PROSPECTUS SUPPLEMENT Pursuant to
(To Prospectus dated March 1, 1993) Rule 424(b)(2)
Reg. No. 33-57910
AMERICAN GENERAL FINANCE CORPORATION
$150,000,000
7% SENIOR NOTES DUE OCTOBER 1, 1997
INTEREST PAYABLE APRIL 1 AND OCTOBER 1
ISSUE PRICE: 99.713%
Interest on the Notes is payable semi-annually on April 1 and October 1 of each
year, beginning April 1, 1995. The Notes will not be redeemable or repayable
prior to maturity and will not be subject to any sinking fund. The Notes will be
represented by one or more global Debt Securities registered in the name of The
Depository Trust Company (the "Depository") or its nominee. Interests in the
global Debt Securities will be shown on, and transfers thereof will be effected
only through, records maintained by the Depository and its participants. Except
as described in the Prospectus, the Notes will not be issued in certificated
form. See "Description of Debt Securities -- Global Debt Securities". The Notes
will trade in the Depository's Same-Day Funds Settlement System until maturity,
and secondary market trading activity for the Notes will therefore settle in
immediately available funds. See "Description of Notes -- Same-Day Settlement
and Payment".
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
PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
UNDERWRITING
DISCOUNTS AND
PRICE TO COMMISSIONS PROCEEDS TO
PUBLIC (1) (2) COMPANY (1)(3)
Per Note...... 99.713% .153% 99.560%
Total......... $149,569,500 $229,500 $149,340,000
(1) Plus accrued interest from October 1, 1994.
(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 payable by the Company estimated at $150,000.
The Notes are offered, subject to prior sale, when, as and if accepted by the
Underwriter and subject to approval of certain legal matters by Brown & Wood,
counsel for the Underwriter. It is expected that the Notes will be available for
delivery in book-entry form through the facilities of The Depository Trust
Company on or about October 3, 1994, against payment therefor in same-day funds.
J.P. MORGAN SECURITIES INC.
September 26, 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH THEY RELATE OR AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH
INFORMATION.
-------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
Description of Notes----------------- S-3
Underwriting------------------------- S-4
PROSPECTUS
Available Information---------------- 2
Incorporation by Reference----------- 2
The Company-------------------------- 3
Use of Proceeds---------------------- 3
Selected Financial Information------- 4
Ratio of Earnings to Fixed
Charges------------------------------ 4
Description of Debt Securities------- 5
Description of Warrants-------------- 13
Plan of Distribution----------------- 14
Legal Opinions----------------------- 15
Experts------------------------------ 15
S-2
<PAGE>
DESCRIPTION OF NOTES
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES OFFERED
HEREBY SUPPLEMENTS THE DESCRIPTION OF THE GENERAL TERMS AND PROVISIONS OF SENIOR
SECURITIES SET FORTH IN THE PROSPECTUS UNDER THE CAPTION "DESCRIPTION OF DEBT
SECURITIES".
The Notes are to be issued as a series of Senior Securities under the Senior
Indenture, which is more fully described in the Prospectus. Certain terms used
herein are defined in the Prospectus.
The Notes are to mature on October 1, 1997 and bear interest at the rate set
forth on the cover page of this Prospectus Supplement from October 1, 1994 or
from the most recent interest payment date to which interest has been paid or
provided for, payable semi-annually on April 1 and October 1, commencing April
1, 1995, to the registered holders thereof on the March 15 or September 15, as
the case may be, next preceding such interest payment date.
The Notes are not redeemable at the option of the Company or repayable at
the option of any holder prior to maturity.
The Notes will be issued as global Debt Securities. See "Description of Debt
Securities -- Global Debt Securities" in the Prospectus. The Depository Trust
Company, New York, New York will be the Depository with respect to the Notes.
The Notes will be issued as fully-registered securities in the name of Cede &
Co., the Depository's partnership nominee, and will be deposited with the
Depository.
BOOK-ENTRY NOTES
The Depository has advised the Company and the Underwriter that it is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Securities Exchange Act of 1934, as
amended. The Depository was created to hold securities for persons that have
accounts with the Depository ("Participants") and facilitate the clearance and
settlement of securities transactions among its Participants in such securities
through electronic book-entry changes in accounts of the Participants, thereby
eliminating the need for physical movement of certificates. The Depository's
Participants include securities brokers and dealers (including the Underwriter),
banks, trust companies, clearing corporations and certain other organizations,
some of which (and/or their representatives) own the Depository. Access to the
Depository's book-entry 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. Persons who are
not Participants may beneficially own interests in securities held by the
Depository only through Participants.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriter in immediately
available funds. All payments of principal and interest on the Notes will be
made by the Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Notes
will trade in the Depository's Same-Day Funds Settlement System until maturity,
and secondary market trading activity in the Notes will therefore be required by
the Depository to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.
S-3
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated the date hereof, the Company has agreed to sell to J.P. Morgan Securities
Inc. (the "Underwriter") and the Underwriter has agreed to purchase from the
Company the entire principal amount of the Notes.
Under the terms and conditions of the Underwriting Agreement, the
Underwriter is obligated to take and pay for all of the Notes if any are taken.
The Underwriter initially proposes to offer the Notes directly to the public
at the public offering price set forth on the cover page of this Prospectus
Supplement and to certain dealers at such price less a concession not in excess
of .1375% of the principal amount of the Notes. The Underwriter may allow, and
such dealers may reallow, a concession not in excess of .100% of the principal
amount of the Notes to certain other dealers. After the initial public offering,
the public offering price and such concessions may be changed.
All secondary trading in the Notes will settle in immediately available
funds. See "Description of Notes -- Same-Day Settlement and Payment".
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriter that it intends to
make a market in the Notes. The Underwriter is not obligated, however, to make a
market in the Notes and may discontinue market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the Notes.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
In the ordinary course of their respective businesses, the Underwriter and
certain of its affiliates have engaged and may in the future engage in
investment banking and commercial banking transactions with the Company.
