<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 14, 1998.
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________
CSX CORPORATION
(Exact name of Registrant as specified in charter)
COMMONWEALTH OF VIRGINIA 62-1051971
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
ONE JAMES CENTER
901 EAST CARY STREET
RICHMOND, VIRGINIA 23219
(804) 782-1400
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
ELLEN M. FITZSIMMONS, ESQ.
GENERAL COUNSEL-CORPORATE
CSX CORPORATION
ONE JAMES CENTER, 901 EAST CARY STREET
RICHMOND, VIRGINIA 23219
(804) 782-1400
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
__________________
COPY TO:
JOSEPH C. CARTER, III, ESQ.
MCGUIRE, WOODS, BATTLE & BOOTHE LLP
ONE JAMES CENTER, 901 EAST CARY STREET
RICHMOND, VIRGINIA 23219
(804) 775-1000
(804) 775-1061 (FACSIMILE)
__________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/
__________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PRICE PER UNIT(1) OFFERING PRICE(1)(2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior and Subordinated Debt
Securities (3)(4)...............
Debt Securities Warrants(5)......
Preferred Stock (6)..............
Preferred Stock Warrants(7)......
Common Stock (6)(8)(9)...........
Common Stock Warrants (10).......
Depositary Shares (6)(11)........
Total $795,479,500 100% $795,479,500 $221,144
====================================================================================================================================
</TABLE>
(Footnotes on next page)
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
____________________
Pursuant to Rule 429 under the Securities Act, this Registration Statement
contains a combined prospectus that also relates to Registration Statement No.
333-53191 previously filed by the Registrant under the Securities Act. This
Registration Statement also constitutes post-effective amendment No. 1 to such
Registration Statement No. 333-53191 and such post-effective amendment No. 1
shall hereafter become effective concurrently with the effectiveness of this
Registration Statement and in accordance with Section 8(c) of the Securities
Act.
<PAGE>
____________________
(FOOTNOTES CONTINUED FROM PREVIOUS PAGE)
(1) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D of Form S-3. Securities registered hereby may be
offered for U.S. dollars or the equivalent thereof in foreign currencies,
currency units or composite currencies. Securities registered hereby may be
sold separately, together or in units with other securities registered
hereby. Such amount represents the total of the aggregate maximum offering
prices of any combination of the Senior and Subordinated Debt Securities,
Debt Securities Warrants, Preferred Stock, Preferred Stock Warrants, Common
Stock, Common Stock Warrants and Depositary Shares. As described elsewhere
on the cover page of this Registration Statement, $4,520,500 proposed
maximum aggregate offering price of securities or, if any such securities
are issued at an original issue discount, such greater amount as may be
sold for an aggregate initial offering price of up to $4,520,500 (or the
equivalent thereof in foreign currencies, currency units or composite
currencies) is being carried forward from Registration Statement No. 333-
53191 previously filed by the Registrant under the Securities Act; a filing
fee of $1,334 was previously paid to register such securities under such
prior registration statement.
(2) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(o). The proposed maximum offering price will be determined from
time to time by the Registrant in connection with the issuance by the
Registrant of the securities registered hereunder.
(3) If any Debt Securities are issued at an original issue discount, then such
greater amount as may be sold for an aggregate initial offering price of up
to the proposed maximum aggregate offering price set forth above.
(4) In addition to any Debt Securities that may be issued directly under this
Registration Statement, there is being registered hereunder such
indeterminate amount of Debt Securities as may be issued upon conversion or
exchange of other Debt Securities, Preferred Stock or Depositary Shares,
for which no separate consideration will be received by the Registrant.
(5) Debt Securities Warrants will represent rights to purchase Debt Securities
registered hereby.
(6) Such indeterminate number of shares of Preferred Stock and Common Stock,
and such indeterminate number of Depositary Shares, as may be issued from
time to time at indeterminate prices. In addition to any Preferred Stock,
Depositary Shares and Common Stock that may be issued directly under this
Registration Statement, there are being registered hereunder such
indeterminate number of shares of Preferred Stock and Common Stock, and
such indeterminate number of Depositary Shares, as may be issued upon
conversion or exchange of Debt Securities, Preferred Stock or Depositary
Shares, as the case may be, for which no separate consideration will be
received by the Registrant.
(7) Preferred Stock Warrants will represent rights to purchase Preferred Stock
registered hereby.
(8) The shares of Common Stock being registered hereunder shall include rights
to purchase CSX's Series B Preferred Stock (the "Rights"). Prior to the
occurrence of certain events, the Rights will not be exercisable or
evidenced separately from Common Stock. Value attributable to the Rights,
if any, will be reflected in the market price of the shares of Common
Stock.
(9) The aggregate amount of Common Stock registered hereunder is limited,
solely for purposes of any at the market offerings, to that which is
permissible under Rule 415(a)(4) of the Securities Act.
(10) Common Stock Warrants will represent rights to purchase Common Stock
registered hereby.
(11) Depositary Shares will represent fractional interests in shares of
Preferred Stock registered hereby.
<PAGE>
PROSPECTUS
$800,000,000
[CSX LOGO]
DEBT SECURITIES, PREFERRED STOCK, DEPOSITARY SHARES, COMMON STOCK AND SECURITIES
WARRANTS
________________
We may sell from time to time, in one or more offerings:
. debt securities
. preferred stock
. depositary shares
. common stock
. warrants for debt securities, preferred stock or
common stock
________________
The total offering price of these securities, in the aggregate, will not
exceed $800,000,000. We will provide specific terms of these securities in
supplements to this prospectus. You should read this prospectus and any
supplement carefully before you invest.
________________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
________________
This prospectus is dated , 1998.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a shelf registration statement that CSX
Corporation ("CSX" or the "Company") filed with the Securities and Exchange
Commission (the "Commission"). Under this shelf registration statement, CSX may
sell any combination of the securities described in this prospectus (the
"Securities") in one or more offerings up to a total dollar amount of
$800,000,000. For further information about the Company's business and the
securities, you should refer to this registration statement and its exhibits.
The exhibits to the registration statement contain the full text of certain
contracts and other important documents summarized in this prospectus. Since
these summaries may not contain all the information that you may find important
in deciding whether to purchase the Securities CSX may offer, you should review
the full text of these documents. The registration statement can be obtained
from the Commission as indicated under the heading "Where You Can Find More
Information."
This prospectus provides you with a general description of the Securities
CSX may offer. Each time CSX sells Securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described under the
heading "Where You Can Find More Information".
You should rely only on the information contained or incorporated by
reference in this prospectus and the prospectus supplement. CSX has not
authorized anyone to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. CSX
will not make an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information appearing
in this prospectus, as well as information CSX previously filed with the SEC and
incorporated by reference in this prospectus, is accurate only as of the date on
the front cover of this prospectus. The Company's business, financial condition,
results of operations and prospects may have changed since that date.
WHERE YOU CAN FIND MORE INFORMATION
CSX is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance with such requirements, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, and at the Commission's Regional Offices in New
York (Seven World Trade Center, 13th Floor, New York, New York 10048), and
Chicago (Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661). Copies of these materials may be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. You may call the Commission at 1-800-SEC-0330 for more
information about the public reference rooms and their copy charges. In
addition, the Commission maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. Reports, proxy statements and other information concerning the
Company may also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005, where the Company's common stock
("Common Stock") is listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows CSX to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that CSX files later with
the Commission will automatically update and supersede this information. CSX
incorporates by reference the documents listed below and any future filings made
with the Commission under Sections 13(a), 13(c), 14, or 15(d) of the Exchange
Act until CSX sells all of the Securities.
2
<PAGE>
. Annual Report on Form 10-K for the fiscal year ended December 26,
1997,
. Quarterly Reports on Form 10-Q for the fiscal quarters ended March 27,
1998, June 26, 1998 and September 25, 1998, and
. Current Reports on Form 8-K dated April 22, 1998, May 12, 1998, May
29, 1998, October 2, 1998 and October 27, 1998.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting CSX at the following address: Alan A.
Rudnick, Vice President-General Counsel and Corporate Secretary, CSX
Corporation, One James Center, 901 East Cary Street, Richmond, Virginia 23219,
telephone number (804) 782-1400.
CSX CORPORATION
CSX Corporation, headquartered in Richmond, Virginia, is a Fortune 500
transportation company providing multimodal freight transportation and contract
logistics services around the world. CSX's unique combination of rail,
container-shipping, intermodal and logistics services offers shippers global
reach unmatched by any other freight transportation company. The Company's goal,
advanced at each of its business units, is to provide efficient, competitive
transportation and related services for customers and to deliver superior value
to CSX shareholders.
The Company's holdings include: CSX Transportation, Inc. ("CSXT"), Sea-Land
Service, Inc. ("Sea-Land"), CSX Intermodal, Inc. ("CSXI"), Customized
Transportation, Inc. ("CTI") and an approximate one-third interest in American
Commercial Lines Holdings LLC ("ACL Holdings"). The Company's non-transportation
interests include: The Greenbrier, the Grand Teton Lodge Company, and CSX Real
Property, Inc. CSX also holds a majority interest in Yukon Pacific Corporation.
In 1997, CSX generated more than $10.6 billion of operating revenue and nearly
$1.6 billion of operating income.
CSXT is a major eastern railroad, providing rail freight transportation
over a network of approximately 18,300 route miles in 20 states in the East,
Midwest and South; and in Ontario, Canada. Headquartered in Jacksonville,
Florida, CSXT accounted for 47% of CSX's operating revenue and 78% of operating
income in 1997.
Sea-Land is the largest U.S.-based ocean carrier and a leader in the global
shipping industry. The carrier operates a fleet of 98 container ships and
approximately 220,000 containers in U.S. and foreign trade and serves 120 ports.
In addition, Sea-Land operates 28 marine terminal facilities across its global
network. Headquartered in Charlotte, North Carolina, Sea-Land accounted for 37%
of CSX's operating revenue and 18% of operating income in 1997.
CSXI provides transcontinental intermodal transportation services and
operates a network of dedicated intermodal facilities across North America.
Every week, CSXI runs more than 300 dedicated trains between its 33 terminals.
CSXI contributed 6% of CSX's operating revenue and 3% of operating income in
1997.
CTI is one of the nation's leading third-party logistics providers,
offering inventory management, distribution, warehousing, assembly and just-in-
time delivery services. The fastest growing unit of CSX, CTI provided 4% of
CSX's operating revenue and 1% of operating income in 1997.
ACL Holdings, headquartered in Jeffersonville, Indiana, is a family of
marine companies providing a wide range of services to the shipping public and
other inland waterway carriers. ACL Holdings is a leader in barge
transportation, operating 195 towboats and more than 4,500 barges on U.S. and
South American waterways. Additionally, ACL Holdings operates marine
construction facilities, river terminals and communications services. Prior to
its combination with National Marine (another barge company) in June 1998 to
form ACL Holdings, American Commercial Lines LLC was wholly-owned by CSX and
accounted for 6% of CSX's operating revenue and 4% of operating income in 1997.
See "Recent Developments."
3
<PAGE>
Resort holdings include the Mobil Five-Star and AAA Five-Diamond hotel, The
Greenbrier in White Sulphur Springs, West Virginia, and the Grand Teton Lodge
Company in Moran, Wyoming. CSX Real Property, Inc. is responsible for sales,
leasing and development of CSX-owned properties. CSX holds a majority interest
in Yukon Pacific Corporation, which is promoting construction of the Trans-
Alaska Gas System to transport Alaska's North Slope natural gas to Valdez for
export to Asian markets.
The Company was incorporated in Virginia in 1978. The Company's principal
executive offices are located at One James Center, 901 East Cary Street,
Richmond, Virginia 23219 (telephone 804-782-1400). Unless the context indicates
otherwise, references herein to the Company or CSX are to CSX Corporation and
its consolidated subsidiaries.
CONRAIL ACQUISITION
In April 1997, CSX and Norfolk Southern Corporation, a Virginia corporation
("Norfolk Southern"), entered into an agreement providing for their joint
acquisition of Conrail Inc., a Pennsylvania corporation ("Conrail"), and the
allocation of its routes and other assets.
Under the agreement, CSX and Norfolk Southern completed their acquisition
of all outstanding shares of Conrail for $115 per share in cash during the
second quarter of 1997. CSX and Norfolk Southern each possess 50% of the voting
and management rights of a jointly owned acquisition company, and non-voting
equity is divided between the parties to achieve overall economic allocations of
42% for CSX and 58% for Norfolk Southern. Following approval by the Surface
Transportation Board ("STB") as described below, Conrail's assets will be
segregated within Conrail, and CSX and Norfolk Southern will each benefit from
the operation of a specified portion of the Conrail routes and other assets
through the use of operating arrangements. Certain Conrail assets will be
operated for the joint benefit of CSX and Norfolk Southern.
The total cost of acquiring the outstanding shares of Conrail under the
joint CSX/Norfolk Southern agreement was approximately $9.8 billion. Pursuant to
the agreement, CSX has paid 42%, or approximately $4.1 billion, and Norfolk
Southern has paid 58%, or approximately $5.7 billion, of such cost. Including
its capitalized transaction costs, CSX's total purchase price was approximately
$4.2 billion.
The Conrail shares were placed in a voting trust pending the STB's approval
of the joint acquisition and control of Conrail. CSX and Norfolk Southern filed
an application for control of Conrail with the STB in June 1997. On June 8,
1998, the STB indicated its approval of the acquisition in a public voting
conference, and issued its written decision on July 23, 1998. That decision
became effective on August 22, 1998. At that time, the voting trust was
dissolved, and a new Conrail board of directors was elected.
CSX is actively planning for the smooth integration of Conrail operations
into the CSX rail system. Plans involve all facets of combining the two systems,
including: safety; customer service; train scheduling, switching and routing;
equipment utilization and track programs; commuter and passenger rail
operations; marketing; technology; labor agreements; and administration. Related
capital improvements to certain routes and facilities on the CSX rail system
also have been initiated. The integration of rail operations is expected to take
place once operating and technology systems are in place and necessary
implementing agreements have been reached, which currently is anticipated in
early 1999.
Until the integration of rail operations takes place, Conrail will continue
to operate as a Class I railroad and CSX's operating results will include 42% of
Conrail's net income, reported under the equity method of accounting. Effective
as of the August 1998 STB control date, the joint CSX/Norfolk Southern entity
that owns Conrail has allocated the total purchase price to Conrail's underlying
assets and liabilities. CSX's operating results include expense for its 42%
share of the effect of that purchase price allocation on items such as
depreciation of property and equipment. CSX will continue to incur interest
expense on the debt issued to acquire the Conrail investment. Acquisition and
transition expenses are expected to continue through 1998 and into 1999 and will
begin to decline once integration is achieved.
4
<PAGE>
Net cash flow prior to integration is expected to be reduced by acquisition
and transition expenses, capital spending incurred to integrate CSX and Conrail
lines, and interest payments on the acquisition debt. At September 25, 1998, the
average interest rate on debt incurred to acquire the Conrail investment was
approximately 6.8%.
Upon integration, CSX expects to begin realizing revenue benefits from
freight traffic that currently moves on other modes of transportation,
principally trucks. CSX also expects to begin realizing cost savings from the
elimination of duplicate positions and facilities, as well as other efficiencies
created by combining its allocated portion of the Conrail system with its
existing rail operations. As CSX and Norfolk Southern move to integrate the
Conrail operations, as expected, they will compete for traffic located in
markets formerly served solely by Conrail. CSX expects that as a result of this
process of entering new markets, there may be changes in the historic rate and
traffic patterns, including some rate reductions and traffic volume shifts. The
process will be driven by market conditions, and CSX presently cannot assess the
impact of these transition effects on either the timing or realization of the
projected benefits of the Conrail transaction.
FORWARD-LOOKING STATEMENTS
This prospectus contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Those statements appear in a number of places in this
prospectus and include statements under "CSX Corporation" regarding the intent,
belief or current expectations of CSX, its directors or its officers with
respect to, among other things: the operational integration of Conrail, the
attainment of labor implementing agreements necessary to effect the integration
and the impact of the Conrail transaction on the financial condition and results
of CSX. Estimates, forecasts and other forward-looking statements included, or
incorporated by reference in, this prospectus are based on estimates and
assumptions about complex economic and operating factors with respect to
industry performance, general business and economic conditions and other matters
that cannot be predicted accurately and that are subject to contingencies over
which CSX has no control. Such forward-looking statements involve known and
unknown risks, uncertainties and other important factors that could cause the
actual results, performance or achievements of CSX to differ materially from any
future results, performance or achievements expressed or implied by such
statements. Certain of those risks, uncertainties and other important factors
that could cause actual results to differ materially include: future economic
conditions in the markets in which CSX and Conrail operate; financial market
conditions; inflation rates; changing competition; changes in the economic
regulatory climate in the U.S. railroad industry; the ability to eliminate
duplicative administrative functions; and adverse changes in applicable laws,
regulations or rules governing environmental, tax or accounting matters. These
forward-looking statements speak only as of the date of this prospectus. CSX
disclaims any obligation or undertaking to disseminate any updates or revisions
to any such statement to reflect changes in CSX's expectations or any change in
events, conditions or circumstances on which any such statements are based.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's consolidated ratio of earnings to fixed charges for each of
the fiscal periods indicated is as follows:
<TABLE>
<CAPTION>
FOR THE NINE
------------
MONTHS ENDED FOR THE FISCAL YEARS ENDED
--------------------- ------------------------------------------------
SEPT. 25, SEPT. 26, DEC. 26, DEC. 27, DEC. 29, DEC. 30, DEC. 31,
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges (a)(b) 2.0x 2.7x 2.6x 4.0x 3.2x 3.1x 2.3x
</TABLE>
__________
(a) For purposes of computing the ratio of earnings to fixed charges, earnings
represent earnings before income taxes plus interest expense related to
indebtedness, amortization of debt discount, the interest portion of fixed
rent expense, undistributed earnings of affiliates accounted for using the
equity method and minority interest expense. Fixed charges include interest
on indebtedness (whether expensed or capitalized), amortization of debt
discount and the interest portion of fixed rent expense.
5
<PAGE>
(b) Pretax earnings for certain periods include the effects of the Company's
investment in Conrail prior to the integration of CSX and Conrail
operations and various non-recurring gains and charges. These items are
summarized as follows:
(1) Interest on indebtedness and other expenses associated with the
Company's acquisition of a 42% interest in Conrail are included for
the nine-month periods ended September 25, 1998 and September 26,
1997, and the fiscal year ended December 26, 1997. During these
periods, the Conrail investment was principally held in a voting trust
pending regulatory approval of the joint acquisition, control and
division of Conrail by CSX and Norfolk Southern.
(2) A net investment gain of $154 million primarily from the conveyance of
the Company's barge subsidiary to a joint venture is included for the
nine-month period ended September 25, 1998.
(3) A restructuring credit of $30 million is included for the nine-month
period ended September 25, 1998 to reflect the reversal of a portion
of the Company's 1995 restructuring charge (see (4) below) due to a
change in the Company's plan of restructuring.
(4) A charge of $257 million to recognize the estimated costs of
initiatives to revise, restructure and consolidate specific operations
and administrative functions at the Company's rail and container-
shipping units is included for the fiscal year ended December 29,
1995.
(5) A charge of $93 million to recognize the estimated costs of
restructuring certain operations and functions at the Company's
container-shipping unit is included for the fiscal year ended December
31, 1993.
