certain conditions precedent, and the underwriters will be obligated to
purchase all such 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.
The Securities may be sold directly by the Company or the applicable Trust
or through agents designated by the Company or the applicable Trust from time
to time. Any agents involved in the offer or sale of the Securities in respect
of which this Prospectus is being delivered, and any commissions payable by
the Company or the applicable Trust to such agents, will be set forth in the
applicable Prospectus Supplement. Unless otherwise indicated in the applicable
Prospectus Supplement, any such agent will be acting on a best efforts basis
for the period of its appointment.
If dealers are utilized in the sale of any Securities, the Company or the
applicable Trust will sell the Securities to the dealers, as principals. Any
dealer may resell the Securities to the public at varying prices to be
determined by the dealer at the time of resale. The name of any dealer and the
terms of the transaction will be set forth in the Prospectus Supplement with
respect to the Securities being offered.
If so indicated in the applicable Prospectus Supplement, the Company or the
applicable Trust will authorize agents, underwriters or dealers to solicit
offers by certain specified institutions to purchase the Securities to which
this Prospectus and the applicable Prospectus Supplement relates from the
Company or the applicable Trust at the public offering price set forth in the
applicable Prospectus Supplement, plus, if applicable, accrued interest,
pursuant to delayed delivery contracts providing for payment and delivery on a
specified date in the future. Such contracts will be subject only to those
conditions set forth in the applicable Prospectus Supplement, and the
applicable Prospectus Supplement will set forth the commission payable for
solicitation of such contracts.
Underwriters will not be obligated to make a market in any Securities. No
assurance can be given regarding the activity of trading in, or liquidity of,
any Securities..
Agents, dealers and underwriters may be entitled, under agreements entered
into with the Company or the applicable Trust (or both), to indemnification by
the Company or the applicable Trust (or both) against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution to payments they may be required to make in respect thereof.
Agents, dealers and underwriters may be customers of, engage in transactions
with, or perform services for, the Company and/or the applicable Trust in the
ordinary course of business.
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LEGAL MATTERS
Certain legal matters in connection with the Equity Securities, the Debt
Securities, the Common Stock Warrants and the Preferred Securities Guarantees
offered hereby will be passed upon for the Company by Austin M. O'Toole, Esq.,
Senior Vice President and Secretary of Coastal, and for any underwriters,
agents and dealers by Cahill Gordon & Reindel (a partnership including a
professional corporation), New York, New York. Certain matters of Delaware law
relating to the validity of the Trust Preferred Securities will be passed upon
on behalf of the Trusts by Richards, Layton & Finger, P.A., Wilmington,
Delaware, special Delaware counsel to the Trusts. As of March 11, 1998, Mr.
O'Toole beneficially owned approximately 23,144 shares of Common Stock and 553
shares of Class A Common Stock of Coastal, including exercisable stock
options.
EXPERTS
The annual consolidated financial statements of the Company incorporated in
this Prospectus by reference from the 1997 Annual Report on Form 10-K have
been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLE-
MENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTA-
TION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
OF THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CON-
STITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SECURITIES
OFFERED HEREBY OR THEREBY TO ANYONE IN ANY JURISDICTION IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE IN-
FORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COM-
PANY SINCE SUCH DATE.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Ratio of Earnings to Fixed Charges S-2
Use of Proceeds S-2
Description of Securities S-2
Underwriting S-4
PROSPECTUS
Available Information 2
Incorporation of Certain Documents by Reference 2
The Company 4
Use of Proceeds 5
Ratio of Earnings to Fixed Charges and Earnings to Combined Fixed Charges
and Preferred Stock Dividends 5
Description of Debt Securities 6
Description of Equity Securities 17
Description of Common Stock Warrants 23
Plan of Distribution 35
Legal Matters 36
Experts 36
</TABLE>
PROSPECTUS SUPPLEMENT
[LOGO OF THE COASTAL CORPORATION APPEARS HERE]
THE COASTAL
CORPORATION
$400,000,000
$200,000,000 6.50% SENIOR DEBENTURES DUE JUNE 1, 2008
$200,000,000 6.95% SENIOR DEBENTURES DUE JUNE 1, 2028
CHASE SECURITIES INC.
UBS SECURITIES
DATED JUNE 2, 1998