S-4
<PAGE>
$1,500,000,000
AMERICAN GENERAL FINANCE CORPORATION
DEBT SECURITIES AND WARRANTS TO PURCHASE DEBT SECURITIES
--------------
American General Finance Corporation (the "Company") may offer from time to
time, either jointly or separately, up to $1,500,000,000 aggregate principal
amount (or net proceeds in the case of securities issued at an original issue
discount) of its debt securities (the "Debt Securities") which may be either
senior debt securities (the "Senior Securities") or senior subordinated debt
securities (the "Subordinated Securities") and/or warrants to purchase Debt
Securities (the "Warrants") (the Senior Securities, the Subordinated Securities
and the Warrants being herein referred to collectively as the "Securities").
The Debt Securities will be direct, unsecured obligations of the Company.
The Senior Securities will rank equally with all other unsecured and
unsubordinated indebtedness of the Company. The Subordinated Securities will be
subordinated to all existing and future Superior Indebtedness of the Company, as
defined in the Subordinated Indenture (hereinafter defined). See "Description of
Debt Securities."
The Securities may be offered as separate series in amounts, at prices and
on terms to be determined at the time of sale. The title, aggregate principal
amount, initial public offering price, denominations, maturity, rate (which may
be fixed or variable) and time of payment of any interest, any terms for
redemption at the option of the Company or the holder, any terms for sinking
fund payments, any listing on a securities exchange, any exercise provisions and
any other terms in connection with the offering and sale of the Securities in
respect of which this Prospectus is being delivered will be set forth in a
Prospectus Supplement or Prospectus Supplements.
The Company may sell the Securities directly, through agents designated from
time to time or through underwriters or dealers. If any agents of the Company 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 set forth in, or may be calculated on
the basis set forth in, the Prospectus Supplement. The net proceeds to the
Company 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 less such discount in the case of
an underwriter, and less, in each case, other issuance expenses. See "Plan of
Distribution" for possible indemnification arrangements for any such 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 COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF THE SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
-------------------
THE DATE OF THIS PROSPECTUS IS MARCH 1, 1993.
<PAGE>
THE COMMISIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT APPROVED
OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, and at the Commission's Regional Offices at 500 West
Madison Street, Chicago, Illinois 60661 and Seven World Trade Center, New York,
New York 10048. Copies of such materials may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, at prescribed rates. In addition, such material may also
be inspected and copied at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits thereto, referred to as
the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus, which constitutes part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby made
to the Registration Statement. Statements contained herein concerning the
provisions of any document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission are not necessarily complete, and in each
instance reference is made to the copy of such document so filed. Each such
statement is qualified in its entirety by such reference.
INCORPORATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act (File No. 1-6155), are incorporated by
reference into this Prospectus and shall be deemed to be a part hereof:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, as amended by Form 8 dated March 26, 1992;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1992, June 30, 1992 and September 30, 1992; and
(c) the Company's Current Reports on Form 8-K dated April 13, 1992, May
13, 1992, July 2, 1992, August 20, 1992, December 1, 1992, December 10, 1992
and January 11, 1993 (all of which relate to prior issuances of debt
securities of the Company or to its Medium-Term Notes, Series C) and
February 1, 1993 (which relates to the earnings release of the Company for
the year ended December 31, 1992).
Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities made 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 document.
Any statement contained herein, in a Prospectus Supplement or in a document
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein, in a Prospectus
Supplement or in any subsequently filed document which 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 the Registration Statement or
this Prospectus.
The Company files with the Commission Annual Reports on Form 10-K containing
financial information that has been audited and reported upon, with an opinion
expressed, by independent auditors. Such Annual Reports are available from the
Company upon request.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
which are incorporated herein by reference, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests should be directed to the Company, 2929 Allen Parkway,
Houston, Texas 77019, Attention: Treasury Department, telephone (713) 522-1111.
2
THE COMPANY
American General Finance Corporation is a financial services holding
company, the subsidiaries of which are engaged primarily in the consumer finance
business and related credit insurance businesses.
The Company was incorporated under the laws of the State of Indiana in 1927
as successor to a business started in 1920. All of the common stock of the
Company is owned by American General Finance, Inc. ("AGFI"), which was
incorporated under the laws of the State of Indiana in 1974. Since 1982, AGFI
has been a direct or indirect wholly-owned subsidiary of American General
Corporation, a consumer financial services organization incorporated in the
State of Texas in 1980 as the successor to American General Insurance Company, a
Texas insurance company incorporated in 1926.
As of September 30, 1992, the Company and its subsidiaries had over 1,200
consumer finance offices in 40 states, Puerto Rico and the Virgin Islands. Total
consolidated finance receivables, net of unearned finance charges, as of
September 30, 1992 were $5.5 billion.
The principal executive offices of the Company are located at 601 N.W.
Second Street, Evansville, Indiana 47708, and its telephone number is (812)
424-8031.
USE OF PROCEEDS
Except as may otherwise be provided in the Prospectus Supplement, the net
proceeds to be received by the Company from the sale of the Securities being
offered hereby will be used to repay borrowings incurred in, or to finance the
growth of receivables arising in connection with, the Company's consumer finance
operations or will be available for the purchase of receivables or for other
general corporate purposes. Pending the uses described above, such net proceeds
may be temporarily invested in short-term marketable securities.
3
<PAGE>
SELECTED FINANCIAL INFORMATION
The following selected financial information is derived from consolidated
financial statements of the Company and its subsidiaries which have been audited
by Ernst & Young, independent auditors. The information should be read in
conjunction with the consolidated financial statements, related notes, and other
financial information incorporated herein by reference. See "Incorporation by
Reference."