Excluding the aforementioned items, the ratio of earnings to fixed charges
for each of the periods indicated below would have been:
Nine months ended September 25, 1998 3.4x
Nine months ended September 26, 1997 4.3x
Fiscal year ended December 26, 1997 4.4x
Fiscal year ended December 29, 1995 3.7x
Fiscal year ended December 31, 1993 2.5x
USE OF PROCEEDS
CSX will use the net proceeds from the sale of the Securities for general
corporate purposes, which may include reduction or refinancing of outstanding
indebtedness, capital expenditures, working capital requirements, implementation
of work force reductions, improvements in productivity and other cost reductions
at the Company's major transportation units, and redemptions and repurchases of
certain outstanding securities. CSX has not specifically allocated the proceeds
to such purposes as of the date of this prospectus. The precise amount and
timing of the application of proceeds from the sale of Securities will depend
upon the funding requirements of the Company and the availability and cost of
other funds at the time of such sale. Allocation of the proceeds of a particular
series of Securities, or the principal reasons for the offering if no such
allocation has been made, will be described in the applicable prospectus
supplement.
DESCRIPTION OF DEBT SECURITIES
The Company may issue debt securities ("Debt Securities") either
separately, or together with, or upon the conversion of or in exchange for,
other Securities. The Debt Securities are to be either senior unsecured
obligations (the "Senior Debt Securities") of the Company issued in one or more
series under an Indenture (the "Senior Indenture") dated as of August 1, 1990
between the Company and The Chase Manhattan Bank, as trustee (the "Senior
Trustee"), as
6
<PAGE>
supplemented by a First Supplemental Indenture dated as of June 15, 1991, a
Second Supplemental Indenture dated as of May 6, 1997 and a Third Supplemental
Indenture dated as of April 22, 1998, or subordinated unsecured obligations (the
"Subordinated Debt Securities") of the Company issued in one or more series
under an Indenture (the "Subordinated Indenture" and, together with the Senior
Indenture, the "Indentures") to be entered into between the Company and The
Chase Manhattan Bank, as trustee (the "Subordinated Trustee" and, together with
the Senior Trustee, the "Trustees"). A copy of each Indenture has been filed as
an exhibit to, or has been or will be incorporated by reference in, the
registration statement of which this prospectus is a part.
The summary of certain provisions of the Indentures and the Debt Securities
set forth below and the summary of certain terms of a particular series of Debt
Securities set forth in the applicable prospectus supplement 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, which provisions of the Indentures
(including defined terms) are incorporated herein by reference. Certain
capitalized terms used herein and not defined are defined in the Indentures.
The Debt Securities may be issued from time to time in one or more series
of Senior Debt Securities and one or more series of Subordinated Debt
Securities. The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provide that Debt Securities of
any series may be issued thereunder up to an aggregate principal amount which
may be authorized from time to time by the Company. The terms of each series of
Debt Securities will be established by or pursuant to a resolution of the Board
of Directors of the Company and set forth or determined in the manner provided
in an Officer's Certificate or by a supplemental indenture. The following
description of Debt Securities summarizes certain general terms and provisions
of the series of Debt Securities to which any prospectus supplement may relate.
The particular terms of each series of Debt Securities offered by a prospectus
supplement or prospectus supplements will be described in such prospectus
supplement or prospectus supplements relating to such series.
Unless otherwise indicated, currency amounts in this prospectus and any
prospectus supplement are stated in United States dollars ("$" or "dollars").
GENERAL
The applicable prospectus supplement or prospectus supplements will
describe the specific terms of the series of Debt Securities offered thereby,
including (where applicable):
. the title of such Debt Securities;
. any limit on the aggregate principal amount of such Debt Securities;
. whether such Debt Securities are to be issuable as Registered
Debt Securities or Bearer Debt Securities or both, whether any of such
Debt Securities are to be issuable initially in temporary global form
and whether any of such Debt Securities are to be issuable in
permanent global form;
. the price or prices (expressed as a percentage of the aggregate
principal amount thereof) at which such Debt Securities will be
issued;
. the date or dates on which such Debt Securities will mature;
. the rate or rates per annum at which such Debt Securities will
bear interest, if any, or the formula pursuant to which such rate or
rates will be determined, and the date or dates from which any such
interest will accrue;
. the Interest Payment Dates on which any such interest on such
Debt Securities will be payable and the Regular Record Date for any
interest payable on any Registered Debt Securities on any Interest
Payment Date;
. the Person to whom any interest on any Registered Debt Securities
of such series will be payable, if other than the Person in whose name
that Debt Security (or one or more Predecessor Debt Securities) is
registered at the close of business on the Regular Record Date for
such interest, the manner in which, or the Person to whom, any
interest on any Bearer Debt Security of such series will be payable,
if otherwise than upon presentation and surrender of the coupons
appertaining thereto, and the extent to which, or the manner in which,
any interest payable on a temporary global Debt Security on an
Interest Payment Date will be paid
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if other than in the manner provided in the relevant Indenture and the
extent to which, or the manner in which, any interest payable on a
permanent global Debt Security on an Interest Payment Date will be
paid;
. each office or agency where, subject to the terms of the Indenture as
described below under "Payment and Paying Agents," the principal of
and any premium and interest on such Debt Securities will be payable
and each office or agency where, subject to the terms of the Indenture
as described below under "Form, Exchange, Registration and Transfer,"
such Debt Securities may be presented for registration of transfer or
exchange;
. the period or periods within which and the price or prices at which
such Debt Securities may, pursuant to any optional redemption
provisions, be redeemed, in whole or in part, at the option of the
Company and the other detailed terms and conditions of any such
optional redemption provisions;
. the obligation, if any, of the Company to redeem or purchase such Debt
Securities pursuant to any sinking fund or analogous provisions or at
the option of the Holder thereof and the period or periods within
which and the price or prices at which such Debt Securities will be
redeemed or purchased, in whole or in part, pursuant to such
obligation, and the other detailed terms and conditions of such
obligation;
. the denominations in which any Registered Debt Securities will be
issuable, if other than denominations of $1,000 and any integral
multiple thereof, and the denomination or denominations in which
Bearer Debt Securities will be issuable, if other than denominations
of $5,000;
. the currency or currencies, including currency units, in which payment
of principal of and any premium and interest on such Debt Securities
will be payable if other than U.S. dollars and the ability, if any, of
the Company or the Holders of such Debt Securities to have payments
made in any currency other than those in which such Debt Securities
are stated to be payable;
. whether the amount of payments of principal of, premium, if any, and
interest, if any, on such Debt Securities may be determined with
reference to an index and the manner in which such amounts will be
determined (any such Debt Securities being hereinafter called "Indexed
Securities");
. the portion of the principal amount of such Debt Securities which
shall be payable upon acceleration thereof if other than the full
principal amount thereof;
. any limitation on the application of the terms of the Indenture
described below under "Discharge, Defeasance and Covenant Defeasance;"
. the terms, if any, upon which such Debt Securities may be convertible
into or exchangeable for other Securities;
. whether such Debt Securities will be Senior Debt Securities or
Subordinated Debt Securities; and
. any other terms of such Debt Securities not inconsistent with the
provisions of the relevant Indenture. Any such prospectus supplement
or prospectus supplements will also describe any special provisions
for the payment of additional amounts relating to specified taxes,
assessments or other governmental charges in respect of the Debt
Securities of such series and whether the Company has the option to
redeem the affected Debt Securities rather than pay such additional
amounts.
As used in this prospectus and any prospectus supplement relating to the
offering of any Debt Securities, references to the principal of and premium, if
any, and interest, if any, on such Debt Securities will be deemed to include
mention of the payment of additional amounts, if any, required by the terms of
such Debt Securities in such context.
Debt Securities may be issued as Original Issue Discount Debt Securities.
An Original Issue Discount Debt Security is a Debt Security, including any zero-
coupon Debt Security, which is issued at a price lower than the amount payable
upon the Stated Maturity thereof, and which provides that, upon redemption or
acceleration of the Maturity thereof, an amount less than the amount payable
upon the Stated Maturity thereof and determined in accordance with the terms of
such Debt Security shall become due and payable. Special United States federal
income tax considerations applicable to Debt Securities issued at an original
issue discount, including Original Issue Discount Debt Securities, and special
United States tax considerations applicable to any Debt Securities which are
denominated in a currency or currency unit other than United States dollars are
described below under "United States Taxation-Original Issue Discount."
If the purchase price of any Debt Securities is payable in a Currency other
than U.S. dollars or if principal of, or premium, if any, or interest, if any,
on any of the Debt Securities is payable in any Currency other than U.S.
dollars,
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the specific terms and other information with respect to such Debt Securities
and such foreign Currency will be specified in the prospectus supplement
relating thereto.
Unless otherwise indicated in the applicable prospectus supplement,
Registered Debt Securities will be issued in denominations of $1,000 or any
integral multiple thereof, and Bearer Debt Securities will be issued in
denominations of $5,000.
Debt Securities of a series may also be issued under the Indenture upon the
exercise of Debt Warrants issued by the Company. See "Description of Debt
Warrants."
The Indentures do not contain any provisions that may afford the Holders of
Debt Securities of any series protection in the event of a highly leveraged
transaction or other transaction that may occur in connection with a takeover
attempt resulting in a decline in the credit rating of the Debt Securities. Any
such provisions, if applicable to the Debt Securities of any series, will be
described in the prospectus supplement or prospectus supplements relating
thereto.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Unless otherwise indicated in the applicable prospectus supplement, each
series of Debt Securities will be issued in registered form only, without
coupons. The Indentures, however, provide that the Company may also issue Debt
Securities in bearer form only, or in both registered and bearer form. Bearer
Debt Securities shall not be offered, sold, resold or delivered in connection
with their original issuance in the United States or to any United States person
(as defined below) other than offices located outside the United States of
certain United States financial institutions. Purchasers of Bearer Debt
Securities will be subject to certification procedures and may be affected by
certain limitations under United States tax laws. Such procedures and
limitations will be described in the prospectus supplement relating to the
offering of the Bearer Debt Securities. Unless otherwise indicated in an
applicable prospectus supplement or prospectus supplements, Bearer Debt
Securities will have interest coupons attached. The Indentures also will provide
that Debt Securities of a series may be issuable in temporary or permanent
global form. See "Global Debt Securities."
In connection with its sale during the Restricted Period (as defined in
Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury Regulations), no
Euro-Debt Security shall be mailed or otherwise delivered to any location in the
United States or its possessions. Except as may otherwise be provided in the
applicable prospectus supplement, a Euro-Debt Security (not including a Debt
Security in temporary global form) may be delivered in connection with its sale
during the Restricted Period only if the person entitled to physical delivery of
such Euro-Debt Security furnishes written certification, in the form required by
the Indenture, to the effect that
(i) such Euro-Debt Security is owned by a person that is not a United
States person (as defined under "Limitations on Issuance of Euro-Debt
Securities"),
(ii) such Euro-Debt Security is owned by a United States person that
is
(A) a foreign branch of a United States financial institution within
the meaning of Section 1.165-12(c)(1)(v) of the United States
Treasury Regulations (a "Financial Institution") purchasing for
its own account or for resale or
(B) a United States person who acquired such Euro-Debt Security
through the foreign branch of a United States Financial
Institution and who holds such Euro-Debt Security through such
Financial Institution on the date of such written certification
(and, in either case (A) or (B), the Financial Institution has agreed to
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the
Internal Revenue Code of 1986, as from time to time amended, and the
regulations thereunder), or
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(iii) such Euro-Debt Security is owned by a United States or foreign
Financial Institution for the purpose of resale during the Restricted
Period.
A Financial Institution described in clause (iii) above, whether or not also
described in clause (i) or (ii) above, must certify that it has not acquired the
Euro-Debt Security for purposes of resale directly or indirectly to a United
States person or to any person within the United States or its possessions. In
the case of a Euro-Debt Security in permanent global form, such certification
must be given in connection with the notation of a beneficial owner's interest
therein upon original issuance of such Debt Security or upon exchange of a
portion of a temporary global Debt Security. See "Limitations on Issuance of
Euro-Debt Securities."
At the option of the Holder, subject to the terms of the relevant
Indenture, Registered Debt Securities of any series will be exchangeable for
other Registered Debt Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor. In addition,
if Debt Securities of any series are issuable as both Registered Debt Securities
and Bearer Debt Securities, at the option of the Holder, subject to the terms of
the relevant Indenture, Bearer Debt Securities (with all unmatured coupons,
except as provided below, and with all matured coupons in default) of such
series will be exchangeable for Registered Debt Securities of the same series of
any authorized denominations and of a like aggregate principal amount and tenor.
Bearer Debt Securities surrendered in exchange for Registered Debt Securities
between a Regular Record Date or a Special Record Date and the relevant date for
payment of interest shall be surrendered without the coupon relating to such
date for payment of interest and interest will not be payable in respect of the
Registered Debt Security issued in exchange for such Bearer Debt Security, but
will be payable only to the Holder of such coupon when due in accordance with
the terms of the Indenture. Registered Debt Securities, including Registered
Debt Securities received in exchange for Bearer Debt Securities, may not be
exchanged for Bearer Debt Securities. Each Bearer Debt Security and coupon will
bear a legend to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code."
Debt Securities may be presented for exchange as provided above, and
Registered Debt Securities may be presented for registration of transfer (with
the form of transfer endorsed thereon duly executed), at the office of the
Security Registrar or at the office of any transfer agent designated by the
Company for such purpose with respect to any series of Debt Securities and
referred to in an applicable prospectus supplement or prospectus supplements,
without a service charge and upon payment of any taxes and other governmental
charges as described in the relevant Indenture. Such transfer or exchange will
be effected upon the records of the Security 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 Trustee as Security
Registrar. If a prospectus supplement or prospectus supplements refer to any
transfer agents (in addition to the Security Registrar) initially designated by
the Company with respect to any series of Debt Securities, 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, if Debt
Securities of a series are issuable solely as Registered Debt Securities, the
Company will be required to maintain a transfer agent in each Place of Payment
for such series and, if Debt Securities of a series are issuable as Bearer Debt
Securities, the Company will be required to maintain (in addition to the
Security Registrar) a transfer agent in a Place of Payment for such series
located outside the United States and its possessions. The Company may at any
time designate additional transfer agents with respect to any series of Debt
Securities.
In the event of any redemption in part, the Company shall not be required
to
. issue, register the transfer of or exchange any Debt Security during a
period beginning at the opening of business 15 days before any
selection for redemption of Debt Securities of like tenor and of the
series of which such Debt Security is 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 Debt
Securities of like tenor and of such series to be redeemed;
. register the transfer of or exchange any Registered Debt Security so
selected for redemption, in whole or in part, except the unredeemed
portion of any Debt Security being redeemed in part; or
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. exchange any Bearer Debt Security so selected for redemption, except
to exchange such Bearer Debt Security for a Registered Debt Security
of that series and like tenor which is immediately surrendered for
redemption.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable prospectus supplement or
prospectus supplements, principal of and any premium and interest on Bearer Debt
Securities will be payable, subject to any applicable laws and regulations, at
the offices of such Paying Agents outside the United States and its possessions
as the Company may designate from time to time or, at the option of the Holder,
by check or by transfer to an account maintained by the payee with a financial
institution located outside the United States and its possessions. Unless
otherwise indicated in an applicable prospectus supplement or prospectus
supplements, payment of interest on a Bearer Debt Security on any Interest
Payment Date will be made only against surrender to the Paying Agent of the
coupon relating to such Interest Payment Date. No payment with respect to any
Bearer Debt Security will be made at any office or agency of the Company in the
United States or its possessions or by check mailed to any address in the United
States or its possessions or by transfer to any account maintained with a
financial institution located in the United States or its possessions.
Notwithstanding the foregoing, payments of principal of and any premium and
interest on Bearer Debt Securities denominated and payable in U.S. dollars will
be made at the office of the Paying Agent in the Borough of Manhattan, The City
of New York, if (but only if) payment of the full amount thereof in U.S. dollars
at all offices or agencies outside the United States and its possessions is
illegal or effectively precluded by exchange controls or other similar
restrictions.
Unless otherwise indicated in an applicable prospectus supplement or
prospectus supplements, principal of and any premium and interest on Registered
Debt Securities 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 shall appear in the Security Register. Unless otherwise
indicated in an applicable prospectus supplement or prospectus supplements,
payment of interest on a Registered Debt Security on any Interest Payment Date
will be made to the Person in whose name such Registered Debt Security (or
Predecessor Debt Security) is registered at the close of business on the Regular
Record Date for such interest.
Unless otherwise indicated in an applicable prospectus supplement or
prospectus supplements, the Corporate Trust Office of the Trustee in The City of
New York will be designated as a Paying Agent for the Company for payments with
respect to Debt Securities of each series which are issuable solely as
Registered Debt Securities and as a Paying Agent for payments with respect to
Debt Securities of each series (subject to the limitations described above in
the case of Bearer Debt Securities) which are issuable solely as Bearer Debt
Securities or as both Registered Debt Securities and Bearer Debt Securities. Any
Paying Agents outside the United States and its possessions and any other Paying
Agents in the United States or its possessions initially designated by the
Company for the Debt Securities of each series will be named in an applicable
prospectus supplement or prospectus supplements. The Company may at any time
designate additional Paying Agents or rescind the designation of any Paying
Agent or approve a change in the office through which any Paying Agent acts,
except that if Debt Securities of a series are issuable solely as Registered
Debt Securities, the Company will be required to maintain a Paying Agent in each
Place of Payment for such series and, if Debt Securities of a series are
issuable as Bearer Debt Securities, the Company will be required to maintain
. a Paying Agent in the Borough of Manhattan, The City of New York for
payments with respect to any Registered Debt Securities of the series
(and for payments with respect to Bearer Debt Securities of the series
in the circumstances described above, but not otherwise), and
. a Paying Agent in a Place of Payment located outside the United States
and its possessions where Debt Securities of such series and any
coupons appertaining thereto may be presented and surrendered for
payment;
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provided, however, that if the Debt Securities of such series are listed on The
International Stock Exchange of the United Kingdom and the Republic of Ireland
Limited (the "London Stock Exchange"), the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and its possessions and
such stock exchange shall so require, the Company will maintain a Paying Agent
in London, Luxembourg or any other required city located outside the United
States and its possessions, as the case may be, for the Debt Securities of such
series.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of and any premium or interest on any Debt Security of any series
which remain unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable will be repaid to the Company and the
Holder of such Debt Security or any coupon appertaining thereto will thereafter
look only to the Company for payment thereof.
RANKING OF DEBT SECURITIES; HOLDING COMPANY STRUCTURE
The Senior Debt Securities will be unsecured unsubordinated obligations of
the Company and will rank on a parity in right of payment with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated Debt
Securities will be unsecured obligations of the Company and will be subordinated
in right of payment to all existing and future Senior Indebtedness (as defined
below) of the Company. See "-Subordination of Subordinated Debt Securities."
The Debt Securities are obligations exclusively of the Company. The Company
is a holding company, substantially all of whose consolidated assets are held by
its subsidiaries. Accordingly, the cash flow of the Company and the consequent
ability to service its debt, including the Debt Securities, are largely
dependent upon the earnings of such subsidiaries.