(DOLLARS IN THOUSANDS)
YEAR ENDED DECEMBER 31,
-------------------------------------
1991 1990 1989
----------- ----------- -----------
SELECTED FINANCIAL INFORMATION
Revenues:
Finance charges-------------- $ 801,040 $ 770,669 $ 720,452
Insurance-------------------- 110,069 112,640 113,958
Other------------------------ 82,296 86,064 92,301
----------- ----------- -----------
Total revenues----------- 993,405 969,373 926,711
----------- ----------- -----------
Expenses:
Interest expense------------- 375,349 389,203 372,526
Operating expenses----------- 243,619 238,309 241,657
Provision for finance
receivable losses---------- 96,732 83,644 74,294
Insurance losses and loss
adjustment expenses-------- 59,410 62,461 73,677
----------- ----------- -----------
Total expenses----------- 775,110 773,617 762,154
----------- ----------- -----------
Income before provision for
income taxes------------------- 218,295 195,756 164,557
Provision for income taxes------- 82,458 72,809 64,159
----------- ----------- -----------
Net income--------------- $ 135,837 $ 122,947 $ 100,398
=========== =========== ===========
DECEMBER 31,
----------------------------------------
1991 1990 1989
------------ ------------ ------------
Finance receivables, net of unearned
finance charges-------------------- $ 5,137,942 $ 4,790,074 $ 4,489,042
Total assets------------------------- 6,464,519 5,917,962 5,805,340
Short-term debt---------------------- 2,030,070 2,152,236 1,865,627
Long-term debt----------------------- 2,776,561 2,191,695 2,290,313
Preferred stock---------------------- 4,000 4,000 129,000
Common shareholder's equity---------- 1,086,756 1,085,691 1,044,949
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical consolidated ratios of
earnings to fixed charges of the Company and its subsidiaries for the periods
indicated:
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED SEPTEMBER 30, ----------------------------------------
1992 1991 1990 1989 1988 1987
1.6 1.6 1.5 1.4 1.5 1.6
For purposes of computing the ratio of earnings to fixed charges, earnings
represent the aggregate of net income, provision for income taxes, extraordinary
item and fixed charges. Fixed charges represent interest expense and implicit
interest in rents.
4
DESCRIPTION OF DEBT SECURITIES
The Senior Securities are to be issued under a Senior Indenture dated as of
February 1, 1993 (the "Senior Indenture") between the Company and Citibank,
N.A., as trustee ("Citibank"), and the Subordinated Securities are to be issued
under a Senior Subordinated Indenture dated as of February 1, 1993 (the
"Subordinated Indenture") between the Company and Citibank, as trustee.
Citibank, in its capacity as trustee under the Senior Indenture and the
Subordinated Indenture, is referred to herein as the "Trustee." Pursuant to the
Trust Indenture Act of 1939, as amended, the Trustee will have a "conflicting
interest" if the Debt Securities issued under either Indenture are in default.
In such event, the Trustee may be required to resign its trusteeship under one
of the Indentures, and the Company would thereupon endeavor to appoint a
successor trustee under such Indenture. Any such resignation would become
effective only upon the appointment of a successor trustee and such successor
trustee's acceptance of such appointment.
The forms of the Senior Indenture and the Subordinated Indenture (being
sometimes referred to herein collectively as the "Indentures" and individually
as an "Indenture") are filed as exhibits to the Registration Statement of which
this Prospectus is a part. The statements and descriptions under this heading
regarding provisions of the Debt Securities and the Indentures are summaries
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 Indentures and the
Debt Securities, including the definitions therein of certain terms. Certain
capitalized terms used herein are defined in the Indentures. Wherever particular
sections of the Indentures or terms that are defined in the Indentures are
referred to herein or in a Prospectus Supplement, it is intended that such
sections or defined terms shall be incorporated by reference herein or therein,
as the case may be.
The Indentures allow for the issuance of Debt Securities denominated in
foreign currencies and/or in bearer form. The Company does not intend to issue
any such Debt Securities pursuant to this Prospectus. Accordingly, certain
provisions of the Indentures relating to such Debt Securities are not described
herein.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company.
The indebtedness represented by the Subordinated Securities will be subordinated
in right of payment to the prior payment in full of the Superior Indebtedness of
the Company as described under "-- Subordination."
The Debt Securities may be issued in one or more series. The particular
terms of each series of Debt Securities, as well as any modifications or
additions to the general terms of the Senior Securities or the Subordinated
Securities as described herein which may be applicable in the case of a
particular series of Securities, are described in the Prospectus Supplement
relating to such series of Debt Securities. Accordingly, for a description of
the terms of a particular series of Debt Securities, reference must be made to
both the Prospectus Supplement relating thereto and to the description of Debt
Securities set forth in this Prospectus.
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities being offered thereby: (1) the designation of such Debt
Securities; (2) any limit on the aggregate principal amount of such Debt
Securities and the series in which such Debt Securities shall be included; (3)
the percentage of their principal amount at which such Debt Securities will be
issued and, in the case of Original Issue Discount Securities, the principal
amount thereof payable upon declaration of acceleration of maturity thereof; (4)
the date or dates on which such Debt Securities will mature or the manner in
which such dates are determined; (5) the rate or rates per annum (which may be
fixed or variable) at which such Debt Securities will bear interest, if any, or
the method of determining such rate or rates; (6) the date from which such
interest, if any, on such Debt Securities will accrue, the dates on which such
interest, if any, will be payable, the date on which payment of such interest,
if any, will commence and the record dates for such interest payment dates, if
any;
5
(7) the terms of any mandatory or optional redemption (including any sinking
fund provisions or any obligation to redeem at the option of a Holder); (8)
whether such Debt Securities are to be issued initially or permanently in the
form of a global Debt Security and, if so, the identity of the Depository
(hereinafter defined) for such global Debt Security; and (9) any other terms of
such Debt Securities not inconsistent with the provisions of the applicable
Indenture. Debt Securities may also be issued under the Indentures upon the
exercise of Warrants. See "Description of Warrants."
The Indentures do not limit the aggregate principal amount of Debt
Securities that may be issued thereunder or of any particular series of such
Debt Securities and provide that, in addition to the Debt Securities, additional
securities may be issued thereunder from time to time in one or more series up
to the aggregate principal amount which may be authorized from time to time by
the Company. (Section 301 of each Indenture) All Debt Securities issued under an
Indenture will rank equally and ratably with any additional Debt Securities
issued under such Indenture. Because the Company is a holding company, the right
of the Company, and hence the right of creditors of the Company (including the
Holders of the Debt Securities), to participate in any distribution of the
assets of any subsidiary upon its liquidation or reorganization or otherwise is
necessarily subject to the prior claims of creditors of the subsidiary, except
to the extent that claims of the Company itself as a creditor of the subsidiary
may be recognized.
Unless the Prospectus Supplement relating to a particular issuance of Debt
Securities specifies otherwise, Debt Securities will be issued in denominations
of $1,000 and integral multiples thereof. No service charge will be made for any
transfer or exchange of Debt Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. (Sections 302 and 305 of each Indenture)
Some of the Debt Securities may be issued under the Indentures as Original
Issue Discount Securities (bearing no interest or interest at a rate which at
the time of issuance is below market rates) to be sold at a substantial discount
below their stated principal amount. Federal income tax consequences and other
special considerations applicable to any such Original Issue Discount Securities
will be described in the Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement relating to a
particular series of Debt Securities, the principal of and any premium or
interest on Debt Securities issued in certificated form will be payable, and the
transfer of Debt Securities will be registrable, at the office of the Trustee
designated for that purpose in New York City, provided that payment of any
interest on Debt Securities issued in certificated form may be made at the
option of the Company by check mailed to the address of the person entitled
thereto. In the case of global Debt Securities (which will be registered in the
name of the Depository or its nominee), payment will be made to the Depository
or its nominee in accordance with the then-existing arrangements between the
paying agent(s) for such global Debt Securities and the Depository. See
"-- Global Debt Securities." (Sections 305, 307 and 1002 of each Indenture)
The Indentures do not contain any provisions that 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 or similar transaction involving
the Company, except as described herein under "-- Limitations on Liens" and
"-- Merger and Consolidation." Reference is made to the Prospectus Supplement
relating to the series of Debt Securities offered thereby for information with
respect to any deletions from, modifications of, or additions to, the Events of
Default or covenants that may be included in the terms of such series of Debt
Securities, including any addition of a covenant or other provision providing
event risk or similar protection.
Under the Indentures, the Company will have the ability, in addition to the
ability to issue Debt Securities with terms different from those of Debt
Securities previously issued, to "reopen" a previous issue of a series of Debt
Securities and issue additional Debt Securities of such series.
6
LIMITATIONS ON LIENS
The Indentures provide that neither the Company nor a Subsidiary shall
create, assume or suffer to exist, except in favor of the Company or a
Wholly-owned Subsidiary, any Mortgage upon any of its or their property, without
equally and ratably securing the Debt Securities (subject, in the case of the
Subordinated Securities, to subordination as to rights of payment as provided in
the Subordinated Indenture), but this restriction does not apply to certain
permitted encumbrances described in the Indentures, including, without
limitation, (a) Mortgages existing on February 1, 1993, (b) any Mortgages on
properties or assets, in addition to those otherwise permitted, securing
Indebtedness which at the time incurred does not, together with all other
Indebtedness so secured and not otherwise permitted, exceed in the aggregate 10%
of Consolidated Liquid Net Worth, (c) any Mortgages on properties or assets
securing Indebtedness of Subsidiaries, created in the ordinary course of
business by such Subsidiaries, if, as a matter of practice, such Subsidiaries
prior to becoming Subsidiaries had incurred Indebtedness on a secured basis, (d)
purchase money Mortgages on property acquired or constructed by the Company or
any of its Subsidiaries after February 1, 1993 to secure the purchase price
thereof (or to secure Indebtedness incurred for the purpose of financing the
acquisition or construction thereof), Mortgages existing on any property at the
time of acquisition, Mortgages existing on any property of any corporation at
the time it becomes a Subsidiary, and any Mortgage with respect to property
acquired after February 1, 1993, in any amount (with respect to any Mortgage
described in this clause (d)) not exceeding 75% of the cost of any property,
including improvements thereon, so acquired or constructed, and (e) refundings
or extensions of any permitted Mortgage. (Section 1009 of each Indenture)
"Mortgage" means any mortgage, pledge, lien, security interest, conditional sale
or other title retention agreement or other similar encumbrance. (Section 101 of
each Indenture)
EVENTS OF DEFAULT, NOTICE AND WAIVER
If an Event of Default with respect to any Debt Securities of any series
Outstanding under either of the Indentures shall occur and be continuing, the
Trustee under such Indenture or the Holders of at least 25% in principal amount
of the Debt Securities of that series Outstanding may declare, by notice as
provided in the applicable Indenture, the principal amount (or such lesser
amount as may be provided for in the Debt Securities of that series) of all the
Debt Securities of that series Outstanding to be due and payable immediately;
provided, that if all such Events of Default with respect to Debt Securities of
that series shall have been cured, or waived as hereinafter provided, and all
amounts due otherwise than on account of such declaration shall have been paid
or deposited with the Trustee, the Holders of a majority in aggregate principal
amount of the Debt Securities of that series then Outstanding may rescind and
annul such declaration and its consequences. (Section 502 of each Indenture)
Upon declaration of acceleration of the Maturity of Original Issue Discount
Securities, an amount less than the principal amount thereof will become due and
payable. Reference is made to the Prospectus Supplement relating to any Original
Issue Discount Securities for the particular provisions relating to acceleration
of the Maturity thereof. Any past default under either Indenture with respect to