Because the Company is a holding company, the Debt Securities will be
effectively subordinated to all existing and future indebtedness, trade
payables, guarantees, lease obligations and letter of credit obligations of the
Company's subsidiaries. Therefore, the Company's rights and the rights of its
creditors, including the Holders of the Debt Securities, to participate in the
assets of any subsidiary upon the latter's liquidation or reorganization will be
subject to the prior claims of such subsidiary's creditors, except to the extent
that the Company may itself be a creditor with recognized claims against the
subsidiary, in which case the claims of the Company would still be effectively
subordinate to any security interest in, or mortgages or other liens on, the
assets of such subsidiary and would be subordinate to any indebtedness of such
subsidiary senior to that held by the Company. Although certain debt instruments
to which the Company and its subsidiaries are parties impose limitations on the
incurrence of additional indebtedness, both the Company and its subsidiaries
retain the ability to incur substantial additional indebtedness and lease and
letter of credit obligations.
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 securities that will be deposited with, or on behalf
of, a depositary (the "Depositary") identified in the prospectus supplement
relating to such series. Global Debt Securities may be issued in either
registered or bearer form and in either temporary or permanent form. Unless and
until it is exchanged in whole or in part for individual certificates evidencing
Debt Securities in definitive form represented thereby, a global Debt Security
may not be transferred except as a whole by the Depositary for such global Debt
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor of such Depositary or a nominee of such
successor.
The specific terms of the depositary arrangement with respect to a series
of global Debt Securities and certain limitations and restrictions relating to a
series of global Bearer Debt Securities will be described in the prospectus
supplement relating to such series.
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REDEMPTION AND REPURCHASE
The Debt Securities of any series may be redeemable at the option of the
Company, may be subject to mandatory redemption pursuant to a sinking fund or
otherwise, or may be subject to repurchase by the Company at the option of the
Holders, in each case upon the terms, at the times and at the prices set forth
in the applicable prospectus supplement.
CONVERSION AND EXCHANGE
The terms, if any, on which Debt Securities of any series are convertible
into or exchangeable for the Company's preferred stock ("Preferred Stock"),
depositary shares ("Depositary Shares") or other Debt Securities will be set
forth in the applicable prospectus supplement. Such terms may include provisions
for conversion or exchange, either mandatory, at the option of the Holders or at
the option of the Company.
CERTAIN COVENANTS AND AGREEMENTS OF THE COMPANY
The Indentures do not limit the amount of indebtedness or lease obligations
that may be incurred by the Company and its subsidiaries. The Indentures do not
contain provisions which would give Holders of the Debt Securities the right to
require the Company to repurchase their Debt Securities in the event of a
decline in the credit rating of the Company's debt securities resulting from a
takeover, recapitalization or similar restructuring.
COVENANT IN THE SENIOR INDENTURE-LIMITATION ON LIENS ON STOCK OF THE
PRINCIPAL SUBSIDIARIES.
The following covenant will be applicable to Senior Debt Securities but not
to Subordinated Debt Securities. The Senior Indenture provides that the Company
may not, nor may it permit any Subsidiary to, create, assume, incur or suffer to
exist any mortgage, pledge, lien, encumbrance, charge or security interest of
any kind upon any stock or indebtedness, whether owned on the date of the Senior
Indenture or thereafter acquired, of any Principal Subsidiary, to secure any
Obligation (other than the Senior Debt Securities) of the Company, any
Subsidiary or any other Person, without in any such case making effective
provision whereby all of the outstanding Senior Debt Securities (and other
outstanding debt securities issued from time to time pursuant to the Senior
Indenture) shall be directly secured equally and ratably with such Obligation.
This provision does not restrict any other property of the Company or its
Subsidiaries. The Senior Indenture defines "Obligation" as indebtedness for
money borrowed or indebtedness evidenced by a bond, note, debenture or other
evidence of indebtedness; "Principal Subsidiary" as CSXT and Sea-Land; and
"Subsidiary" as a corporation a majority of the outstanding voting stock of
which is owned, directly or indirectly, by the Company or one or more
Subsidiaries, or by the Company and one or more Subsidiaries. The Indentures do
not prohibit the sale by the Company or any Subsidiary of any stock or
indebtedness of any Subsidiary.
PROVISION IN BOTH INDENTURES-CONSOLIDATION, MERGER AND SALE OF ASSETS.
The following provision will be applicable to both Senior Debt
Securities and Subordinated Debt Securities. Each Indenture provides that the
Company may, without the consent of the Holders of any of the Outstanding Debt
Securities of a series, consolidate with, merge into or transfer its assets
substantially as an entirety to any corporation organized under the laws of any
domestic or foreign jurisdiction, provided that
. the successor corporation assumes, by a supplemental indenture, the
Company's obligations on the Debt Securities of each series and under
such Indenture,
. after giving effect thereto, no Event of Default, and no event which,
after notice or lapse of time, or both, would become an Event of
Default shall have occurred and be continuing, and
. the Company delivers to the relevant Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such
transaction and supplemental indenture, if any, comply with the
applicable article of such Indenture and that all conditions precedent
therein relating to such transaction have been complied with.
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EVENTS OF DEFAULT
An Event of Default with respect to the Debt Securities of any series is
defined in the relevant Indenture as being a:
. failure to pay principal of or any premium on any of the Debt
Securities of that series when due;
. failure to pay any interest on any Debt Security of that series when
due, continued for 30 days;
. failure to deposit any sinking fund payment, when due, in respect of
any Debt Security of that series;
. failure to perform any other covenant of the Company in the relevant
Indenture (other than a covenant included in such Indenture solely for
the benefit of series of Debt Securities other than that series)
continued for 90 days after written notice as provided in such
Indenture;
. certain events of bankruptcy, insolvency or reorganization of the
Company; or
. any other Event of Default provided with respect to Debt Securities of
that series.
No Event of Default with respect to any particular series of Debt
Securities necessarily constitutes an Event of Default with respect to any other
series of Debt Securities. Each Indenture provides that the Trustee thereunder
may withhold notice to the Holders of the Debt Securities of any series of the
occurrence of a default with respect to the Debt Securities of such series
(except a default in payment of principal, premium, if any, interest, if any, or
sinking fund payments, if any) if the Trustee considers it in the interest of
the Holders to do so.
Subject to the provisions of the Trust Indenture Act of 1939 requiring each
Trustee, during an Event of Default under the relevant Indenture, to act with
the requisite standard of care, and to the provisions of the relevant Indenture
relating to the duties of the Trustee thereunder in case an Event of Default
shall occur and be continuing, a Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request or direction of
any of the Holders of Debt Securities of any series or any related coupons
unless such Holders shall have offered to the Trustee reasonable indemnity.
Subject to such provisions for the indemnification of the relevant Trustee, the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the relevant
Trustee, or exercising any trust or power conferred on such Trustee, with
respect to Debt Securities of that series.
If an Event of Default with respect to Debt Securities of any series at the
time Outstanding shall occur and be continuing, either the relevant Trustee or
the Holders of at least 25% in aggregate principal amount of the Outstanding
Debt Securities of that series may declare the principal of all such Outstanding
Debt Securities, or, if any such Debt Securities are Original Issue Discount
Debt Securities, such lesser amount as may be described in an applicable
prospectus supplement or prospectus supplements, of all the Debt Securities of
that series to be due and payable immediately. At any time after a declaration
of acceleration with respect to Debt Securities of any series has been made but
before a judgment or decree for payment of money due has been obtained by the
relevant Trustee, the Holders of a majority in aggregate principal amount of
Outstanding Debt Securities of that series may rescind any declaration of
acceleration and its consequences, if all payments due (other than those due as
a result of acceleration) have been made and all Events of Default have been
cured or waived.
No Holder of any Debt Securities of any series or any related coupons will
have any right to institute any proceeding with respect to the relevant
Indenture or for any remedy thereunder, unless such Holder shall have previously
given to the relevant Trustee written notice of a continuing Event of Default
with respect to Debt Securities of that series, the Holders of at least 25% in
aggregate principal amount of the Outstanding Debt Securities of that series
shall have made written request, and offered reasonable indemnity, to the
relevant Trustee to institute such proceeding as trustee, and such Trustee shall
not have received from the Holders of a majority in aggregate principal amount
of the Outstanding
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Debt Securities of that series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. However, such
limitations do not apply to a suit instituted by a Holder of an Outstanding Debt
Security of that series for enforcement of payment of the principal of, or any
premium or interest on, such Debt Security on or after the respective due dates
expressed in such Debt Security.
The Company is required to furnish to the relevant Trustee annually a
statement as to performance or fulfillment of covenants, agreements or
conditions in the relevant Indenture and as to the absence of default.
MEETINGS, MODIFICATION AND WAIVER
Each Indenture contains provisions permitting the Company and the relevant
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Debt Securities of each series
issued under such Indenture and affected by a modification or amendment (voting
as one class), to modify or amend any of the provisions of such Indenture or of
such Debt Securities or the rights of the Holders of such Debt Securities under
such Indenture, provided that no such modification or amendment shall, without
the consent of each Holder of each outstanding Debt Security affected thereby:
. change the Stated Maturity of the principal of, or any instalment of
principal of or interest on, any Debt Security, or reduce the
principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or change any obligation
of the Company to pay additional amounts (except as contemplated and
permitted by such Indenture), or reduce the amount of the principal of
an Original Issue Discount Security that would be due and payable upon
a declaration of acceleration of the Maturity thereof or change the
coin or currency in which any Debt Security or any premium or interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date),
. reduce the aforesaid percentage in principal amount of such Debt
Securities, the consent of the Holders of which is required for any
such modification or amendment or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of such
Indenture or certain defaults thereunder and their consequences) or
reduce the requirements for a quorum or voting at a meeting of Holders
of such Debt Securities,
. change any obligation of the Company to maintain an office or agency
in the places and for the purposes required by such Indenture,
. solely in the case of the Subordinated Indenture, modify any of the
provisions of Article Sixteen thereof (relating to subordination of
the Subordinated Debt Securities) or the definition of Senior
Indebtedness in a manner adverse to the Holders of the Subordinated
Debt Securities, or
. modify any of the above provisions (except as permitted by such
Indenture).
Each Indenture also contains provisions permitting the Company and the
relevant Trustee, without the consent of the Holders of such Debt Securities
issued thereunder, to modify or amend such Indenture in order, among other
things:
. to add any additional Events of Default or add to the covenants of the
Company for the benefit of the Holders of all or any series of Debt
Securities issued under such Indenture;
. to establish the form or terms of Debt Securities of any series;
. to cure any ambiguity, to correct or supplement any provision therein
which may be inconsistent with any other provision therein, or to make
any other provisions with respect to matters or questions arising
under
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such Indenture which shall not adversely affect the interests of the
Holders of any Debt Securities issued thereunder in any material
respect; or
. to change or eliminate any of the provisions of such Indenture,
provided that any such change or elimination shall become effective
only when there is no Debt Security Outstanding of any series issued
under such Indenture created prior to the execution of the
supplemental indenture which is entitled to the benefit of such
provision.
The Holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of a series may, on behalf of the Holders of all the
Debt Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the Indenture,
including the covenant described above under "-Certain Covenants and Agreements
of the Company-Covenant in the Senior Indenture-Limitation on Liens on Stock of
the Principal Subsidiaries." The Holders of not less than a majority in
aggregate principal amount of the Outstanding Debt Securities of a series may,
on behalf of all Holders of Debt Securities of that series and any coupons
appertaining thereto, waive any past default under the Indenture with respect to
Debt Securities of that series, except a default (a) in the payment of principal
of or any premium or interest on any Debt Security of such series or (b) in
respect of a covenant or provision of the Indenture which cannot be modified or
amended without the consent of the Holder of each Outstanding Debt Security of
such series affected.
Each Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder
or are present at a meeting of Holders of Debt Securities for quorum purposes,
(i) the principal amount of an Original Issue Discount Debt Security that
shall be deemed to be Outstanding shall be the amount of the
principal thereof that would be due and payable as of the date of
such determination upon acceleration of the Maturity thereof,
(ii) the principal amount of a Debt Security denominated in a foreign
currency or currency unit shall be the U.S. dollar equivalent,
determined as of the date of original issuance of such Debt Security,
of the principal amount of such Debt Security or, in the case of an
Original Issue Discount Debt Security, the U.S. dollar equivalent,
determined as of the date of original issuance of such Debt Security,
of the amount determined as provided in (i) above and
(iii) any Debt Security owned by the Company or any other obligor on such
Debt Security or any Affiliate of the Company or such other obligor
shall be deemed not to be outstanding.
Each Indenture contains provisions for convening meetings of the Holders of
Debt Securities of any or all series. A meeting may be called at any time by the
relevant Trustee, and also, upon request, by the Company or the Holders of at
least 10% in aggregate principal amount of the Outstanding Debt Securities of
such series, in any such case upon notice given in accordance with "Notices"
below and the provisions of such Indenture. Except for any consent which must be
given by the Holder of each Outstanding Debt Security affected thereby, as
described above, any resolution presented at a meeting, or adjourned meeting
duly reconvened, at which a quorum (as described below) is present may be
adopted by the affirmative vote of the Holders of a majority in principal amount
of the Outstanding Debt Securities of that series; provided, however, that,
except for any consent which must be given by the Holder of each Outstanding
Debt Security affected thereby, as described above, any resolution with respect
to any consent, waiver, request, demand, notice, authorization, direction or
other action which may be given by the Holders of not less than a specified
percentage in principal amount of the Outstanding Debt Securities of a series
may be adopted at a meeting, or an adjourned meeting dully reconvened, at which
a quorum is present only by the affirmative vote of the Holders of not less than
such specified percentage in principal amount of the Outstanding Debt Securities
of that series.
Any resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with the relevant Indenture
will be binding on all Holders of Debt Securities of that series and the related
coupons. The quorum required for any meeting called to adopt a resolution, and
at any reconvened meeting, will be
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Persons holding or representing a majority in principal amount of the
Outstanding Debt Securities of a series; provided, however, that if any action
is to be taken at such meeting with respect to a consent, waiver, request,
demand, notice, authorization, direction or other action which may be given by
the Holders of not less than a specified percentage in principal amount of the
Outstanding Debt Securities of a series, the Persons holding or representing
such specified percentage in principal amount of the Outstanding Debt Securities
of such series will constitute a quorum.
NOTICES
Except as otherwise provided in the Indenture, notices to Holders of Bearer
Debt Securities will be given by publication at least twice in a daily newspaper
of general circulation in The City of New York and in such other city or cities
as may be specified in such Debt Securities. Notices to Holders of Registered
Debt Securities will be given by mail to the addresses of such Holders as they
appear in the Security Register.
TITLE
Title to any Bearer Debt Securities (including Bearer Debt Securities in
temporary global form and in permanent global form) and any coupons appertaining
thereto will pass by delivery. The Company, the Trustee and any agent of the
Company or the Trustee may treat the bearer of any Bearer Debt Security and the
bearer of any coupon and the registered owner of any Registered Debt Security as
the absolute owner thereof (whether or not such Debt Security or coupon shall be
overdue and notwithstanding any notice to the contrary) for the purpose of
making payment and for all other purposes.
REPLACEMENT OF DEBT SECURITIES
Any mutilated Debt Security or a Debt Security with a mutilated coupon
appertaining thereto will be replaced by the Company at the expense of the
Holder upon surrender of such Debt Security to the relevant Trustee. Debt
Securities or coupons that become destroyed, lost or stolen will be replaced by
the Company at the expense of the Holder upon delivery to the relevant Trustee
of evidence of the destruction, loss or theft thereof satisfactory to the
Company and the relevant Trustee; in the case of any coupon which becomes
destroyed, lost or stolen, such coupon will be replaced by issuance of a new
Debt Security in exchange for the Debt Security to which such coupon appertains.
In the case of a destroyed, lost or stolen Debt Security or coupon, an indemnity
satisfactory to the Trustee and the Company may be required at the expense of
the Holder of such Debt Security or coupon before a replacement Debt Security
will be issued.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Upon the direction of the Company, either Indenture shall generally cease
to be of further effect with respect to any series of Debt Securities issued
thereunder specified by the Company (subject to the survival of certain
provisions thereof) when
. the Company has delivered to the relevant Trustee for cancellation all
Debt Securities issued thereunder or
. all Debt Securities issued thereunder not theretofore delivered to the
relevant Trustee for cancellation shall have become due and payable,
or are by their terms to become due and payable within one year or are
to be called for redemption within one year, and the Company shall
have deposited with the relevant Trustee as trust funds the entire
amount sufficient to pay and discharge at Stated Maturity or upon
redemption the entire indebtedness on all Debt Securities issued
thereunder
(and if, in either case, the Company has paid or caused to be paid all other
sums payable under the relevant Indenture with respect to the Debt Securities of
such series by the Company and the Company has delivered an Officer's
Certificate and an Opinion of Counsel each stating that the requisite conditions
have been complied with).
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In addition, unless otherwise provided in an applicable prospectus
supplement or prospectus supplements, the Company may elect with respect to any
series of Debt Securities either
(i) to defease and be discharged from any and all obligations with respect
to such Debt Securities (except as otherwise provided in the relevant
Indenture) ("defeasance") or
(ii) to be released from its obligations with respect to such Debt
Securities described above under "-Certain Covenants and Agreements of
the Company-Covenant in the Senior Indenture-Limitation on Liens on
Stock of the Principal Subsidiaries" (which covenant appears only in
the Senior Indenture) and certain other restrictive covenants in the
relevant Indenture and, if indicated in the applicable prospectus
supplement, its obligations with respect to any other covenant
applicable to the Debt Securities of such series ("covenant
defeasance").
If the Company exercises its defeasance option with respect to any series
of Debt Securities, payment of such Debt Securities may not be accelerated
because of an Event of Default. If the Company exercises its covenant defeasance
option with respect to any series of Debt Securities, payment of such Debt
Securities may not be accelerated because of an Event of Default related to the
covenants noted under clause (ii) of the immediately preceding paragraph. The
Company may exercise its defeasance option with respect to such Debt Securities
notwithstanding its prior exercise of its covenant defeasance option.
If the Company effects covenant defeasance with respect to any Debt
Securities and such Debt Securities are declared due and payable because of the
occurrence of any Event of Default other than an Event of Default with respect
to the covenant described above under "-Certain Covenants and Agreements of the
Company-Covenant in the Senior Indenture-Limitation on Liens on Stock of the
Principal Subsidiaries" (which covenant appears only in the Senior Indenture and
which would no longer be applicable to such Debt Securities after such covenant
defeasance) or with respect to any other covenant as to which there has been
covenant defeasance, the amount of monies and/or Government Obligations
deposited with the applicable Trustee to effect such covenant defeasance may not
be sufficient to pay amounts due on such Debt Securities at the time of any
acceleration resulting from such Event of Default. However, the Company would
remain liable to make payment of such amounts due at the time of acceleration.
The Company may exercise its defeasance option or its covenant defeasance
option with respect to any series of Debt Securities, only if
(a) the Company irrevocably deposits in trust with the Trustee cash and/or
U.S. Government Obligations for the payment of principal, premium, if
any, and interest with respect to such Debt Securities to maturity or
redemption, as the case may be, and the Company delivers to the
relevant Trustee a certificate from a nationally recognized firm of
independent public accountants expressing their opinion that the
payments of principal and interest when due and without reinvestment
on the deposited U.S. Government Obligations plus any deposited money
without investment will provide cash at such times and in such amounts
as will be sufficient to pay the principal, premium, if any, and
interest when due with respect to all such Debt Securities to maturity
or redemption, as the case may be,
(b) no Event of Default with respect to the Debt Securities of such series
shall have occurred and be continuing
. on the date of such deposit or
. with respect to certain bankruptcy defaults, at any time during
the period ending on the 123rd day after the date of such
deposit,
(c) such defeasance or covenant defeasance does not result in the trust
arising from such deposit to constitute, unless it is qualified as, a
regulated investment company under the Investment Company Act of 1940,
as amended,
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(d) the defeasance or covenant defeasance shall not result in a breach or
violation of, or constitute a default under, the relevant Indenture or
any other agreement or instrument to which the Company is a party or
by which it is bound,
(e) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the Holders of such Debt Securities will not recognize
income, gain or loss for United States federal income tax purposes as
a result of such defeasance or covenant defeasance and will be subject
to United States federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, and
(f) the Company delivers to the Trustee an Officer's Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of such Debentures as contemplated by the
Indenture have been complied with.
The Opinion of Counsel, with respect to defeasance, referred to in clause
(e) above, must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable United States federal income tax law occurring
after the date of the relevant Indenture.
The Trustee shall hold in trust cash or U.S. Government Obligations
deposited with it as described above and shall apply the deposited cash and the
proceeds from deposited U.S. Government Obligations to the payment of principal,
premium, if any, and interest with respect to such Debentures.
The applicable prospectus supplement may further describe the provisions,
if any, permitting or restricting such defeasance or covenant defeasance with
respect to the Debt Securities of a particular series.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed
in accordance with, the laws of the State of New York.
CONCERNING THE TRUSTEES
The Trust Indenture Act of 1939 contains limitations on the rights of a
trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases or to realize on certain property received by it in respect of
any such claims, as security or otherwise. Each Trustee is permitted to engage
in other transactions with the Company and its subsidiaries from time to time,
provided that if such Trustee acquires any conflicting interest it must
eliminate such conflict upon the occurrence of an Event of Default under the
relevant Indenture, or else resign.
The Company and certain of its subsidiaries may from time to time maintain
lines of credit, and have other customary banking and commercial relationships,
with The Chase Manhattan Bank, the Senior Trustee and the Subordinated Trustee.
The Chase Manhattan Bank acts as trustee under the Senior Indenture and another
indenture pursuant to which the Company issued its 9.64% Medium-Term Note due
2000, 9.50% Notes due 2000, 7.00% Notes due 2000, 7.05% Debentures due 2002,
7.25% Debentures due 2004, 9.00% Debentures due 2006, 7.45% Debentures due 2007,
9.78% Medium Term Note due 2011, 7.90% Debentures due 2017, 9.87% Medium-Term
Note due 2021, 8.625% Debentures due 2022, 8.10% Debentures due 2022, 7.95%
Debentures due 2027, 6.95% Debentures due 2027, 7.25% Debentures due 2027, 8.30%
Debentures due 2032, 6.59% Medium-Term Notes due 2008, 6.50% Medium-Term Notes
due 2008, 6.46% Medium-Term Notes due 2005, 5.85% Medium-Term Notes due 2001,
6.35% Medium-Term Notes due 2007, 6.40% Medium-Term Notes due 2008, 5.86%
Medium-Term Notes due 2008, 6.25% Notes due 2008, 5.85% Medium-Term Notes due
2003 and 6.80% Medium-Term Notes due 2028.
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SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The payment of the principal of, premium, if any, and interest, if any, on
the Subordinated Debt Securities will be subordinated, to the extent and in the
manner set forth in the Subordinated Indenture, in right of payment to the prior
payment in full of all Senior Indebtedness which may at any time and from time
to time be outstanding. Unless otherwise provided in the applicable prospectus
supplement with respect to an issue of Subordinated Debt Securities, in the
event of any distribution of assets of the Company upon any dissolution, winding
up, liquidation, reorganization or other similar proceedings of the Company,
. all Senior Indebtedness shall first be paid in full, or such payment
shall be provided for, before any payment on account of the principal
of, or premium, if any, or interest, if any, on the Subordinated Debt
Securities is made and
. if, notwithstanding the foregoing, any payment or distribution of
assets of the Company is received by the Subordinated Trustee or the
Holders of any of the Subordinated Debt Securities before all Senior
Indebtedness is paid in full, such payment or distribution will be
paid over to the Holders of such Senior Indebtedness or on their
behalf for application to the payment of all such Senior Indebtedness
remaining unpaid until all such Senior Indebtedness has been paid in
full or such payment provided for, after giving effect to any
concurrent payment or distribution to the Holders of such Senior
Indebtedness.
Subject to the payment in full of all Senior Indebtedness upon any such
distribution of assets of the Company, the Holders of the Subordinated Debt
Securities will be subrogated to the rights of the Holders of the Senior
Indebtedness to the extent of payments made to the Holders of such Senior
Indebtedness out of the distributive share of the Subordinated Debt Securities.
By reason of such subordination, if any distribution of assets of the
Company upon dissolution, winding up, liquidation, reorganization or other
similar proceedings of the Company,
. Holders of Senior Indebtedness will be entitled to be paid in full
before payments may be made on the Subordinated Debt Securities and
the Holders of Subordinated Debt Securities will be required to pay
over their share of such distribution to the Holders of Senior
Indebtedness until such Senior Indebtedness is paid in full and
. creditors of the Company who are neither Holders of Subordinated Debt
Securities nor holders of Senior Indebtedness may recover less,
ratably, than holders of Senior Indebtedness and may recover more,
ratably, than the Holders of the Subordinated Debt Securities.
Furthermore, such subordination may result in a reduction or elimination of
payments to the Holders of Subordinated Debt Securities. The Subordinated
Indenture provides that the subordination provisions thereof will not apply to
any money and securities held in trust pursuant to the discharge, defeasance and
covenant defeasance provisions of the Subordinated Indenture (see "-Discharge,
Defeasance and Covenant Defeasance" above).
The Subordinated Indenture also provides that no payment on account of the
principal of, or premium, if any, sinking funds, if any, or interest, if any, on
the Subordinated Debt Securities shall be made unless full payment of amounts
then due for the principal of, premium, if any, sinking funds, if any, and
interest, if any, on Senior Indebtedness has been made or duly provided for.
The Subordinated Indenture defines "Senior Indebtedness" as
(a) any liability of the Company
. for borrowed money or under any reimbursement obligation relating
to a letter of credit, or
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. evidenced by a bond, note, debenture or similar instrument, or
. for obligations to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary
course of business, or
. for the payment of money relating to a capitalized lease
obligation, or
. for the payment of money under any Swap Agreement;
(b) any liability of others described in the preceding clause (a) that the
Company has guaranteed or that is otherwise its legal liability; and
(c) any deferral, renewal, extension or refunding of any liability of the
types referred to in clauses (a) and (b) above,
unless, in the instrument creating or evidencing any such liability referred to
in clause (a) or (b) above or any such deferral, renewal, extension or refunding
referred to in clause (c) above or pursuant to which the same is outstanding, it
is expressly provided that such liability, deferral, renewal, extension or
refunding is subordinate in right of payment to all other Indebtedness of the
Company or is not senior or prior in right of payment to the Subordinated Debt
Securities or ranks pari passu with or subordinate to the Subordinated Debt
Securities in right of payment; and provided that the Subordinated Debt
Securities shall not constitute Senior Indebtedness. The Subordinated Indenture
defines "Swap Agreement" as any financial agreement designed to manage the
Company's exposure to fluctuations in interest rates, currency exchange rates or
commodity prices, including without limitation swap agreements, option
agreements, cap agreements, floor agreements, collar agreements and forward
purchase agreements.
If this prospectus is being delivered in connection with the offering of a
series of Subordinated Debt Securities, the accompanying prospectus supplement
or the information incorporated by reference herein will set forth the
approximate amount of Senior Indebtedness outstanding as of a recent date. There
are no limitations in the Subordinated Indenture on the issuance or incurrence
of Senior Indebtedness of the Company.
LIMITATIONS ON ISSUANCE OF EURO-DEBT SECURITIES
United States tax laws and regulations impose certain restrictions on the
issuance of any securities in bearer form. Except as may otherwise be provided
in the prospectus supplement applicable thereto, in accordance with the federal
tax laws and regulations of the United States, Euro-Debt Securities may not, in
connection with their offer or sale during the Restricted Period (as defined
above under "Description of Debt Securities-Form, Exchange, Registration and
Transfer"), be offered or sold, directly or indirectly,
. to any person in the United States or its possessions (as defined
below), or
. to any United States person (as defined below) other than
(x) an office located outside the United States or itspossessions of
a Financial Institution (as defined above under "Description of
Debt Securities-Form, Exchange, Registration and Transfer")
purchasing for its own account or for the account of a customer,
provided that such Financial Institution agrees in writing to
comply with the requirements of Section 165(j)(3)(A), (B), or (C)
of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder or
(y) otherwise as permitted by United States Treasury Regulation
Section 1.163-5(c)(2)(i)(D).
Any underwriters, agents and dealers participating in the offering of Debt
Securities must covenant that they will not offer or sell during the Restricted
Period any Euro-Debt Securities to any person in the United States or its
possessions
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or to any United States person (other than (x) an office located outside the
United States and its possessions of a Financial Institution or (y) otherwise as
permitted by United States Treasury Regulation Section 1.163-5(c)(2)(i)(D)), and
that they will not deliver Euro-Debt Securities within the United States or its
possessions.
In addition, any such underwriters, agents and dealers must covenant that
they have in effect procedures reasonably designed to ensure that their
employees or agents who are directly engaged in selling Euro-Debt Securities are
aware of the above restrictions on the offer or sale of Euro-Debt Securities.
Moreover, Bearer Debt Securities (including a permanent global Debt Security)
and any coupons appertaining thereto will not be delivered in definitive form
or, if prior to delivery in definitive form, interest will not be paid on any
Euro-Debt Securities, unless the Company has received a signed certificate in
writing (or an electronic certificate described in United States Treasury
Regulation Section 1.163-5(c)(2)(i)(D)(3)(ii)) in the form and to the effect
described above under "Description of Debt Securities-Form, Exchange,
Registration and Transfer." Bearer Debt Securities (including a permanent global
Debt Security) and coupons will bear a legend to the following effect: "Any
United States person who holds this obligation will be subject to limitations
under the United States income tax laws, including the limitations provided in
Section 165(j) and 1287(a) of the Internal Revenue Code." The sections referred
to in such legend provide that a United States person (other than a Financial
Institution or a United States person holding through a Financial Institution)
who holds a Bearer Security or coupon will not be allowed to deduct any loss
realized on the sale, exchange or redemption of such Bearer Security or coupon
and any gain (which might otherwise be characterized as capital gain) recognized
on such sale, exchange or redemption will be treated as ordinary income.
As used herein, "United States person" means a citizen of the United
States, a resident of the United States for federal income tax purposes, a
corporation, partnership or other entity created or organized in or under the
laws of the United States, an estate the income of which is subject to United
States federal income taxation regardless of its source and a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantive decisions of the trust. "United States"
means the United States of America (including the States and the District of
Columbia) and "possessions" of the United States include Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and Northern Mariana Islands.
DESCRIPTION OF PREFERRED STOCK
The Company may issue shares of its Preferred Stock, in one or more series,
either separately, or together with, or upon the conversion of or in exchange
for, other Securities. The summary of certain provisions of the Preferred Stock
set forth below and the summary of certain terms of a particular series of
Preferred Stock set forth in the applicable prospectus supplement do not purport
to be complete and are subject to and qualified in their entirety by reference
to all of the provisions of the Company's articles of incorporation, as amended
and restated (the "Amended and Restated Articles of Incorporation"), and the
Company's By-laws, which have been filed or incorporated by reference as
exhibits to the registration statement, and the form of articles of amendment
relating to such series of Preferred Stock which will be filed as an exhibit to
or incorporated by reference in the registration statement, all of which are
incorporated herein by reference.
The following description of Preferred Stock sets forth certain general
terms and provisions of any series of Preferred Stock to which any prospectus
supplement may relate. Certain other terms of any particular series of Preferred
Stock, including Preferred Stock to be represented by Depositary Shares, will be
described in the applicable prospectus supplement. If so indicated in the
applicable prospectus supplement, the terms of the Preferred Stock offered
thereby may differ from the terms set forth below.
GENERAL
Under the Amended and Restated Articles of Incorporation, the Company is
authorized to issue up to 25,000,000 shares of Preferred Stock, without par
value, which may be issued from time to time in one or more series. Subject to
limitations prescribed by Virginia law and the Amended and Restated Articles of
Incorporation, the Board
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of Directors of the Company, without further action by the shareholders, is
authorized to designate and issue in series Preferred Stock and to fix as to any
series:
. the number of shares constituting such series;
. the rate of dividend, the time of payment and, if cumulative, the
dates from which dividends shall be cumulative, and the extent of
participation rights, if any;
. any right to vote with holders of shares of any other series or class
and any right to vote as a class, either generally or as a condition
to specified corporate action;
. the price at and the terms and conditions on which shares may be
redeemed, including any sinking fund provisions for the redemption or
purchase of shares;
. the amount payable in the event of a liquidation; and
. whether shares will have the privilege of conversion, and if so, the
terms and conditions on which shares may be converted.
The Company has reserved for issuance 250,000 shares of Series A $7.00
Cumulative Convertible Preferred Stock, $100 stated value per share ("Series A
Preferred Stock"). In addition, in connection with the Shareholder Rights Plan
(as defined below), the Company has reserved for issuance 3,000,000 shares of
Series B Junior Participating Preferred Stock, without par value (the "Series B
Preferred Stock"), which are issuable only in connection with the exercise of
Rights (as defined below). As of the date of this prospectus, no shares of
Series A Preferred Stock or Series B Preferred Stock were outstanding. See
"Description of Capital Stock."
Reference is made to the applicable prospectus supplement relating to the
series of Preferred Stock offered thereby (the "Offered Preferred Stock") for
specific terms of such Offered Preferred Stock, including (where applicable):
. the title of the series;
. the number of shares offered,
. the initial public offering price;
. the dividend rate or method of calculation thereof and the dividend
payment dates or periods;
. the date from which dividends shall accrue and whether dividends will
be cumulative;
. any right to vote with holders of shares of any other series or class
and any right to vote as a class;
. the provisions for redemption or repurchase, if applicable, including
any sinking fund provisions for the redemption or repurchase of
shares;
. the amount payable with respect to both the payment of dividends and
the distribution of assets upon liquidation, dissolution or winding up
of the Company;
. any listing on any securities exchange;
. the procedures for any auction or remarketing, if any;
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. the terms and conditions, if any, upon which such Offered Preferred
Stock will be convertible into or exchangeable for other Securities;
. whether interests will be represented by Depositary Shares; and
. any other specific terms of such Offered Preferred Stock.
RANKING
Unless otherwise specified in the applicable prospectus supplement, any
series of Offered Preferred Stock offered thereby will rank, with respect to
both the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Company,
. junior to Series A Preferred Stock (if issued),
. senior to Series B Preferred Stock (if issued) and Common Stock, and
. on a parity with shares of any other outstanding series of Offered
Preferred Stock.
DIVIDEND, REPURCHASE AND REDEMPTION RESTRICTIONS
Unless otherwise described in the applicable prospectus supplement, the
Company will be limited in its ability to pay dividends on, and redeem or
otherwise purchase, any shares of Offered Preferred Stock if the Company has not
paid full cumulative dividends on Series A Preferred Stock.
DIVIDENDS
Subject to the preferential rights of holders of Series A Preferred Stock
and any other capital stock of the Company ranking prior to any series of the
Offered Preferred Stock as to dividends, holders of shares of such Offered
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors of the Company, out of assets of the Company legally
available therefor, dividends at such rates and on such dates as will be set
forth in, or as are determined by the method described in, the applicable
prospectus supplement. Such rates may be fixed or variable or both. If variable,
the formula used for determining the dividend rate for each dividend period will
be specified in the applicable prospectus supplement. Each such dividend shall
be payable to holders of record as they appear on the stock transfer books of
the Company on such record dates as shall be fixed by the Board of Directors of
the Company. Dividends may be paid in the form of cash, Preferred Stock (of the
same or a different series), or other securities or property, in each case as
specified in the applicable prospectus supplement.
Dividends on any series of the Offered Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable prospectus supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable prospectus supplement. If the Board of Directors of the Company fails
to declare a dividend payable on a dividend payment date on any series of the
Offered Preferred Stock for which dividends are non-cumulative, then the holders
of such series of the Offered Preferred Stock will have no right to receive a
dividend in respect of the dividend period ending on such dividend payment date,
and the Company will have no obligation to pay the dividend accrued for such
period, whether or not dividends on such series are declared payable on any
future dividend payment date.
No full dividends will be declared or paid or set aside for payment on any
Preferred Stock of the Company ranking, as to dividends, on a parity with or
junior to any outstanding series of Offered Preferred Stock for any period
unless full dividends on such series of Offered Preferred Stock (including
accumulated dividends on any such series of Offered Preferred Stock on which
dividends are cumulative) have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set aside for payment.
When dividends are not paid in full on any series of Offered Preferred Stock and
any other Preferred Stock ranking on a parity as to dividends with such series
of Offered Preferred Stock, all dividends declared or paid upon shares of
Offered Preferred Stock of such series and any
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other Preferred Stock ranking on a parity as to dividends with the Offered
Preferred Stock of such series shall be declared and paid pro rata so that the
amount of dividends declared and paid per share on the Offered Preferred Stock
of such series and such other Preferred Stock shall in all cases bear to each
other the same ratio that accrued dividends per share (which in the case of non-
cumulative Preferred Stock shall not include any accumulation in respect of
unpaid dividends for prior dividend periods) on shares of such series of Offered
Preferred Stock and such other Preferred Stock bear to each other. Except as
provided in the preceding sentence, unless full dividends on all outstanding
shares of any series of Offered Preferred Stock (including accumulated dividends
on any such series on which dividends are cumulative) have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set aside for payment, no dividends (other than dividends or
distributions paid in shares of, or options, warrants or rights to subscribe for
or purchase shares of, Common Stock or any other stock of the Company ranking
junior to the Offered Preferred Stock of such series as to dividends and as to
distribution of assets upon liquidation, dissolution or winding up of the
Company) shall be declared or paid or set aside for payment or any other
distribution declared or made upon Common Stock or any other stock of the
Company ranking junior to or on a parity with the Offered Preferred Stock of
such series as to dividends or distribution of assets upon liquidation,
dissolution or winding up of the Company, nor may any Common Stock or any other
stock of the Company ranking junior to or on a parity with the Offered Preferred
Stock of such series as to dividends or distribution of assets upon liquidation,
dissolution or winding up of the Company be redeemed, purchased or otherwise
acquired for any consideration (and no moneys shall be paid to or made available
for a sinking fund for the redemption of any shares of any such junior or parity
stock) by the Company (except by conversion into or exchange for stock of the
Company ranking junior to the Offered Preferred Stock of such series as to
dividends and as to distribution of assets upon liquidation, dissolution or
winding up of the Company).
Holders of shares of any series of Offered Preferred Stock shall not be
entitled to any dividends, whether payable in cash, securities or other
property, in excess of full cumulative (if applicable) dividends on such series.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend or payments which may be in arrears.
The Company will be prohibited from paying dividends on Offered Preferred
Stock of any series in the event of a dividend arrearage on Series A Preferred
Stock and may be prohibited from paying dividends on Offered Preferred Stock of
any series as a result of certain other dividend restrictions. See "-Dividend,
Repurchase and Redemption Restrictions" above and "Description of Capital
Stock-Preferred Stock Reserved for Issuance -Series A Preferred Stock" below.
REDEMPTION AND REPURCHASE
The shares of Offered Preferred Stock of any series may be redeemable at
the option of the Company, may be subject to mandatory redemption pursuant to a
sinking fund or otherwise, or may be subject to repurchase by the Company at the
option of the holders, in each case upon the terms, at the times and at the
prices set forth in the applicable prospectus supplement. Offered Preferred
Stock redeemed by the Company will be restored to the status of authorized but
unissued shares of Preferred Stock.