Debt Securities of any series, and any Event of Default arising therefrom, may
be waived by the Holders of a majority in principal amount of all Debt
Securities of such series Outstanding under such Indenture, except in the case
of (i) default in the payment of the principal of or any premium or interest on
any Debt Securities of such series or (ii) default in respect of a covenant or
provision which may not be amended or modified without the consent of the Holder
of each Outstanding Debt Security of such series affected. (Section 513 of each
Indenture)
An Event of Default with respect to any series of Debt Securities is defined
in each Indenture as being: (a) default in the payment of any interest upon any
Debt Security of such series when such interest becomes due and payable, and
continuance of such default for a period of 30 days; (b) default in the payment
of the principal of and any premium on any Debt Security of such series when it
becomes due and payable, whether at the Stated Maturity, upon redemption or
repayment, by declaration or otherwise; (c) default in the making of any sinking
fund payment on any Debt Security
7
of such series; (d) default in the performance or breach of any covenant or
warranty of the Company contained in such Indenture for the benefit of such
series or in the Debt Securities of such series, continued for 60 days after
written notice as provided in such Indenture; (e) acceleration of the maturity
of any indebtedness for money borrowed of the Company if such acceleration is
not annulled or such indebtedness is not discharged within 10 days after written
notice as provided in such Indenture; (f) certain events in bankruptcy,
insolvency or reorganization; and (g) any other Event of Default provided with
respect to the Debt Securities of such series. (Section 501 of each Indenture)
The Trustee is required, within 90 days after the occurrence of a default
with respect to the Debt Securities of any series which is known to the Trustee
and is continuing (without regard to any grace period or notice requirements),
to give to the Holders of the Debt Securities of such series notice of such
default; provided, however, that, except in the case of a default in the payment
of the principal of or any premium or interest on any Debt Securities of such
series or in the payment of any sinking fund installment with respect to the
Debt Securities of such series, the Trustee shall be protected in withholding
such notice if it in good faith determines that the withholding of such notice
is in the interests of the Holders of the Debt Securities of such series; and
provided further that, in the case of any default referred to in clause (d) of
the second preceding paragraph with respect to the Debt Securities of such
series, no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. (Section 602 of each Indenture)
The Trustee, subject to its duties during default to act with the required
standard of care, may require indemnification by the Holders of the Debt
Securities of any series with respect to which a default has occurred before
proceeding to exercise any right or power under the Indentures at the request of
the Holders of the Debt Securities of such series. (Sections 601 and 603 of each
Indenture) Subject to such right of indemnification, the Holders of a majority
in principal amount of the Outstanding Debt Securities of any series under
either Indenture may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to the Debt Securities of such
series. (Section 512 of each Indenture)
The Company is required to furnish annually to the Trustee statements as to
the Company's compliance with all conditions and covenants under the Indentures.
(Section 1007 of each Indenture)
MERGER AND CONSOLIDATION
The Company may consolidate or merge with or into any other corporation, and
the Company may sell or transfer all or substantially all of its assets to
another corporation, provided that (a) the corporation (if other than the
Company) formed by, resulting from or surviving any such consolidation or merger
or which shall have received the transfer of such assets shall be a corporation
organized and existing under the laws of The United States of America or a state
thereof and shall assume payment of the principal of and any premium and
interest on the Debt Securities and the performance and observance of all of the
covenants and conditions of the Indentures to be performed or observed by the
Company and (b) the Company or such successor corporation, as the case may be,
shall not immediately thereafter be in default in the performance of any such
covenant or condition under the Indentures and shall not immediately thereafter
have outstanding (or otherwise be liable for) any Indebtedness secured by a
Mortgage not permitted by the provisions of Section 1009 of each Indenture or
shall have secured the Debt Securities equally and ratably with (or prior to)
any Indebtedness secured by any Mortgage not so permitted (subject, in the case
of the Subordinated Securities, to subordination as to rights of payment as
provided in the Subordinated Indenture). (Sections 801 and 802 of each
Indenture)
MODIFICATION AND WAIVER
Modification and amendment of each of the Indentures may be made by the
Company and the Trustee with the consent of the Holders of not less than 66 2/3%
in principal amount of the Outstanding
8
Debt Securities of each series affected thereby, provided that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby, (a) change the Stated Maturity of
the principal of, or any installment of principal of or interest on, any
Outstanding Debt Security; (b) reduce the principal amount of or the rate of
interest on or any premium payable with respect to any Debt Security; (c) reduce
the amount of principal of an Original Issue Discount Security that would be due
and payable upon a declaration of acceleration of the Maturity thereof; (d)
adversely affect any right of repayment at the option of the Holder of any Debt
Security; (e) change the place or currency of payment of the principal of or any
premium or interest on any Debt Security; (f) impair the right to institute suit
for the enforcement of any such payment on or after the Stated Maturity, or any
date of redemption or repayment, thereof; (g) reduce the above-stated percentage
of Outstanding Debt Securities of any series necessary to modify or amend the
Indenture with respect to such series or reduce the percentage of Outstanding
Debt Securities of any series necessary to waive any past default or compliance
with certain restrictive provisions to less than a majority of such series, or
reduce the requirements of Section 1404 of the applicable Indenture for quorum
or voting; or (h) modify the provisions of the Indentures described in this
paragraph or those regarding waiver of compliance with certain provisions of, or
certain defaults and their consequences under, the Indentures, except to
increase the percentage of Outstanding Debt Securities necessary to modify and
amend the Indentures or to give any such waiver, and except to provide that
certain other provisions of the Indentures cannot be modified or waived without
the consent of the Holder of each Outstanding Debt Security affected thereby.