The prospectus supplement relating to a series of Offered Preferred Stock
which is subject to mandatory redemption will specify the number of shares of
such series which shall be redeemed by the Company in each year commencing after
a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon
(including accumulated dividends on any such series on which dividends are
cumulative) to the date fixed for redemption. The redemption price may be
payable in cash, securities or other property, as specified in the prospectus
supplement relating to such series of Offered Preferred Stock.
If fewer than all of the outstanding shares of any series of Offered
Preferred Stock are to be redeemed, the shares to be redeemed will be determined
pro rata, by lot or by any other method deemed equitable by the Company.
If full cumulative dividends on any series of Offered Preferred Stock
(including accumulated dividends on any such series on which dividends are
cumulative) have not been declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment, the Company shall not redeem,
repurchase or otherwise acquire any shares of
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such series of Offered Preferred Stock except by conversion into or exchange for
capital stock of the Company ranking junior to the Offered Preferred Stock of
such series as to dividends and as to distributions upon liquidation,
dissolution or winding up of the Company, or except pursuant to a purchase or
exchange offer made on the same terms to all holders of such series of Offered
Preferred Stock.
Notice of redemption shall be given by mailing the same to each record
holder of the shares to be redeemed, not less than 30 nor more than 60 days
prior to the date fixed for redemption thereof, to the respective addresses of
such holders as the same shall appear in the stock registry of the Company. Each
such notice shall state:
. the redemption date;
. the number of shares and series of Offered Preferred Stock to be
redeemed;
. the redemption price;
. the place or places where certificates for such Offered Preferred
Stock are to be surrendered for payment of the redemption price;
. that dividends on the shares to be redeemed will cease to accrue on
such redemption date; and
. the date upon which the holder's conversion rights as to such shares,
if any, shall terminate. If fewer than all shares of any series of the
Preferred Stock held by any holder are to be redeemed, the notice
mailed to such holder shall also specify the number of shares to be
redeemed from such holder.
If a notice of redemption has been given, from and after the redemption
date for the shares of Offered Preferred Stock called for redemption (unless the
Company shall default in providing money for the payment of the redemption price
of the shares so called for redemption plus, if applicable, accrued and unpaid
dividends), dividends on the shares of Offered Preferred Stock so called for
redemption shall cease to accrue and such shares shall no longer be deemed to be
outstanding, and all rights of the holders thereof as shareholders of the
Company shall cease, except the right to receive the redemption price plus, if
applicable, accrued and unpaid dividends upon surrender of the certificates
representing the shares to be so redeemed (properly endorsed or assigned for
transfer, if the Company shall so require) in accordance with such notice. If
fewer than all of the shares represented by any such certificates are redeemed,
a new certificate shall be issued representing the unredeemed shares.
The Company will be prohibited from redeeming or repurchasing Offered
Preferred Stock of any series in the event of a dividend arrearage on Series A
Preferred Stock and may be prohibited from redeeming or repurchasing Offered
Preferred Stock of any series as the result of certain other dividend
restrictions. See "- Dividend, Repurchase and Redemption Restrictions" above and
"Description of Capital Stock" below.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, and after payment of all amounts due upon liquidation, dissolution
or winding up to holders of Series A Preferred Stock and any other capital stock
of the Company ranking prior to the Offered Preferred Stock of any series as to
the distribution of assets upon liquidation, dissolution or winding up, and
subject to the rights of holders of any capital stock of the Company ranking on
a parity with the shares of Offered Preferred Stock of such series as to
distribution of assets upon liquidation, dissolution or winding up of the
Company, the holders of shares of Offered Preferred Stock of such series shall
be entitled to receive, out of assets of the Company legally available therefor
and before any distribution or payment shall be made to the holders of any
Common Stock or any other class or series of capital stock of the Company
ranking junior to the Offered Preferred Stock of such series as to distribution
of assets upon liquidation, dissolution or winding up of the Company,
liquidating distributions in the amount of the liquidation preference per share
set forth in the applicable prospectus supplement, plus accrued and unpaid
dividends (including accumulated dividends if dividends on such series of
Offered Preferred Stock are cumulative). After payment of the full amount of the
liquidating distributions to which
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they are entitled, the holders of Offered Preferred Stock of such series will
have no right or claim to any of the remaining assets of the Company. In the
event that, upon any such voluntary or involuntary liquidation, dissolution or
winding up, the legally available assets of the Company are insufficient to pay
the amount of the liquidating distributions on all outstanding shares of Offered
Preferred Stock of any series and the corresponding amounts payable on all
shares of other capital stock of the Company ranking on a parity with the
Offered Preferred Stock of such series in the distribution of assets upon
liquidation, dissolution or winding up, the holders of the Offered Preferred
Stock of such series and of such other capital stock shall share ratably in any
such distribution of assets in proportion to the full liquidating distributions
to which they would otherwise be respectively entitled.
For such purposes, the consolidation or merger of the Company with or into
any other person, or the sale, lease, transfer or conveyance of all or
substantially all or any portion of the property or business of the Company,
shall not be deemed to constitute a liquidation, dissolution or winding up of
the Company.
VOTING RIGHTS
Holders of Offered Preferred Stock will not have voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable prospectus supplement. In the event that the Company
issues a series of Offered Preferred Stock with voting rights or the Offered
Preferred Stock of any series is entitled pursuant to applicable law to vote on
any matter, then, unless otherwise specified in the prospectus supplement
relating to such series, each share of such series will be entitled to one vote
on matters on which holders of such shares are entitled to vote. However, as
more fully described under "Description of Depositary Shares," if the Company
elects to provide for the issuance of Depositary Shares representing fractional
interests in shares of any such series of Offered Preferred Stock, the holder of
any such Depositary Share will, in effect and subject to certain limitations and
conditions, be entitled to such fraction of a vote, rather than a full vote. In
the case of any series of Offered Preferred Stock having one vote per share on
matters on which holders of such series are entitled to vote, the voting power
of such series on matters on which holders of such series and holders of any
other series of Preferred Stock or other capital stock of the Company are
entitled to vote as a single class will depend on the number of shares in such
series, not the aggregate stated value, liquidation preference or initial
offering price of the shares of such series.
So long as any shares of Offered Preferred Stock remain outstanding, and
except as otherwise set forth in the applicable prospectus supplement or except
as otherwise required by applicable law, the Company will not, without the
affirmative vote or consent of the holders of at least a majority of the shares
of any affected series of Offered Preferred Stock outstanding at the time
(voting separately as a single class with all other affected series of Preferred
Stock ranking on a parity with the Offered Preferred Stock of such series either
as to dividends or as to distribution of assets upon liquidation, dissolution or
winding up of the Company and upon which like voting rights have been conferred
and are then exercisable), given in person or by proxy, either in writing or at
a meeting,
. authorize, create or issue, or increase the authorized or issued
amount of, any class or series of capital stock ranking prior to such
affected series of Offered Preferred Stock with respect to payment of
dividends or the distribution of assets upon liquidation, dissolution
or winding up or reclassify any authorized capital stock of the
Company into any such shares, or create, authorize or issue any
obligation or security convertible into or evidencing the right to
purchase any such shares; or
. amend, alter or repeal the provisions of the Amended and Restated
Articles of Incorporation (including the articles of amendment for
such affected series of Offered Preferred Stock), whether by merger,
consolidation or otherwise, so as to materially and adversely affect
any right, preference or privilege of such affected series of Offered
Preferred Stock;
provided, however, that any increase in the amount of the authorized Preferred
Stock or the creation or issuance of any other class or series of capital stock
or any other series of Preferred Stock, or any increase in the number of
authorized shares of any series of Preferred Stock, in each case, ranking on a
parity with or junior to the Preferred Stock of such affected series with
respect to payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences or privileges.
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None of the foregoing voting provisions will apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected or occur, all outstanding shares of the relevant series of
Offered Preferred Stock shall have been redeemed or called for redemption upon
proper notice and sufficient funds shall have been deposited in trust to effect
such redemption.
Under Virginia law, notwithstanding anything to the contrary set forth
above, holders of shares of a series of Preferred Stock generally will be
entitled to vote as a class upon a proposed amendment to the Amended and
Restated Articles of Incorporation if the amendment would increase or decrease
the aggregate number of authorized shares of such class; effect an exchange or
reclassification of all or part of the shares of the class into shares of
another class; effect an exchange or reclassification, or create the right of
exchange, of all or part of the shares of another class into shares of the
class; change the designation, rights preferences, or limitations of all or part
of the shares of the class; change the shares of all or part of the class into a
different number of shares of the same class; create a new class of shares, or
change a class with subordinate and inferior rights into a class of shares,
having rights or preferences with respect to distributions or to dissolution
that are prior, superior, or substantially equal to the shares of the class, or
increase the rights, preferences, or number of authorized shares of any class
having rights or preferences with respect to distributions or to dissolution
that are prior, superior, or substantially equal to the shares of the class; or
cancel or otherwise affect rights to distributions or dividends that have
accumulated but not yet been declared. Any such amendment requires the vote of a
majority of the shares entitled to vote thereon, voting as a class. If a
proposed amendment that entitles two or more series of shares to vote as
separate voting groups would affect those two or more series in the same or
substantially similar way, the shares of all the series so affected shall vote
together as a single voting group on the proposed amendment.
CONVERSION AND EXCHANGE RIGHTS
The terms, if any, upon which shares of any series of Preferred Stock are
convertible into or exchangeable for Common Stock, another series of Preferred
Stock or other Securities will be set forth in the applicable prospectus
supplement relating thereto. Such terms may include provisions for conversion or
exchange, either mandatory, at the option of the holders or at the option of the
Company.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the shares of Preferred Stock will be
named in the applicable prospectus supplement.
DESCRIPTION OF DEPOSITARY SHARES
The Company may offer Depositary Shares (either separately or together with
other Securities) representing fractional interests in shares of Preferred Stock
of any series. In connection with the issuance of any Depositary Shares, the
Company will enter into a deposit agreement (a "Deposit Agreement") with a bank
or trust company, as depositary (the "Preferred Stock Depositary"), which will
be named in the applicable prospectus supplement. Depositary Shares will be
evidenced by depositary receipts (the "Depositary Receipts") issued pursuant to
the related Deposit Agreement. The summary of certain provisions of the
Depositary Shares and the Deposit Agreement set forth below and the summary of
certain terms of a particular issue of Depositary Shares and the related Deposit
Agreement set forth in the applicable prospectus supplement do not purport to be
complete and are subject to and qualified in their entirety by reference to all
the provisions of the form of Deposit Agreement, together with the form of
related Depositary Receipt which will be filed as an exhibit to or incorporated
by reference in the registration statement, all of which are incorporated herein
by reference.
The following description of Depositary Shares sets forth certain general
terms and provisions of the Depositary Shares and the related Deposit Agreement
to which any prospectus supplement may relate. Certain other terms of any
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such Depositary Shares and the related Deposit Agreement will be described in
the applicable prospectus supplement. If so indicated in the accompanying
prospectus supplement, the terms of the Depositary Shares offered thereby and of
the related Deposit Agreement may differ from the terms set forth below.
GENERAL
The Company may provide for the issuance by the Preferred Stock Depositary
of Depositary Receipts evidencing the related Depositary Shares, each of which
Depositary Shares in turn will represent a fractional interest (which will be
specified in the applicable prospectus supplement) in one share of a series of
Preferred Stock. Shares of Preferred Stock of any series represented by
Depositary Shares will be deposited under a separate Deposit Agreement. Subject
to the terms of the Deposit Agreement, each owner of a Depositary Receipt will
be entitled, in proportion to the fraction of a share of Preferred Stock
represented by the related Depositary Share, to all the rights, preferences and
privileges of, and will be subject to all of the limitations and restrictions
on, the Preferred Stock represented thereby (including, if applicable and
subject to certain matters discussed below, dividend, voting, conversion,
exchange, redemption and liquidation rights).
Depositary Shares may be issued in respect of shares of the Preferred Stock
of any series. Immediately following the issuance of any such shares of
Preferred Stock by the Company, the Company will deposit such shares of
Preferred Stock with the relevant Preferred Stock Depositary and will cause the
Preferred Stock Depositary to issue, on behalf of the Company, the related
Depositary Receipts.
Reference is made to the applicable prospectus supplement relating to the
Depositary Shares offered thereby for specific terms, including (where
applicable):
. the terms of the series of Preferred Stock deposited by the Company
under the related Deposit Agreement;
. the number of such Depositary Shares and the fraction of one share of
such Preferred Stock represented by one such Depositary Share;
. whether such Depositary Shares will be listed on any securities
exchange;
. whether such Depositary Shares will be sold with any other Securities
and, if so, the amount and terms thereof; and
. any other specific terms of such Depositary Shares and the related
Deposit Agreement.
Depositary Receipts may be surrendered for transfer or exchange for new
Depositary Receipts of different authorized denominations at any office or
agency of the relevant Preferred Stock Depositary maintained for such purpose,
subject to the terms of the related Deposit Agreement. Unless otherwise
specified in the applicable prospectus supplement, Depositary Receipts will be
issued in denominations evidencing any whole number of Depositary Shares. No
service charge will be made for any permitted transfer or exchange of Depositary
Receipts, but the Company or the Preferred Stock Depositary may require payment
of any tax or other governmental charge payable in connection therewith.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the related Preferred Stock to the
record holders of Depositary Receipts in proportion, insofar as possible, to the
number of Depositary Receipts owned by such holders on the relevant record date.
The Preferred Stock Depositary will distribute only such amount, however, as can
be distributed without attributing to any holder of Depositary Receipts a
fraction of one cent, and any balance not so distributed will be added to and
treated as part of the next sum, if any, received by the Preferred Stock
Depositary for distribution to the record holders of Depositary Receipts.
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In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto in proportion, insofar as possible, to the
number of Depositary Receipts owned by such holders on the relevant record date,
unless the Preferred Stock Depositary determines that it is not feasible to make
such distribution, in which case the Preferred Stock Depositary may, with the
approval of the Company, adopt such method as it deems equitable and practicable
for the purpose of effecting such distribution, including sale (public or
private) of such property and distribution of the net proceeds from such sale to
such holders.
The Deposit Agreement will also contain provisions relating to the manner
in which any subscription or similar rights offered by the Company to holders of
the related series of Preferred Stock will be made available to holders of
Depositary Receipts.
The amount distributed in any of the foregoing cases will be reduced by any
amount required to be withheld by the Company or the Preferred Stock Depositary
on account of taxes.
WITHDRAWAL OF PREFERRED STOCK
Upon surrender of the Depositary Receipts at an office or agency of the
Preferred Stock Depositary maintained for such purpose (unless the related
shares of Preferred Stock have previously been called for redemption), the
holder thereof will be entitled to delivery, at such office or agency, to or
upon such holder's order, of the number of whole shares of the related series of
Preferred Stock and any money or other property represented by such Depositary
Receipts. Shares of Preferred Stock so withdrawn, however, may not be
redeposited. If the Depositary Receipts delivered by the holder evidence a
number of Depositary Shares in excess of the number of whole shares of Preferred
Stock to be withdrawn, the Preferred Stock Depositary will deliver to such
holder at the same time a new Depositary Receipt evidencing such excess number
of Depositary Shares.
REDEMPTION AND REPURCHASE OF PREFERRED STOCK
If a series of Preferred Stock represented by Depositary Shares is subject
to redemption at the option of the Company, then, whenever the Company redeems
shares of Preferred Stock of such series held by the Preferred Stock Depositary,
the Preferred Stock Depositary will redeem as of the same redemption date the
number of Depositary Shares representing the shares of the Preferred Stock so
redeemed, provided the Company shall have paid in full to the Preferred Stock
Depositary the redemption price of the Preferred Stock to be redeemed plus any
other amounts or property payable with respect to the Preferred Stock to be
redeemed. The redemption price per Depositary Share will be equal to the
redemption price and any other amounts or property per share payable with
respect to the Preferred Stock multiplied by the fraction of a share of
Preferred Stock represented by one such Depositary Share. If less than all of
the Depositary Shares are to be redeemed, the Depositary Shares to be redeemed
will be selected by the Preferred Stock Depositary by lot or pro rata or other
equitable method, in each case as may be determined by the Company. If the
Depositary Shares evidenced by a Depositary Receipt are to be redeemed in part
only, one or more new Depositary Receipts will be issued for any Depositary
Shares not so redeemed.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Receipts evidencing the Depositary Shares so called
for redemption will cease, except the right to receive any monies payable upon
such redemption and any money or other property to which the holders of such
Depositary Receipts were entitled upon such redemption upon surrender of such
Depositary Receipts to the Preferred Stock Depositary.
Depositary Shares, as such, are not subject to repurchase by the Company at
the option of the holders. Nevertheless, if the Preferred Stock represented by
Depositary Shares is subject to repurchase of the option of the holders, the
related Depositary Receipts may be surrendered by the holders thereof to the
Preferred Stock Depositary with written instructions to the Preferred Stock
Depositary to instruct the Company to repurchase the Preferred Stock represented
by the Depositary Shares evidenced by such Depositary Receipts at the applicable
repurchase price specified in the related prospectus supplement. The Company,
upon receipt of such instructions and subject to the Company having funds
legally available therefor, will repurchase the requisite whole number of shares
of such Preferred Stock from the
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Preferred Stock Depositary, who in turn will repurchase such Depositary
Receipts. Notwithstanding the foregoing, holders shall only be entitled to
request the repurchase of Depositary Shares representing one or more whole
shares of the related Preferred Stock. The repurchase price per Depositary Share
will be equal to the repurchase price and any other amounts per share payable
with respect to the Preferred Stock multiplied by the fraction of a share of
Preferred Stock represented by one Depositary Share. If the Depositary Shares
evidenced by a Depositary Receipt are to be repurchased in part only, one or
more new Depositary Receipts will be issued for any Depositary Shares not to be
repurchased.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock of any series represented by Depositary Shares are entitled to vote, the
relevant Preferred Stock Depositary will mail the information contained in such
notice of meeting to the record holders of the related Depositary Receipts. Each
record holder of Depositary Receipts evidencing Depositary Shares on the record
date (which will be the same date as the record date for the Preferred Stock)
will be entitled to instruct the Preferred Stock Depositary as to the exercise
of the voting rights pertaining to the amount of Preferred Stock represented by
such holder's Depositary Shares. The Preferred Stock Depositary will endeavor,
insofar as practicable, to vote the number of shares of Preferred Stock
represented by such Depositary Shares in accordance with such instructions, and
the Company will agree to take all reasonable action which may be deemed
necessary by the Preferred Stock Depositary in order to enable the Preferred
Stock Depositary to do so. The Preferred Stock Depositary will abstain from
voting shares of Preferred Stock to the extent it does not receive specific
instructions from the holders of Depositary Receipts evidencing the Depositary
Shares representing such Preferred Stock.
CONVERSION AND EXCHANGE OF PREFERRED STOCK
If the Preferred Stock represented by Depositary Shares is exchangeable at
the option of the Company for other Securities, then, whenever the Company
exercises its option to exchange all or a portion of such shares of Preferred
Stock held by the Preferred Stock Depositary, the Preferred Stock Depositary
will exchange as of the same exchange date a number of such Depositary Shares
representing the shares of the Preferred Stock so exchanged, provided the
Company shall have issued and deposited with the Preferred Stock Depositary the
Securities for which such shares of Preferred Stock are to be exchanged. The
exchange rate per Depositary Share shall be equal to the exchange rate per share
of Preferred Stock multiplied by the fraction of a share of Preferred Stock
represented by one Depositary Share. If less than all of the Depositary Shares
are to be exchanged, the Depositary Shares to be exchanged will be selected by
the Preferred Stock Depositary by lot or pro rata or other equitable method, in
each case as may be determined by the Company. If the Depositary Shares
evidenced by a Depositary Receipt are to be exchanged in part only, a new
Depositary Receipt or Receipts will be issued for any Depositary Shares not to
be exchanged.
Depositary Shares, as such, are not convertible or exchangeable at the
option of the holders into other Securities or property. Nevertheless, if the
Preferred Stock represented by Depositary Shares is convertible into or
exchangeable for other Securities at the option of the holders, the related
Depositary Receipts may be surrendered by holders thereof to the Preferred Stock
Depositary with written instructions to the Preferred Stock Depositary to
instruct the Company to cause conversion or exchange, as the case may be, of the
Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipts into a whole number of shares of Common Stock or Preferred
Stock, a whole number of warrants for Common Stock ("Common Stock Warrants"), or
Debt Securities in authorized denominations, as specified in the related
prospectus supplement. The Company, upon receipt of such instructions and any
amounts payable in respect thereof, will cause the conversion or exchange, as
the case may be, and will deliver to the holders such number of whole shares of
Common Stock or Preferred Stock, a whole number of Common Stock Warrants, or a
principal amount of Debt Securities in authorized denominations (and cash in
lieu of any fractional Security). The exchange or conversion rate per Depositary
Share shall be equal to the exchange or conversion rate per share of Preferred
Stock multiplied by the fraction of a share of Preferred Stock represented by
one Depositary Share. If the Depositary Shares evidenced by a Depositary Receipt
are to be converted or exchanged in part only, a new Depositary Receipt or
Receipts will be issued for any Depositary Shares not to be converted or
exchanged.
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AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The Depositary Receipts evidencing Depositary Shares and any provision of
the related Deposit Agreement may at any time be amended by agreement between
the Company and the Preferred Stock Depositary. However, any amendment that
materially and adversely alters the rights of the holders of Depositary Receipts
issued under any Deposit Agreement will not be effective unless such amendment
has been approved by the holders of at least a majority of such Depositary
Receipts then outstanding (or such greater proportion as may be required by the
rules of any securities exchange on which the related Depositary Shares may be
listed). In no event may any such amendment impair the right of any holder of
Depositary Receipts, subject to the conditions specified in the Deposit
Agreement, to receive the related Preferred Stock upon surrender of such
Depositary Receipts as described above under "- Withdrawal of Preferred Stock."
The Deposit Agreement may be terminated by the Company upon not less than
60 days' notice to the Preferred Stock Depositary. In any such case, the
Preferred Stock Depositary shall deliver or make available to each holder of the
related Depositary Receipts, upon surrender of such Depositary Receipts, such
number of whole shares of the related series of Preferred Stock represented by
the Depositary Shares evidenced by such Depositary Receipts, together with cash
in lieu of any fractional shares (to the extent the Company has deposited such
cash with the Preferred Stock Depositary). The Deposit Agreement will
automatically terminate if all of the shares of Preferred Stock deposited
thereunder shall have been withdrawn, redeemed, converted or exchanged or if
there shall have been a final distribution in respect of such Preferred Stock in
connection with any liquidation, dissolution or winding up of the Company.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Company will pay the fees and expenses of the Preferred Stock
Depositary in connection with the performance of its duties under the Deposit
Agreement, and will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. Holders of
Depositary Receipts will be required to pay all other transfer and other taxes
and governmental charges (including taxes and other governmental charges in
connection with the transfer, exchange, surrender or conversion of Depositary
Receipts) and such other charges as are expressly provided in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the Preferred Stock Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Stock Depositary.
MISCELLANEOUS
The Preferred Stock Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Stock Depositary with respect to the related Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if
either is prevented or delayed by law or any circumstances beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Preferred Stock Depositary under the Deposit Agreement will be
limited to performing their duties thereunder without gross negligence or
willful misconduct, and the Company and the Preferred Stock Depositary will not
be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or any related shares of Preferred Stock or Depositary
Receipts unless satisfactory indemnity is furnished. The Company and the
Preferred Stock Depositary may rely on advice of counsel, accountants or other
advisors, and information provided by persons presenting shares of Preferred
Stock for deposit, holders of Depositary Receipts or other persons believed to
be authorized or competent and on documents believed to be genuine.
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If the Preferred Stock Depositary shall receive conflicting claims,
requests or instructions from any holders of Depositary Receipts, on the one
hand, and the Company, on the other hand, the Preferred Stock Depositary shall
be entitled to act on such claims, requests or instructions received from the
Company.
DESCRIPTION OF COMMON STOCK
The Company may issue (either separately or together with other Securities)
shares of its Common Stock. Under its Amended and Restated Articles of
Incorporation, the Company is authorized to issue up to 300,000,000 shares of
Common Stock. The Common Stock is listed on the New York Stock Exchange under
the symbol "CSX." Reference is made to the applicable prospectus supplement
relating to Common Stock offered thereby for the terms relevant thereto,
including the number of shares offered and the initial public offering price.
For a summary of certain terms of Common Stock, see "Description of Capital
Stock" below.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue (either separately or together with other Securities)
warrants for the purchase of Debt Securities (the "Debt Warrants"), warrants for
the purchase of Preferred Stock (the "Preferred Stock Warrants") and warrants
for the purchase of Common Stock (the "Common Stock Warrants"). The Debt
Warrants , the Preferred Stock Warrants and the Common Stock Warrants are
collectively referred to herein as the "Securities Warrants." The Securities
Warrants are to be issued under warrant agreements (each a "Securities Warrant
Agreement") to be entered into between the Company and a bank or trust company,
as warrant agent ("Securities Warrant Agent"), all as set forth in the
prospectus supplement relating to the particular issue of Securities Warrants.
The form of Securities Warrant Agreement, including the form of certificates
representing the Securities Warrants ("Securities Warrant Certificates"), that
will be entered into with respect to a particular offering of Securities
Warrants will be filed as an exhibit to or incorporated by reference in the
registration statement. The following summary of certain provisions of the
Securities Warrant Agreement and the Securities Warrants and the summary of
certain terms of the particular Securities Warrant Agreement and Securities
Warrants set forth in the applicable prospectus supplement do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the particular Securities Warrant Agreement and the
related Securities Warrant Certificates, all of which are incorporated herein by
reference.
The following description of the Securities Warrants sets forth certain
general terms and provisions of the Securities Warrants and the related
Securities Warrant Agreement to which any prospectus supplement may relate.
Certain other terms of any Securities Warrants and the related Securities
Warrant Agreement will be described in the applicable prospectus supplement. If
so indicated in the accompanying prospectus supplement, the terms of the
Securities Warrants offered thereby and the related Securities Warrant Agreement
may differ from the terms set forth below.
GENERAL
Reference is made to the applicable prospectus supplement for the terms of
the Securities Warrants offered thereby, including (where applicable):
. the title and aggregate number of such Securities Warrants;
. the designation, aggregate principal amount, currency, currencies or
currency units and terms of the Debt Securities purchasable upon
exercise of the Securities Warrants; the price, or the manner of
determining the price, at which such Debt Securities may be purchased
upon such exercise;
. the designation, number of shares and terms of the series of Preferred
Stock purchasable upon exercise of the Securities Warrants; the price,
or the manner of determining the price, at which such Preferred Stock
may be purchased upon such exercise;
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. the number of shares of Common Stock that may be purchased upon
exercise of each such Securities Warrant; the price, or the manner of
determining the price, at which such shares may be purchased upon such
exercise;
. if other than cash, the property and manner in which the exercise
price of such Securities Warrants may be paid; and any minimum number
of such Securities Warrants that are exercisable at any one time;
. the time or times at which, or period or periods during which, such
Securities Warrants may be exercised and the expiration date of such
Securities Warrants;
. the terms of any right of the Company to redeem such Securities
Warrants;
. the terms of any right of the Company to accelerate the exercise of
such Securities Warrants upon the occurrence of certain events;
. whether such Securities Warrants will be sold with any other
Securities, and the date, if any, on and after which such Securities
Warrants and any such other Securities will be separately
transferable;
. whether Securities Warrants will be issued in registered or bearer
form;
. a discussion of certain Federal income tax, accounting and other
special considerations, procedures and limitations relating to the
Securities Warrants; and
. any other terms of such Securities Warrants.
Securities Warrant Certificates may be surrendered for transfer or exchange
for new Securities Warrant Certificates of authorized denominations at any
office or agency of the relevant Securities Warrant Agent maintained for such
purpose, subject to the terms of the related Securities Warrant Agreement.
Unless otherwise specified in the applicable prospectus supplement, Securities
Warrant Certificates will be issued in denominations evidencing any whole number
of Warrants. No service charge will be made for any permitted transfer or
exchange of Securities Warrant Certificates, but the Company or the Securities
Warrant Agent may require payment of any tax or other governmental charge
payable in connection therewith.
EXERCISE OF WARRANTS
Each Securities Warrant will entitle the holder to purchase such principal
amount of Debt Securities or such number of shares of Preferred Stock or Common
Stock, as the case may be, at such exercise price as shall in each case be set
forth in, or be determinable from, the prospectus supplement relating to such
Securities Warrants, by payment of such exercise price in the Currency and in
the manner specified in the prospectus supplement. Securities Warrants may be
exercised at any time up to the date and time specified in the applicable
prospectus supplement for the expiration thereof. After the specified expiration
time on the specified date of expiration, unexercised Securities Warrants will
become void.
Upon receipt at an office or agency indicated in the applicable prospectus
supplement of
. payment of the exercise price and
. the Securities Warrant Certificate properly completed and duly
executed,
the Company will, as soon as practicable, issue and deliver the Debt Securities,
shares of Preferred Stock or shares of Common Stock purchasable upon such
exercise. Unless otherwise indicated in the applicable prospectus supplement,
fractional shares of Preferred Stock or Common Stock, as the case may be, will
not be issued upon the exercise of Warrants and, in lieu thereof, the Company
will make a cash payment in an amount determined as provided in the
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applicable prospectus supplement. If less than all of the Securities Warrants
represented by such Securities Warrant Certificate are exercised, a new
Securities Warrant Certificate will be issued for the remaining number of
Securities Warrants. The holder of a Securities Warrant will be required to pay
any tax or other governmental charge that may be imposed in connection with any
transfer involved in the issuance of Securities purchased upon such exercise.
MODIFICATIONS
Any Securities Warrant Agreement and the terms of the related Securities
Warrants may be modified or amended by the Company and the applicable Securities
Warrant Agent, without the consent of any holder of the related Securities
Warrants, for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective or inconsistent provision contained therein, or in
any other manner that the Company deems necessary or desirable and that will not
materially and adversely affect the interests of the holders of the related
Securities Warrants.
The Company and the applicable Securities Warrant Agent may also modify or
amend the applicable Securities Warrant Agreement and the terms of the related
Securities Warrants with the consent of the holders of not less than a majority
in number of the then outstanding unexercised Securities Warrants affected
thereby; provided that no such modification or amendment that accelerates the
expiration date, increases the exercise price, or reduces the number of
outstanding Securities Warrants the consent of whose holders is required for any
such amendment or modification, may be made without the consent of each holder
affected thereby.
NO RIGHTS AS HOLDERS
Holders of Securities Warrants for the purchase of Debt Securities are not
entitled, by virtue of being such holders, to exercise any rights as holders of
Debt Securities, or to receive any principal, interest or other amounts in
respect of Debt Securities. Holders of Securities Warrants for the purchase of
shares of Preferred Stock or Common Stock are not entitled, by virtue of being
such holders, to vote, consent or receive notice as stockholders of the Company
in respect of any meeting of stockholders for the election of directors of the
Company or any other matter, or to exercise any other rights whatsoever as
stockholders of the Company, or to receive any dividends or distributions, if
any, on the Preferred Stock or Common Stock, as the case may be.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of (i) 300,000,000
shares of Common Stock, par value $1.00 per share, and (ii) 25,000,000 shares of
Preferred Stock, without par value, issuable in series, of which 250,000 shares
of Series A Preferred Stock have been reserved for issuance and 3,000,000 shares
of Series B Preferred Stock have been reserved for issuance under the
Shareholders Rights Plan. As of September 25, 1998, 218,280,066 shares of Common
Stock were issued and outstanding, and no shares of Preferred Stock were
outstanding.
The following summary of certain provisions of Common Stock, Preferred
Stock, Series A Preferred Stock, Series B Preferred Stock, the Amended and
Restated Articles of Incorporation and the By-laws do not purport to be complete
and are qualified in their entirety by reference to the Amended and Restated
Articles of Incorporation, the By-laws and the articles of amendment
establishing the terms of Series A Preferred Stock and Series B Preferred Stock,
copies of which have been incorporated by reference or filed as exhibits to the
registration statement.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters voted on by shareholders, including elections of directors, and, except
as otherwise required by law or provided by the express provisions of any series
of Preferred Stock of the Company, the holders of such shares exclusively
possess all voting power of the Company. If and when issued and except as
otherwise provided by law, the holders of Series A Preferred Stock will be
entitled to one vote per share, and the holders of such Series A Preferred
Stock, and the holders of Common Stock and any other class of stock of the
Company then having general voting rights shall vote together as one class. If
and when
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issued and except as otherwise provided by law, the holders of Series B
Preferred Stock will be entitled to 100 votes per share (subject to adjustment
in accordance with the Amended and Restated Articles of Incorporation) on all
matters submitted to a vote of the shareholders of the Company, and the holders
of such Series B Preferred Stock and the holders of Common Stock shall vote
together as one class. See "-Preferred Stock" and "-Preferred Stock Reserved for
Issuance" below. There is no cumulative voting in the election of directors, and
no holder of Common Stock is entitled as such, as a matter of right, to
subscribe for or purchase any shares of Common Stock or Preferred Stock. Subject
to the preferential rights of any outstanding series of Preferred Stock, the
holders of Common Stock are entitled to receive ratably such dividends as may be
declared from time to time by the Board of Directors of the Company from funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of the Company, holders of Common Stock are entitled to share ratably
in all assets remaining after payment or provision for liabilities and amounts
owing in respect of any outstanding Preferred Stock.
The transfer agent for the Common Stock is Harris Trust Company located in
Chicago, Illinois.
PREFERRED STOCK
Preferred Stock may be issued from time to time in one or more series.
Subject to limitations prescribed by Virginia law and the Amended and Restated
Articles of Incorporation, the Board of Directors of the Company, without
further action by the shareholders, is authorized to designate and issue in
series Preferred Stock and to fix as to any series:
. the number of shares constituting such series,
. the rate of dividend, the time of payment and, if cumulative, the
dates from which dividends shall be cumulative, and the extent of
participation rights, if any,
. any right to vote with holders of shares of any other series or class
and any right to vote as a class, either generally or as a condition
to specified corporate action,
. the price at and the terms and conditions on which shares may be
redeemed, including any sinking fund provisions for the redemption or
purchase of shares,
. the amount payable in the event of a liquidation, and
. whether shares will have the privilege of conversion, and if so, the
terms and conditions on which shares may be converted.
The issuance of Preferred Stock, while providing flexibility in connection
with possible acquisitions and other corporate purposes, could, among other
things, adversely affect the voting power of the holders of Common Stock and,
under certain circumstances, make it more difficult for a third party to gain
control of the Company and could have the effect of delaying or preventing a
merger, tender offer or other attempted takeover of the Company. No holder of
Preferred Stock shall be entitled, as a matter of right, to subscribe for or
purchase any shares of Preferred Stock or Common Stock.
PREFERRED STOCK RESERVED FOR ISSUANCE
SERIES A PREFERRED STOCK. Pursuant to a resolution adopted on April 20,
1982, the Board of Directors of the Company designated 250,000 shares of
Preferred Stock as Series A Preferred Stock. No shares of Series A Preferred
Stock are outstanding as of the date of this prospectus.
Each share of Series A Preferred Stock is entitled to receive, when, as and
if declared by the Board of Directors of the Company out of funds legally
available therefor, cash dividends in the amount of $7.00 per annum, payable
quarterly. Dividends on shares of Series A Preferred Stock are cumulative
commencing with the first day of the first
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dividend period, whether or not there are net profits or net assets of the
Company legally available for the payment of such dividends. However, no
dividend is payable as to any payment date occurring in the same calendar month
in which the initial issuance of Series A Preferred Stock occurs. Series A
Preferred Stock ranks senior as to dividends to both Series B Preferred Stock
and Common Stock.
Except as otherwise provided by law, holders of shares of Series A
Preferred Stock are entitled to one vote for each share held, and the shares of
Series A Preferred Stock, the shares of Common Stock and any other class of
stock of the Company having general voting rights, vote together as one class.
In the event that at any time or from time to time, while any shares of Series A
Preferred Stock are outstanding, six or more quarterly dividends, whether
consecutive or not, on any shares of Series A Preferred Stock are in arrears and
unpaid, whether or not earned or declared, then the holders of all of the
outstanding shares of Series A Preferred Stock together with the holders of any
other series of Preferred Stock then entitled to such a vote, voting as a single
class, will be entitled to elect two members of the Board of Directors of the
Company. The number of members of the Board of Directors of the Company will be
increased accordingly. Generally, so long as such a dividend arrearage exists,
holders of shares of Series A Preferred Stock and such other Preferred Stock
entitled to such a vote will be entitled to elect two additional directors at
each subsequent regular annual meeting of shareholders.
Upon any involuntary or voluntary liquidation, dissolution or winding up of
the Company, the holders of Series A Preferred Stock are entitled to be paid out
of the assets of the Company legally available for distribution to its
shareholders an amount equal to $100 per share, plus an amount equal to
accumulated and unpaid dividends to and including the date on which payment is
made, before any amount shall be paid or distributed to the holders of shares of
capital stock ranking junior to the Series A Preferred Stock with respect to
distributions upon liquidation, dissolution or winding up, including the Series
B Preferred Stock and the Common Stock. If, upon any such liquidation,
dissolution or winding up, amounts payable in respect of the Series A Preferred
Stock and any other capital stock ranking as to such distribution on a parity
with the Series A Preferred Stock are not paid in full, the holders of Series A
Preferred Stock and such parity stock shall share ratably in any distribution of
assets in proportion to the full respective preferential amounts to which they
are entitled. Neither the merger or consolidation of the Company with or into
any other corporation, nor the sale, transfer, exchange or lease of all or any
portion of the assets of the Company, shall be deemed to be a dissolution,
liquidation or winding up for the foregoing purposes.
Shares of Series A Preferred Stock are, at the option of the holder,
convertible at any time into shares of Common Stock at the conversion rate in
effect at that time as determined in accordance with the Amended and Restated
Articles of Incorporation. The initial conversion rate is two shares of Common
Stock for each share of Series A Preferred Stock. The Amended and Restated
Articles of Incorporation call for adjustments from time to time to the
conversion rate upon the occurrence of various events including, but not limited
to, changes in the number of outstanding shares of Common Stock due to stock
dividends and stock splits, the issuance of rights or warrants for Common Stock
below "average market price," and the distribution of indebtedness or assets
(excluding cash dividends) to holders of Common Stock. Should any
reorganization, recapitalization, consolidation, merger, or sale, transfer,
exchange or conveyance of all or substantially all of the property or assets of
the Company occur, as a result of which the holders of Common Stock shall be
entitled to receive stock, other securities, cash or other assets in exchange
for Common Stock, holders of Series A Preferred Stock shall have the right to
convert each share of Series A Preferred Stock into the amount of such
consideration at the Common Stock conversion rate applicable just prior to such
an event.