The Holders of at least a majority in principal amount of the Outstanding Debt
Securities of any series may waive compliance by the Company with certain
restrictive provisions applicable to such series. (Sections 902 and 1010 of each
Indenture)
Modification and amendment of each of the Indentures may be made by the
Company and the Trustee without the consent of any Holder of Outstanding Debt
Securities, for any of the following purposes: (a) to evidence the succession of
another corporation to the Company and the assumption of the covenants of the
Company; (b) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Debt Securities or to surrender any right or
power conferred upon the Company; (c) to add any additional Events of Default
with respect to all or any series of Debt Securities; (d) to change or eliminate
any restrictions on the payment of the principal of or any premium or interest
on Debt Securities or to permit the issuance of Debt Securities in
uncertificated form, provided any such action does not adversely affect the
interests of the Holders of the Debt Securities of any series in any material
respect; (e) to change or eliminate any provision of the Indentures, provided
that no Outstanding Debt Security of any series is entitled to the benefit of
such provision; (f) to secure the Debt Securities pursuant to the requirements
of Sections 801 or 1009 of the Indentures or otherwise; (g) to establish the
form or terms of the Debt Securities of any series; (h) to provide for the
acceptance of appointment by a successor Trustee with respect to the Debt
Securities of one or more series and to add to or change any of the provisions
as shall be necessary to provide for or facilitate the administration of the
trusts under the Indentures by more than one Trustee; (i) to change the
conditions, limitations and restrictions on the authorized amount, terms or
purposes of issuance, authentication and delivery of the Debt Securities as set
forth in the Indentures, the Debt Securities and the Prospectus Supplement
relating thereto; or (j) to cure any ambiguity, defect or inconsistency in the
Indentures, provided such action does not adversely affect the interests of the
Holders of the Debt Securities of any series in any material respect. (Section
901 of each Indenture)
DEFEASANCE AND DISCHARGE
The Senior Indenture provides that the Company and the Trustee, without the
consent of any Holder of Outstanding Debt Securities, may execute a supplemental
indenture to provide that the Company will be discharged from any and all
obligations in respect of the Senior Securities of any series (except for
certain obligations to register the transfer or exchange of Senior Securities,
to
9
replace stolen, lost or mutilated Senior Securities, to maintain paying agencies
and hold moneys for payment in trust) upon the deposit with the Trustee under
the Senior Indenture, in trust, of money or Government Obligations, or a
combination thereof, which through the payment of interest and principal thereof
in accordance with their terms will provide money in an amount sufficient to pay
the principal of, any premium and interest on, and any mandatory sinking fund
payments in respect of, the Senior Securities of such series on the Stated
Maturity of such payments in accordance with the terms of the Senior Indenture
and such Senior Securities. Such a supplemental indenture may only be executed
if the Company has received from, or there has been published by, the United
States Internal Revenue Service a ruling, or if there has been a change in the
applicable federal income tax law, in either case, to the effect that such a
discharge will not cause the Holders of the Senior Securities of such series to
recognize income, gain or loss for federal income tax purposes; and the
provisions of such a supplemental indenture shall not be applicable to any
series of Senior Securities then listed on the New York Stock Exchange if the
provisions would cause the Outstanding Senior Securities of such series to be
delisted. (Section 901 of the Senior Indenture)
Each of the Indentures provides that, when the conditions set forth in
Section 401 of the applicable Indenture have been satisfied, upon the request of
the Company, such Indenture will cease to be of further effect (except as to any
surviving right of registration of transfer or exchange of Debt Securities
expressly provided for therein). Such conditions include that (i) all Debt
Securities issued under such Indenture either shall have been delivered to the
Trustee for cancellation or shall be due, or are to be called for redemption,
within one year and (ii) with respect to all Debt Securities issued under such
Indenture but not previously delivered to the Trustee for cancellation, there
shall have been delivered to the Trustee, in trust, money or Government
Obligations, or a combination thereof, which through the payment of interest and
principal thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of, and any premium and interest on, all such
Debt Securities on the Stated Maturity of such payments in accordance with the
applicable Indenture. (Section 401 of each Indenture)
DEFEASANCE OF CERTAIN COVENANTS
The terms of the Senior Securities of any series may provide the Company
with the option to omit to comply with the covenants described under
"-- Limitations on Liens" above and any additional covenants not included in the
Senior Indenture that may be specified as applicable to such series in the
Prospectus Supplement with respect thereto. If such terms make such option
available with respect to the Senior Securities of any series, the Company, in
order to exercise such option, will be required to deposit with the Trustee
under the Senior Indenture, in trust, money or Government Obligations, or a
combination thereof, which through the payment of interest and principal thereof
in accordance with their terms will provide money in an amount sufficient to pay
the principal of, any premium and interest on, and any mandatory sinking fund
payments in respect of, the Senior Securities of such series on the Stated
Maturity of such payments in accordance with the terms of the Senior Indenture
and such Senior Securities. The Company will also be required to deliver to the
Trustee under the Senior Indenture an Opinion of Counsel to the effect that the
deposit and related covenant defeasance will not cause the Holders of the Senior
Securities of such series to recognize income, gain or loss for federal income
tax purposes. Such covenant defeasance would not be available with respect to
any series of Senior Securities then listed on the New York Stock Exchange if
such defeasance would cause the Outstanding Senior Securities of such series to
be delisted. (Section 1011 of the Senior Indenture) The Prospectus Supplement
relating to a particular issuance of Senior Securities may further describe the
provisions, if any, permitting such an omission to comply.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global Debt Securities that will be deposited with, or on
behalf of, a depositary (the "Depository") identified in the Prospectus
Supplement relating to such series. Global Debt Securities may be issued
10
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 Debt
Security may not be transferred except as a whole among the Depository, any
successor Depository and their respective nominees.
The specific terms of the depository arrangement with respect to a series of
Debt Securities will be described in the Prospectus Supplement relating to such
series. Unless otherwise indicated in the applicable Prospectus Supplement, the
following provisions will apply to all depository arrangements.
Upon the issuance of a global Debt Security, the Depository for such global
Debt 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 Debt Security to the accounts of persons
that have accounts with such Depository ("Participants"). Such accounts will be
designated by the underwriters or agents with respect to such Debt Securities or
by the Company if such Debt Securities are offered and sold directly by the
Company. Ownership of beneficial interests in a global Debt Security will be
limited to Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such global Debt Security will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the applicable Depository or its nominee (with respect to
interests of Participants) and the records of Participants (with respect to
interests of persons other than Participants). The laws of some states may
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limit and such laws may impair the ability
to transfer beneficial interests in a global Debt Security.