Shares of Series A Preferred Stock are subject to a mandatory redemption
provision that will require the Company to redeem, at a redemption price of $100
per share
. 50,000 shares of Series A Preferred Stock on the last day of the
dividend period for Series A Preferred Stock which includes the sixth
anniversary of the initial issuance of such Series A Preferred Stock
and
. an additional 50,000 shares of Series A Preferred Stock on the last
day of each corresponding dividend period in the four successive
twelve month periods. The shares to be redeemed will be selected by
lot by the transfer agent as provided in the Amended and Restated
Articles of Incorporation.
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At any time after the fifth anniversary of the initial issuance date of the
Series A Preferred Stock, the Company will have the option to redeem all of the
shares of Series A Preferred Stock at a price of $110 per share within 60 days
of a "class vote" as described in the Amended and Restated Articles of
Incorporation. A "class vote," as so described, shall be deemed to have occurred
if
. the shares of Series A Preferred Stock shall have voted as a class,
either separately or together with shares of any other series of
Preferred Stock, as a condition to the taking of any corporate action
other than action which would change the Series A Preferred Stock
dividend rights, liquidation preference, mandatory redemption rights,
redemption premium, voting rights, or conversion rights,
. the vote necessary to constitute approval of that action by such class
shall not have been obtained, and
. the vote necessary to constitute approval of that action by the
holders of the Common Stock shall have been obtained.
All accumulated dividends owed to holders of Series A Preferred Stock must
be paid prior to the redemption of any shares of Series A Preferred Stock.
Shares of Series A Preferred Stock which have been acquired by the Company
will not be reissued as Series A Preferred Stock, but will be retired and
cancelled in the manner provided by Virginia law and shall constitute authorized
but unissued Preferred Stock undesignated as to series.
SERIES B PREFERRED STOCK. In connection with the issuance of the Rights
(described under "- Shareholder Rights Plan" below), the Board of Directors of
the Company designated 3,000,000 shares of Preferred Stock as Series B Preferred
Stock. No shares of Series B Preferred Stock are outstanding as of the date of
this prospectus, and such shares will be issued only in connection with the
exercise of Rights. The Series B Preferred Stock ranks junior to Series A
Preferred Stock as to the payment of dividends and the distribution of assets.
Subject to the rights of the holders of shares of any other series of
Preferred Stock ranking prior and superior to Series B Preferred Stock with
respect to dividends, and in preference to Common Stock or any other junior
series of Preferred Stock or other stock, each share of Series B Preferred is
generally entitled to receive, when, as and if declared by the Board of
Directors of the Company out of funds legally available therefor, cumulative
quarterly cash dividends equal to the greater of $1.00 per share or, subject to
certain adjustments, 100 times the aggregate per share amount of all cash
dividends and non-cash dividends paid on each share of the Company's Common
Stock in the preceding quarter. Whenever quarterly dividends or other
distributions payable to the holders of Series B Preferred Stock are in arrears,
whether or not such dividends or other distributions have been declared the
Company shall not
. declare or pay dividends or distributions to holders of Common Stock
or any shares of stock junior to Series B Preferred Stock or
. purchase or otherwise acquire shares of Series B Preferred Stock or
any shares of stock junior to or in parity with Series B Preferred
Stock.
Except as otherwise provided by law, holders of shares of Series B
Preferred Stock are entitled to 100 votes for each share held, and the shares of
Series B Preferred Stock and the shares of Common Stock of the Company will vote
together as one class. In the event the Company declares or pays any dividend to
holders of Common Stock payable in Common Stock, or affects the number of
outstanding shares of Common Stock by reclassification or otherwise, the number
of votes per share of Series B Preferred Stock will be adjusted to equalize the
relative voting strength of the Series B Preferred Stock vis-a-vis the Common
Stock to the relative voting strength immediately prior to such an event.
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Upon any involuntary or voluntary liquidation, dissolution or winding up of
the Company, subject to the rights of Series A Preferred Stock and the rights of
any other capital stock prior in rank with respect to liquidation, dissolution
or winding up, the holders of Series B Preferred Stock will be entitled to be
paid out of the assets of the Company legally available therefor the greater of
$100 per share, plus accumulated and unpaid dividends, or an amount per share
equal to 100 times the aggregate amount to be distributed per share to the
holders of Common Stock (subject to certain adjustments). In such a liquidation,
dissolution or winding up, Series B Preferred Stock will be paid prior to any
distributions to the holders of Common Stock or any other stock ranking junior
to Series B Preferred Stock. Holders of stock ranking on a parity (either as to
dividends or liquidation, dissolution or winding up) with Series B Preferred
Stock, will share ratably in any distribution with holders of Series B Preferred
Stock in proportion to the total amounts to which the holders of all such shares
are entitled upon liquidation, dissolution or winding up of the Company.
In the event that the Company shall enter into any consolidation, merger,
combination or other transaction in which Common Stock is exchanged for or
changed into other securities, cash or property, the holders of Series B
Preferred Stock will be entitled to receive 100 times the per share
consideration received in connection with such transaction by holders of Common
Stock (subject to certain adjustments).
Shares of Series B Preferred Stock which have been acquired by the Company
in any manner whatsoever will not be reissued as Series B Preferred Stock, but
will be retired and cancelled in the manner provided by Virginia law and shall
constitute authorized but unissued Preferred Stock undesignated as to series.
Shares of Series B Preferred Stock are not redeemable.
SHAREHOLDER RIGHTS PLAN
The following summary of certain provisions of the Company's Shareholder
Rights Plan and the Rights Agreement, dated as of May 29, 1998 (the "Rights
Agreement"), between the Company and Harris Trust Company of New York does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, including the form of Rights Certificate attached thereto, and
the articles of amendment for Series B Preferred Stock, both of which are
incorporated by reference as exhibits to the registration statement.
The Rights Agreement contains provisions that could make it more difficult
for a third party to gain control of the Company and that could have the effect
of delaying or preventing a merger, tender offer or other takeover attempt of
the Company. In May 1998, the Board of Directors of the Company declared a
dividend of one preferred share purchase right (each, a "Right") for each share
of the Company's Common Stock outstanding as of June 8, 1998. Each Right
entitles its holder to purchase from the Company, until the earlier of June 8,
1998, or the redemption of the Rights, one one-hundredth (1/100th) of a share of
Series B Preferred Stock at an exercise price of $180 per Right, subject to
certain adjustments or, under certain circumstances, to obtain additional shares
of Common Stock of the Company in exchange for each Right. The Rights will not
be exercisable or transferable apart from Common Stock of the Company until the
earlier of 10 days following the public announcement that a person or affiliated
group has acquired or obtained the right to acquire 20% or more of the
outstanding Common Stock of the Company; or 10 days following the commencement
or announcement of an intention to make a tender offer or exchange offer, the
consummation of which would result in the ownership by a person or group of 20%
or more of the outstanding Common Stock of the Company. The Board of Directors
of the Company may redeem the Rights at a price of one cent per Right at any
time prior to the acquisition by a person of 20% or more of the outstanding
Common Stock of the Company.
VIRGINIA STOCK CORPORATION ACT; ANTI-TAKEOVER EFFECTS
The Virginia Stock Corporation Act contains provisions governing
"Affiliated Transactions." These provisions, with several exceptions discussed
below, generally require approval of certain material transactions between a
Virginia corporation and any beneficial holder of more than 10% of any class of
its outstanding voting shares (an "Interested Shareholder") by a majority of
disinterested directors and by the holders of at least two-thirds of the
remaining voting shares. Affiliated Transactions subject to this approval
requirement include mergers, share exchanges, material dispositions of corporate
assets not in the ordinary course of business, any dissolution of the
corporation proposed by or on behalf of an Interested Shareholder, or any
reclassification, including reverse stock splits, recapitalization or merger
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of the corporation with its subsidiaries, which increases the percentage of
voting shares owned beneficially by an Interested Shareholder by more than 5%.
For three years following the time that an Interested Shareholder becomes
an owner of 10% of the outstanding voting shares, a Virginia corporation cannot
engage in an Affiliated Transaction with such Interested Shareholder without the
approval of two-thirds of the voting shares other than those shares beneficially
owned by the Interested Shareholder, and the approval of a majority of the
Disinterested Directors. "Disinterested Director" means, with respect to a
particular Interested Shareholder, a member of the Company's Board of Directors
who was
. a member on the date on which an Interested Shareholder became an
Interested Shareholder or
. recommended for election by, or was elected to fill a vacancy and
received the affirmative vote of, a majority of the Disinterested
Directors then on the Board.
After the expiration of the three-year period, the statute requires approval of
Affiliated Transactions by two-thirds of the voting shares other than those
beneficially owned by the Interested Shareholder.
The principal exceptions to the special voting requirements apply to
transactions proposed after the three-year period has expired and require either
that the transaction be approved by a majority of the Company's Disinterested
Directors or that the transaction satisfy the fair-price requirements of the
statute. In general, the fair-price requirement provides that in a two-step
acquisition transaction, the Interested Shareholder must pay the shareholders in
the second step either the same amount of cash or the same amount and type of
consideration paid to acquire the Company's shares in the first step.
None of the foregoing limitations and special voting requirements applies
to an Interested Shareholder whose acquisition of shares making such person an
Interested Shareholder was approved by a majority of the Company's Disinterested
Directors.
These provisions are designed to deter certain types of takeovers of
Virginia corporations. The statute provides that, by affirmative vote of a
majority of the voting shares other than shares owned by any Interested
Shareholder, a corporation can adopt an amendment to its articles of
incorporation or by-laws providing that the Affiliated Transactions provisions
shall not apply to the corporation. The Company has not "opted out" of the
Affiliated Transactions provisions.
Virginia law also generally provides that shares of a Virginia corporation
acquired in a transaction that would cause the acquiring person's voting
strength to meet or exceed any of three thresholds (20%, 33-1/3% or 50%) have no
voting rights with respect to such shares unless granted by a majority vote of
shares not owned by the acquiring person or any officer or employee-director of
the corporation. This provision empowers an acquiring person to require the
Virginia corporation to hold a special meeting of shareholders to consider the
matter within 50 days of its request. The Board of Directors of a Virginia
corporation can opt out of this provision at any time before four days after
receipt of a control share acquisition notice.
UNITED STATES TAXATION
The following summary of the principal United States federal income tax
consequences of the ownership and disposition of Debt Securities is based upon
the opinion of McGuire, Woods, Battle & Boothe LLP, special tax counsel for the
Company. It deals only with Debt Securities held as capital assets and does not
deal with special classes of Holders, such as dealers in securities or
currencies, banks, life insurance companies, tax-exempt organizations, persons
holding Debt Securities as a hedge against currency risks, certain United States
expatriates or United States Holders (as defined below) whose functional
currency is not the U.S. dollar. It also does not deal with Holders other than
original purchasers and thus does not deal with the "market discount rules."
Moreover, the summary deals only with Debt Securities that are due to mature not
later than 30 years from the date on which they are issued. The United States
federal income tax consequences of ownership of Debt Securities that are due to
mature more than 30 years from their date of
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issue will be discussed in an applicable prospectus supplement. The discussion
of original issue discount is based on the Internal Revenue Code of 1986, as
amended (the "Code"), regulations promulgated thereunder, judicial decisions and
administrative rulings in effect on the date hereof, all of which are subject to
change, possibly with retroactive effect. PERSONS CONSIDERING THE PURCHASE OF
DEBT SECURITIES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION
OF THE UNITED STATES FEDERAL TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS
THE APPLICATION OF STATE, LOCAL, OR FOREIGN LAWS.
The federal income tax consequences of ownership of other Securities
including Preferred Stock, Common Stock, Securities Warrants and Depositary
Shares will be discussed in an applicable prospectus supplement.
UNITED STATES HOLDERS
The following discussion pertains to a Holder of a Debt Security who or
which is a United States person as defined above under "Limitations on Issuance
of Euro-Debt Securities" (a "United States Holder").
PAYMENTS OF INTEREST.
Except as provided below under "Original Issue Discount", Interest on a
Debt Security (including payments received on the sale, exchange or retirement
of a Debt Security that are attributable to accrued but unpaid interest) will be
taxable to a United States Holder as ordinary interest income at the time it is
accrued or is received (or made available for payment, if earlier), depending on
the United States Holder's method of accounting for tax purposes. If interest is
payable in a currency or currency unit other than the U.S. dollar (a "Specified
Currency"), the amount of income will be the U.S. dollar value of the Specified
Currency, which (i) will be determined, in the case of a cash basis United
States Holder, at the time such payment is received or is made available for
payment, if earlier, and (ii) in the case of an accrual basis United States
Holder, or a cash basis United States Holder accruing original issue discount,
will be translated at the average exchange rate for the interest accrual period
or, with respect to an interest accrual period that spans two taxable years, at
the average rate for the partial period within the taxable year, or, if so
elected, at the spot rate on the applicable date, as provided in Section 1.988-
2(b)(iii)(B) of the Treasury Regulations. The rules described in the preceding
sentence will apply regardless of whether the payment is in fact converted to
U.S. dollars. In general, upon the receipt of an interest payment (including a
payment attributable to accrued but unpaid interest upon the sale or retirement
of a Debt Security) in the Specified Currency, an accrual basis United States
Holder will recognize foreign currency gain or loss to the extent of the
difference, if any, between the U.S. dollar value of the accrued interest with
respect to which payment is being made (determined as described in the preceding
sentence), and the U.S. dollar value of the interest payments received
(determined as of the time of receipt). Such foreign currency gain or loss
generally will be treated as ordinary income or loss.
ORIGINAL ISSUE DISCOUNT.
General. A Debt Security will be treated as having been issued at an
original issue discount (a "Discount Security") if the excess of its "stated
redemption price at maturity" over its issue price (defined as the initial
offering price to the public at which a substantial amount of the Discount Debt
Securities have been sold) equals or exceeds 1/4 of 1 percent of such Debt
Security's "stated redemption price at maturity" multiplied by the number of
complete years to its maturity. The stated redemption price at maturity of a
Debt Security is the total of all payments provided by the Debt Security that
are not "qualified stated interest payments." Stated generally, a qualified
stated interest payment is stated interest that is unconditionally payable in
cash or in property (other than in debt instruments of the issuer) at least
annually over the term of the Debt Security at (i) a single fixed rate of
interest, (ii) one or more qualified floating rates, (iii) a single fixed rate
and one or more qualified floating rates, (iv) a single fixed rate and a single
objective rate that is a qualified inverse floating rate, or (v) a single
objective rate.
A United States Holder (including a cash basis Holder) of a Discount
Security will be required to include original issue discount ("Discount") in
income as it accrues, generally before the receipt of cash attributable to such
income. The amount of Discount includable in income is the sum of the daily
portions of Discount with respect to the Discount Security determined for each
day during the taxable year or portion of the taxable year in which a United
States
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Holder holds such Discount Security. The daily portion is determined by
allocating to each day in any "accrual period" a pro rata portion of the
Discount allocable to such accrual period. The amount of Discount allocable to
any accrual period is an amount equal to the excess of (a) the product of the
Discount Security's adjusted issue price at the beginning of such accrual period
and the yield to maturity of the Discount Security (determined by compounding at
the close of each accrual period and adjusted for the length of such period)
over (b) the qualified stated interest payments, if any, allocable to the
accrual period. In general, unless otherwise specified, the accrual period is
each period between Interest Payment Dates (including (i) the period from the
issue date to the first Interest Payment Date and (ii) the period from the final
Interest Payment Date to Stated Maturity). The accrual period may be of any
length and may vary in length over the term of the Debt Security, provided that
each accrual period is no longer than one year and each scheduled payment of
principal or interest occurs either on the final day or on the first day of an
accrual period. The adjusted issue price of the Discount Security at the start
of any accrual period is the sum of the issue price of such Discount Security,
increased by the amount of Discount previously includable by the Holder for each
prior accrual period, and decreased by any prior payments made during each prior
accrual period on the Discount Security that were not qualified stated interest
payments.
Under existing Treasury Regulations, it is possible that Debt Securities
that (i) do not provide for payments of stated interest at least annually, (ii)
bear interest pursuant to an interest rate formula that is subject to a
restriction or restrictions on the maximum stated interest rate, on the minimum
stated interest rate, on the amount of increase or decrease in the stated
interest rate, or other similar restrictions, or (iii) bear interest at a base
rate that is not based on either changes in the price of actively traded
personal property or on one or more floating market interest rates, that are
issued at par may be subject to the original issue discount rules of the Code as
Discount Securities even though such Debt Securities may not be Original Issue
Discount Securities (as defined above in "Description of Debt Securities--
General"). Accordingly, United States Holders (including cash basis Holders) may
be required to report income in respect of such Debt Securities before the
receipt of cash attributable thereto.
Pre-Issuance Accrued Interest. If (i) a portion of the initial purchase
price of a Debt Security is attributable to pre-issuance accrued interest, (ii)
the first stated interest payment on the Debt Security is to be made within one
year of the Debt Security's issue date and (iii) the payment will equal or
exceed the amount of pre-issuance accrued interest, then the United States
Holder may elect to decrease the issue price of the Debt Security by the amount
of pre-issuance accrued interest. In that event, a portion of the first stated
interest payment will be treated as a return of the excluded pre-issuance
accrued interest and not as an amount payable on the Debt Security.
Acquisition Premium. A United States Holder that purchases a Debt Security
for an amount less than or equal to the sum of all amounts payable on the Debt
Security after the purchase date (other than payments of qualified stated
interest) but in excess of its adjusted issue price (any such excess being
"acquisition premium") and that does not make the election described below under
"Election to Treat All Interest as Original Issue Discount" is permitted to
reduce the daily portions of OID by a fraction, the numerator of which is the
excess of the United States Holder's adjusted basis in the Debt Security
immediately after its purchase over the adjusted issue price of the Debt
Security, and the denominator of which is the excess of the sum of all amounts
payable on the Debt Security after the purchase date, other than payments of
qualified stated interest, over the Debt Security's adjusted issue price.
Debt Securities Subject to Contingencies Including Optional Redemption. In
general, if a Debt Security provides for an alternative payment schedule or
schedules applicable upon the occurrence of a contingency or contingencies and
the timing and amounts of the payments that comprise each payment schedule are
known as of the issue date, special rules apply for purposes of determining the
yield and maturity of the Debt Security.
If the Debt Security is not subject to any contingencies other than
contingencies that are, in the aggregate, remote and incidental contingencies,
then any such contingencies will be disregarded in computing the yield and
maturity of the Debt Security. For purposes of this rule, a contingency is
remote if, as of the date of issuance, the likelihood that it will occur is
remote, and a contingency is incidental if, as of the date of issuance, the
amount of payments subject to the contingency and the impact of the contingency
on the timing of payments is insignificant.
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If the Debt Security is subject to one or more contingencies (other than
remote and incidental contingencies), then, in general, the amount of interest
taken into account for each accrual period will be determined by constructing a
projected payment schedule for the Debt Security and applying rules similar to
those for accruing OID on a noncontingent debt instrument. This method is
applied by first determining the yield at which the Company would have issued a
fixed rate debt instrument with terms and conditions similar to the contingent
payment Debt Security (the comparable yield) and then determining a payment
schedule as of the issue date that would produce the comparable yield.