So long as the Depository for a global Debt Security, or its nominee, is the
registered owner of such global Debt 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 Debt Security for all purposes under the
applicable Indenture. Except as provided below, owners of beneficial interests
in a global Debt Security will not be entitled to have any of the individual
Debt Securities of the series represented by such global Debt Security
registered in their names, will not receive or be entitled to receive physical
delivery of such Debt Securities in definitive form, and will not be considered
the owners or Holders thereof under the applicable Indenture.
Payments of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a global Debt Security registered in
the name of a Depository or its nominee will be made to the Depository or its
nominee, as the case may be, as the registered owner of the global Debt Security
representing such Debt Securities. Neither the Company, the Trustee, any Paying
Agent, nor the Security 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 of the global Debt
Security for such Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Company expects that the Depository for a series of Debt Securities, or
its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent global Debt Security representing any of such Debt
Securities, will immediately credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such global Debt Security for such Debt Securities as shown on the
records of such Depository or its nominee. The Company also expects that
payments by Participants to owners of beneficial interests in such global Debt
Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such Participants.
If the Depository for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days or if the Company executes and delivers
to the Trustee a Company Order to the effect that a global Debt Security shall
be exchangeable for certificated Debt Securities or if an Event of Default has
occurred and is continuing with respect to a series of Debt Securities, the
Company will issue individual
11
certificated Debt Securities of such series in definitive form in exchange for
the global Debt Security or Debt Securities representing such series of Debt
Securities. Accordingly, 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 Debt Securities of a series
represented by one or more global Debt Securities and, in such event, will issue
individual certificated Debt Securities of such series in definitive form in
exchange for the global Debt Security or Debt Securities representing such
series of Debt Securities. In any such instance, the individual certificated
Debt Securities of such series issued by the Company will be issued to
Participants, as directed by the Depository or its nominee, or to the beneficial
owners holding Debt Securities of such series through such Participants, as
directed by such Participants, all in accordance with standing instructions and
customary practices, as is now the case with securities registered in "street
name." Certificated Debt Securities of such series so issued in definitive form
will be issued in denominations, unless otherwise specified by the Company, of
$1,000 and integral multiples thereof.
MISCELLANEOUS
No Holder of a Debt Security of any series may institute any action against
the Company under either of the Indentures (except actions for payment of
overdue principal of, premium, if any, or interest on such Debt Securities)
unless the Holders of at least 25% of the principal amount of the Debt
Securities of that series then Outstanding under such Indenture shall have
requested the Trustee to institute such action and offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request and the Trustee shall not have instituted such
action within 60 days of such request. (Sections 507 and 508 of each Indenture)
SUBORDINATION
In the event of any distribution, division or application of all or any part
of the assets of the Company, or the proceeds thereof, occurring by reason of
the liquidation, dissolution or other winding up of the Company, or by reason of
any execution, sale, receivership, insolvency or bankruptcy proceedings, or
proceedings for reorganization, or readjustment of the Company or its
properties, payment or distribution of any kind upon the Subordinated Securities
of each series is to be subordinated to the prior payment in full of all
Superior Indebtedness. (Sections 1601 and 1602 of the Subordinated Indenture)
The Subordinated Indenture also provides that in the event of the acceleration
of the principal amount of the Subordinated Securities of any series (or, in the
case of Original Issue Discount Securities, such portion of the principal amount
thereof as may be specified in the terms thereof) because of the occurrence of
an Event of Default with respect to such series under the Subordinated
Indenture, the holders of Superior Indebtedness will be entitled to declare such
Superior Indebtedness due and payable and in such event to receive payment in
full of all principal, premium and interest on all Superior Indebtedness before
the Holders of the Subordinated Securities of such series are entitled to
receive any payment. The Subordinated Indenture further provides that in the
event of a default in payment of the principal of or any premium or interest on
any Superior Indebtedness, so long as such payment shall not have been made or
provided for, or in the event of the acceleration of the maturity of any
Superior Indebtedness which has not been rescinded and annulled, no payment of
principal or any premium or interest will be made on the Subordinated
Securities. (Sections 1602 and 1603 of the Subordinated Indenture) The Holders
of the Subordinated Securities of each series will be subrogated to the rights
of the holders of the Superior Indebtedness to the extent of payments made to
the holders of Superior Indebtedness upon any distribution of assets in any such
proceedings out of the distributive share of the Subordinated Securities.
(Section 1602 of the Subordinated Indenture) By reason of such subordination, in
the event of a distribution of assets upon insolvency, certain general creditors
of the Company may recover more, ratably, than Holders of the Subordinated
Securities.
Superior Indebtedness is defined in the Subordinated Indenture as all
Indebtedness of the Company for borrowed money (other than Indebtedness of the
Company evidenced by certificates of
12
investment or indebtedness which are issued by the Company in the ordinary
course of the Finance Business in connection with the making of a loan), which
is not expressed to be subordinate and junior to any other Indebtedness of the
Company. (Section 101 of the Subordinated Indenture) As of September 30, 1992,
an aggregate of $4.6 billion of Superior Indebtedness was outstanding and an
aggregate of $424 million of subordinated Indebtedness was outstanding. The
Subordinated Indenture does not limit the amount of Superior Indebtedness that
may be incurred by the Company in the future.
The Subordinated Indenture may be modified or amended as provided under
"-- Modification and Waiver," provided that no such modification or amendment
may, without the consent of the Holder of each Outstanding Subordinated Security
affected thereby, modify any of the provisions of the Subordinated Indenture
relating to the subordination of the Subordinated Securities in a manner adverse
to such Holder. (Section 902 of the Subordinated Indenture)
THE TRUSTEE UNDER THE INDENTURES
The Company and certain of its affiliates maintain banking and borrowing
relations with Citibank.
The Indentures provide that an alternative Trustee may be appointed by the
Company with respect to any particular series of Debt Securities. Any such
appointment will be described in the Prospectus Supplement relating to such
series of Debt Securities.
DESCRIPTION OF WARRANTS
The Company may issue, together with Debt Securities or separately, Warrants
for the purchase of Debt Securities. Any Warrants are to be issued under Warrant
Agreements (each a "Warrant Agreement") to be entered into between the Company
and a bank or trust company, as Warrant Agent (the "Warrant Agent"), all as
shall be set forth in the Prospectus Supplement relating to Warrants being
offered thereby. A copy of the form of Warrant Agreement, including the forms of
Warrant Certificates representing the Warrants (the "Warrant Certificates"),
reflecting the alternative provisions to be included in the Warrant Agreements
that will be entered into with respect to particular offerings of Warrants, is
filed as an exhibit to the Registration Statement. The following summaries of
certain provisions of the Warrant Agreement and the Warrant Certificates 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 and the Warrant
Certificates, respectively, including the definitions therein of certain terms.
The form of Warrant Agreement allows for the issuance of Warrants in foreign
currencies and/or in bearer form. The Company does not intend to issue any such
Warrants pursuant to this Prospectus. Accordingly, certain provisions of the
form of Warrant Agreement relating to such Warrants are not described herein.
GENERAL
The applicable Prospectus Supplement will describe the terms of Warrants
offered thereby, the Warrant Agreement relating to such Warrants and the Warrant
Certificates representing such Warrants, including the following: (1) the
designation, aggregate principal amount, denominations and terms of the series
of Debt Securities purchasable upon exercise of such Warrants and the procedures
and conditions relating to the exercise of such Warrants; (2) the designation
and terms of any related series of Debt Securities with which such Warrants are
issued and the number of such Warrants issued with each such Debt Security; (3)
the date, if any, on and after which such Warrants and the related Debt
Securities will be separately transferable; (4) the principal amount of the
series of Debt Securities purchasable upon exercise of each such Warrant and the
price at which such principal amount of Debt Securities may be purchased upon
such exercise and whether such Debt Securities may be purchased for
consideration other than cash; (5) the date on which the right to exercise such
13
Warrants shall commence and the date on which such right shall expire (the
"Expiration Date"); (6) if the series of Debt Securities purchasable upon
exercise of such Warrants are Original Issue Discount Securities, a discussion
of Federal income tax considerations applicable thereto; (7) where the Warrant
Certificates may be transferred and registered; and (8) any other terms of the
Warrants.
Warrant Certificates will be exchangeable for new Warrant Certificates of
different denominations at the corporate trust office of the Warrant Agent or
any other office indicated in the applicable Prospectus Supplement. Prior to the
exercise of Warrants, holders of such Warrants will not have any of the rights
of Holders of the Debt Securities purchasable upon such exercise and will not be
entitled to payments of principal of or any premium or interest on the Debt
Securities purchasable upon such exercise.
EXERCISE OF WARRANTS
Each Warrant will entitle the Holder to purchase for cash or specified
securities such principal amount of the related series of Debt Securities at
such exercise price as shall in each case be set forth in, or be determinable as
set forth in, the Prospectus Supplement relating to the Warrants offered
thereby. Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Warrants offered thereby and may be so exercised up to the close
of business on the Expiration Date set forth in such Prospectus Supplement.
After the close of business on the Expiration Date, unexercised Warrants will
become void.
Warrants may be exercised by delivery to the Warrant Agent of payment as
provided in the applicable Prospectus Supplement of the amount required to
purchase the Debt Securities purchasable upon such exercise together with
certain information set forth in the Warrant Certificate. Warrants will be
deemed to have been exercised upon receipt of the exercise price, subject to the
receipt within five business days of the Warrant Certificate representing such
Warrants. Upon receipt of the requisite payment and the 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 pursuant
to the applicable Indenture the Debt Securities purchasable upon such exercise.
If less than all of the Warrants represented by such Warrant Certificate are
exercised, a new Warrant Certificate will be issued for the remaining amount of
Warrants.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell the Securities to or through underwriters or dealers;
directly to other purchasers; or through agents. Any such underwriter, dealer or
agent involved in the offer and sale of the Securities will be named in an
applicable Prospectus Supplement or Prospectus Supplements (including any
Pricing Supplement or Pricing Supplements).
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities for whom they may
act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agent. Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of Securities by
them may be deemed to be underwriting discounts and commissions, under the
Securities Act. Any compensation paid by the Company to underwriters, dealers or
agents in
14
connection with the offering of the Securities, and any discounts, concessions
or commissions allowed by underwriters to participating dealers, will be
described in an applicable Prospectus Supplement or Pricing Supplement.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company against and/or contribution by the
Company toward certain liabilities, including liabilities under the Securities
Act.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in a Prospectus Supplement, the Company will authorize
underwriters, dealers or other persons acting as the Company's agents to solicit
offers by certain institutions to purchase Securities from the Company pursuant
to contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases such institutions must be
approved by the Company. The obligations of any purchaser under any such
contract will be subject to the condition that the purchase of the Securities
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such other
agents will not have any responsibility in respect of the validity or
performance of such contracts.
LEGAL OPINIONS
Unless otherwise indicated in a Prospectus Supplement, the validity of each
issue of the Securities will be passed upon for the Company by Baker & Daniels,
Indianapolis, Indiana, and certain legal matters relating to the Securities
offered hereby will be passed upon for any underwriters or agents by Brown &
Wood, New York, New York. Brown & Wood may rely as to matters of Indiana law on
the opinion of Baker & Daniels.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1991 have been audited by Ernst & Young, independent auditors, as
set forth in their report included therein and incorporated herein by reference.
See "Incorporation by Reference." Such financial statements are, and audited
financial statements to be included in subsequently filed documents will be,
incorporated herein by reference in reliance upon the reports of Ernst & Young
pertaining to such financial statements (to the extent covered by consents filed
with the Commission) given upon the authority of such firm as experts in
accounting and auditing.
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