Notwithstanding the general rules for determining yield and maturity in the
case of Debt Securities subject to contingencies, if the Company or the Holder
has an unconditional option or options that, if exercised, would require
payments to be made on the Debt Security under an alternative payment schedule
or schedules, then (i) in the case of an option or options of the Company, the
Company will be deemed to exercise or not exercise an option or combination of
options in the manner that minimizes the yield on the Debt Security and (ii) in
the case of an option or options of the Holder, the Holder will be deemed to
exercise or not exercise an option or combination of options in the manner that
maximizes the yield on the Debt Security. For purposes of those calculations,
the yield on the Debt Security is determined by using any date on which the Debt
Security may be redeemed or repurchased as the maturity date and the amount
payable on such date in accordance with the terms of the Debt Security as the
principal amount payable at maturity.
If a contingency (including the exercise of an option) fails to occur, or
actually occurs but in a manner inconsistent with the assumption made according
to the above rules (a "change in circumstances") then, except to the extent that
a portion of the Debt Security is repaid as a result of the change in
circumstances and solely for purposes of the accrual of OID, the yield and
maturity of the Debt Security are redetermined by treating the Debt Security as
having been retired and reissued on the date of the change in circumstances for
an amount equal to the Debt Security's adjusted issue price on that date.
The federal income tax treatment of Debt Securities providing for
alternative payment schedules applicable upon the occurrence of one or more
contingencies will be described in greater detail in the applicable prospectus
supplement.
Election to Treat All Interest as Original Issue Discount. A United States
Holder may elect to include in gross income all interest that accrues on a Debt
Security using the constant-yield method described above under the heading
"Original Issue Discount -- General", with the modifications described below.
For purposes of this election, interest includes stated interest, OID, de
minimis original issue discount, market discount, de minimis market discount and
unstated interest, as adjusted by any amortizable bond premium (described below
under "Debt Securities Purchased at a Premium") or acquisition premium.
In applying the constant-yield method to a Debt Security with respect to
which this election has been made, the issue price of the Debt Security will
equal the electing United States Holder's adjusted basis in the Debt Security
immediately after its acquisition, the issue date of the Debt Security will be
the date of its acquisition by the electing United States Holder, and no
payments on the Debt Security will be treated as payments of qualified stated
interest. This election will generally apply only to the Debt Security with
respect to which it is made and may not be revoked without the consent of the
Service. If this election is made with respect to a Debt Security with
amortizable bond premium, then the electing United States Holder will be deemed
to have elected to apply amortizable bond premium against interest with respect
to all debt instruments with amortizable bond premium (other than debt
instruments the interest on which is excludible from gross income) held by the
electing United States Holder as of the beginning of the taxable year in which
the Debt Security with respect to which the election is made is acquired or
thereafter acquired. The deemed election with respect to amortizable bond
premium may not be revoked without the consent of the Service.
Variable Rate Debt Securities. A "Variable Rate Debt Security" is a Debt
Security that: (i) has an issue price that does not exceed the total
noncontingent principal payments by more than the lesser of (1) .015 multiplied
by the product of (x) the total noncontingent principal payments and (y) the
number of complete years to maturity from the issue date, or (2) 15 percent of
the total noncontingent principal payments; (ii) provides for stated interest
compounded or paid
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at least annually at (1) one or more "qualified floating rates", (2) a single
fixed rate and one or more qualified floating rates, (3) a single "objective
rate" or (4) a single fixed rate and a single objective rate that is a
"qualified inverse floating rate"; (iii) provides that a qualified floating rate
or objective rate in effect at any time during the term of the instrument must
be set at a "current value" of that rate (i.e., the value of the rate on any day
that is no earlier than three months prior to the first day on which that value
is in effect and no later than one year following that first day); and (iv) does
not provide for any contingent principal payments other than as provided in
clause (i) of this sentence.
A variable rate is a "qualified floating rate" if (i) variations in the
value of the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the Debt
Security is denominated or (ii) it is equal to the product of a rate described
in clause (i) and either (a) a fixed multiple that is greater than zero but not
more than 1.35, or (b) a fixed multiple greater than zero but not more than
1.35, increased or decreased by a fixed rate. A rate is not a qualified floating
rate, however, if the rate is subject to certain restrictions (including caps,
floors, governors or other similar restrictions) unless such restrictions are
fixed throughout the term of the Debt Security or are not reasonably expected to
significantly affect the yield on the Debt Security.
An "objective rate" is a rate, other than a qualified floating rate, that
is determined using a single, fixed formula and that is based on objective
financial or economic information, including one or more qualified floating
rates, or the yield or changes in the price of one or more actively traded items
of personal property other than stock or debt of the issuer or a related party.
A variable rate is not an objective rate, however, if it is based on information
within the control of the issuer or a related party or if it is reasonably
expected that the average value of the rate during the first half of the Debt
Security's term will be either significantly less than or significantly greater
than the average value of the rate during the final half of the Debt Security's
term. An objective rate is a "qualified inverse floating rate" if (i) the rate
is equal to a fixed rate minus a qualified floating rate, and (ii) the
variations in the rate can reasonably be expected to inversely reflect
contemporaneous variations in the cost of newly borrowed funds.
In general, if a Variable Rate Debt Security provides for stated interest
at a single qualified floating rate or objective rate, all stated interest on
the Debt Security is qualified stated interest and the amount of OID, if any, is
determined by using, in the case of a qualified floating rate or qualified
inverse floating rate, a fixed rate equal to the value as of the issue date of
the qualified floating rate or qualified inverse floating rate, or, in the case
of any other objective rate, a fixed rate that reflects the yield reasonably
expected for the Debt Security.
If a Variable Rate Debt Security does not provide for stated interest at a
single qualified floating rate or objective rate and does not provide for
interest payable at a fixed rate (other than at a single fixed rate for an
initial period), the amount of interest and OID accruals on the Debt Security
are generally determined by (i) determining a fixed rate substitute for each
variable rate provided under the Variable Rate Debt Security (which generally
will be the value of each variable rate as of the issue date or, in the case of
an objective rate that is not a qualified inverse floating rate, a rate that
reasonably reflects the expected yield on the note), (ii) constructing the
equivalent fixed rate debt instrument (using the fixed rate substitute described
above), (iii) determining the amount of qualified stated interest and OID with
respect to the equivalent fixed rate debt instrument, and (iv) making the
appropriate adjustments for actual variable rates during the applicable accrual
period.
If a Variable Rate Debt Security provides for stated interest either at one
or more qualified floating rates or at a qualified inverse floating rate, and in
addition provides for stated interest at a single fixed rate (other than at a
single fixed rate for an initial period), the amount of interest and OID
accruals are determined as in the immediately preceding paragraph with the
modification that the Variable Rate Debt Security is treated, for purposes of
the first three steps of the determination, as if it provided for a qualified
floating rate (or a qualified inverse floating rate, as the case may be) rather
than the fixed rate. The qualified floating rate (or qualified inverse floating
rate) replacing the fixed rate must be such that the fair market value of the
Variable Rate Debt Security as of the issue date would be approximately the same
as the fair market value of an otherwise identical debt instrument that provides
for the qualified floating rate (or qualified inverse floating rate) rather than
the fixed rate.
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United States federal income tax rules applicable to Debt Securities that
provide for payments of stated interest at a variable rate, but do not meet the
foregoing requirements of a Variable Rate Debt Security, will be described in
the applicable prospectus supplement.
Short-Term Debt Securities. In general, an individual or other cash basis
United States Holder of a Debt Security with a term of one year or less (a
"short-term Debt Security") is not required to accrue OID (as specially defined
below for the purposes of this paragraph) for United States federal income tax
purposes unless such person elects to do so (but may be required to include any
stated interest in income as the interest is received). Accrual basis United
States Holders and certain other United States Holders, including banks,
regulated investment companies, dealers in securities, common trust funds,
United States Holders who hold Debt Securities as part of certain identified
hedging transactions, certain pass-through entities and cash basis United States
Holders who so elect, are required to accrue OID on short-term Debt Securities
on either a straight-line basis or under the constant-yield method (based on
daily compounding), at the election of the United States Holder.
In the case of a United States Holder not required and not electing to
include OID in income currently, any gain realized on the sale or retirement of
the short-term Debt Security will be ordinary income to the extent of the OID
accrued on a straight-line basis (unless an election is made to accrue the OID
under the constant- yield method) through the date of sale or retirement. United
States Holders who are not required and do not elect to accrue OID on short-term
Debt Securities will be required to defer deductions for interest on borrowings
allocable to short-term Debt Securities in an amount not exceeding the deferred
income until the deferred income is realized.
For purposes of determining the amount of OID subject to these rules, all
interest payments on a short-term Debt Security, including stated interest, are
included in the short-term Debt Security's stated redemption price at maturity.
Foreign Currency Discount Debt Securities. OID for any accrual period on a
Discount Debt Security that is denominated in, or determined by reference to, a
Specified Currency will be determined in the Specified Currency and then
translated into U.S. dollars in the same manner as stated interest accrued by an
accrual basis United States Holder, as described under "Payments of Interest".
Upon receipt of an amount attributable to OID (whether in connection with a
payment of interest or the sale or retirement of a Debt Security), a United
States Holder may recognize ordinary income or loss.
Other Considerations. The preceding discussion sets forth the general
structure of the federal income tax rules applicable to Discount Securities that
have a maturity date in excess of one year from the date of issue. The precise
application of these rules will be affected by the terms of the particular
Discount Security, including the existence of any optional redemption rights
exercisable by the Company, the denomination of the Debt Security in a Specified
Currency, and the term of the Debt Security. The impact of such terms, if any,
on the application of these rules will be discussed in the applicable prospectus
supplement.
Reporting. The Company is required to report to the Internal Revenue
Service the amount of Discount accrued on Discount Securities held of record by
United States persons other than corporations and other exempt Holders. The
amount required to be reported by the Company may not be equal to the amount of
original issue discount required to be reported as taxable income by a Holder of
such Debt Security.
DEBT SECURITIES PURCHASED AT A PREMIUM.
A United States Holder that purchases a Debt Security for an amount in
excess of its principal amount may elect to treat such excess as "amortizable
bond premium", in which case the amount required to be included in the United
States Holder's income each year with respect to interest on the Debt Security
will be reduced by the amount of amortizable bond premium allocable (based on
the Debt Security's yield to maturity) to such year. In the case of a Debt
Security that is denominated in, or determined by reference to, a foreign
currency, bond premium will be computed in units of foreign currency, and
amortizable bond premium will reduce interest income in units of the foreign
currency. At the time amortized bond premium offsets interest income, exchange
gain or loss (taxable as ordinary income or loss) is realized measured by the
difference between exchange rates at that time and at the time of the
acquisition of the Debt
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Securities. Any election to amortize bond premium shall apply to all bonds
(other than bonds the interest on which is excludible from gross income) held by
the United States Holder at the beginning of the first taxable year to which the
election applies or thereafter acquired by the United States Holder, and is
irrevocable without the consent of the Service. See also "Original Issue
Discount - Election to Treat All Interest as Original Issue Discount."
PURCHASE, SALE AND RETIREMENT OF THE DEBT SECURITIES.
A United States Holder's tax basis in a Debt Security generally will be its
U.S. dollar cost (as defined below), increased by the amount of any OID or
market discount included in the United States Holder's income with respect to
the Debt Security and the amount, if any, of income attributable to de minimis
original issue discount and de minimis market discount included in the United
States Holder's income with respect to the Debt Security, and reduced by (i) the
amount of any payments that are not qualified stated interest payments, and (ii)
the amount of any amortizable bond premium applied to reduce interest on the
Debt Security. The U.S. dollar cost of a Debt Security purchased with a foreign
currency will generally be the U.S. dollar value of the purchase price on the
date of purchase or, in the case of Debt Securities traded on an established
securities market, as defined in the applicable Treasury Regulations, that are
purchased by a cash basis United States Holder (or an accrual basis United
States Holder that so elects), on the settlement date for the purchase.
A United States Holder will generally recognize gain or loss on the sale or
retirement of a Debt Security equal to the difference between the amount
realized on the sale or retirement and its tax basis in the Debt Security. The
amount realized on a sale or retirement for an amount in foreign currency will
be the U.S. dollar value of such amount on (i) the date payment is received in
the case of a cash basis United States Holder, (ii) the date of disposition in
the case of an accrual basis United States Holder or (iii) in the case of Debt
Securities traded on an established securities market, as defined in the
applicable Treasury Regulations, sold by a cash basis United States Holder (or
an accrual basis United States Holder that so elects), on the settlement date
for the sale. Except to the extent described above under "Original Issue
Discount - Short-Term Debt Securities" or described in the next succeeding
paragraph or attributable to accrued but unpaid interest, gain or loss
recognized on the sale or retirement of a Debt Security will be capital gain or
loss and will be long-term capital gain or loss if the Debt Security was held
for more than one year.
Gain or loss recognized by a United States Holder on the sale or retirement
of a Debt Security that is attributable to changes in exchange rates will be
treated as ordinary income or loss. However, exchange gain or loss is taken into
account only to the extent of total gain or loss realized on the transaction.
EXCHANGE OF SPECIFIED CURRENCY.
A United States Holder's tax basis in Specified Currency purchased by such
Holder generally will be the U.S. dollar value thereof at the spot rate on the
date such Specified Currency is purchased. A United States Holder's tax basis in
Specified Currency received as interest on, or on the sale, exchange or
retirement of, a Debt Security will be the U.S. dollar value thereof at the spot
rate at the time such Specified Currency is received. The amount of gain or loss
recognized by a United States Holder on a sale, exchange or other disposition of
Specified Currency will be equal to the difference between (i) the amount of
U.S. dollars, the U.S. dollar value at the spot rate of Specified Currency, or
the fair market value in U.S. dollars of any other property received by the
Holder in the sale, exchange or other disposition, and (ii) the Holder's tax
basis in the Specified Currency.
Accordingly, a United States Holder that purchases a Debt Security with
Specified Currency will recognize gain or loss in an amount equal to the
difference, if any, between such Holder's tax basis in the Specified Currency
and the U.S. dollar value at the spot rate of the Specified Currency on the date
of purchase. Generally, any such gain or loss will be ordinary income or loss
and will not be treated as interest income or expense, except to the extent
provided by administrative pronouncements of the IRS.
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BEARER DEBT SECURITIES.
Under Sections 165(j) and 1287(a) of the Code, a United States Holder
generally will not be entitled to deduct any loss on Bearer Debt Securities
(including for purposes of this paragraph Debt Securities in global form
exchangeable for Bearer Debt Securities) or coupons (other than Bearer Debt
Securities having a maturity of one year or less from their date of issuance)
and must treat as ordinary income any gain realized on the sale, exchange or
other disposition (including the receipt of principal) of Bearer Debt Securities
or coupons (other than Bearer Debt Securities having a maturity of one year or
less from their date of issue).
INDEXED DEBT SECURITIES.
The applicable prospectus supplement will contain a discussion of any
special United States federal income tax rules with respect to Indexed
Securities.
CONVERTIBLE DEBT SECURITIES.
The applicable prospectus supplement will contain a discussion of any
special United States federal income tax rules with respect to Debt Securities
that are convertible into or exchangeable for Common Stock, Preferred Stock,
Depository Shares, or other Securities.
DEBT WARRANTS.
The applicable prospectus supplement will contain a discussion of any
special United States federal income tax rules with respect to an issuance of
Debt Warrants.
UNITED STATES ALIEN HOLDERS
Under present United States federal income and estate tax law and subject
to the discussion of backup withholding below:
(1) payments of principal and any premium and interest (including any
Discount) on a Debt Security by the Company or any of its Paying Agents to
any Holder that is a United States Alien Holder (as defined below) will not
be subject to United States federal withholding tax, provided that in the
case of such Debt Security, (i) the Holder does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company, (ii) the Holder is not a controlled
foreign corporation that is related to the Company through stock ownership;
(iii) the Holder is not a bank that acquired the Notes pursuant to a loan
agreement made in the ordinary course or its trade or business; (iv) if the
Debt Security is a Bearer Debt Security, the Company and any underwriters,
agents, and dealers participating in the offering of such Debt Security
have complied with certain requirements described in "Limitations on
Issuance of Euro-Debt Securities," and (v) if the Debt Security is a
Registered Debt Security (including such Debt Securities which were
received in exchange for Bearer Debt Securities), either (x) the beneficial
owner of the Debt Securities certifies to the Company or its agent, under
penalties of perjury, that such Owner is not a United States Holder and
provides such Owner's name and address, or (y) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and holds the Debt Securities on behalf of a beneficial owner
certifies to the Company or its Paying Agent, under penalties of perjury,
that such statement has been received from the beneficial owner by it or by
a financial institution between it and the beneficial owner and furnishes
the payor with a copy thereof;
(2) a United States Alien Holder generally will not be subject to
United States federal income tax or withholding tax on gain realized on the
sale, exchange or redemption of a Debt Security, unless (i) in the case of
an individual Holder, such Holder is present in the United States for a
period of 183 days or more during the taxable year in which gain is
realized and certain other conditions are met or (ii) if the Company is a
"United States real property holding corporation," as defined in Section
897 of the Code, such Holder actually or
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constructively owns any other interests in the Company (excluding an
interest solely as a creditor, but including convertible debt instruments)
that are not regularly traded with an aggregate fair market value exceeding
the fair market value of 5% of the "regularly traded class," as defined in
the United States Treasury Regulations, of the Company's stock with the
lowest fair market value (currently, the Company's Common Stock); and
(3) a Debt Security or coupon held by an individual who at the time of
death is not a citizen or resident (as defined for federal estate tax
purposes) of the United States (as defined under "Limitations on Issuance
of Euro-Debt Securities") will not be subject to United States federal
estate tax as a result of such individual's death if (i) the individual
does not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of the Company entitled to vote (ii)
the Debt Security does not provide for any payment of contingent interest,
and (iii) the income on the Debt Securities would not have been effectively
connected with the conduct of a trade or business by the individual in the
United States.
A United States Alien Holder will be subject to United States federal
income tax on any interest income (including Discount) and on any gain realized
on the sale, exchange or other disposition of a Debt Security in the same manner
as a United States Holder, if interest (including Discount) or gain on such Debt
Security is effectively connected with the conduct by the United States Alien
Holder of a trade or business within the United States. See "United States
Holders" above. Such a Holder generally will be exempt from withholding tax with
respect to such income, provided that it provides the Company with a properly
executed Internal Revenue Service Form 4224.
In the case of a Non-U.S. Holder that is a corporation, such U.S. trade or
business income may also be subject to the branch profits tax, which is
generally imposed on a foreign corporation on the actual or deemed repatriation
from the United States of earnings and profits attributable to U.S. trade or
business income, at a 30% rate. The branch profits tax may not apply, or may
apply at a reduced rate, in the case of Non-U.S. Holders that are qualified
residents of certain countries with which the United States has an income tax
treaty.
As used herein, a "United States Alien Holder" is a beneficial owner of a
Debt Security that is not a United States Holder.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, payments of principal and any premium and interest (including
Discount, if any) made within the United States by the Company or any of its
Paying Agents are subject to information reporting and, in certain cases, to
"backup withholding" at a rate of 31%. Similarly, payment of the proceeds from
the sale of a Debt Security to or through the United States office of a broker
will be subject to information reporting and backup withholding unless the
Holder or beneficial owner provides a certification that it is not a United
States person or otherwise establishes its entitlement to an exemption from the
information reporting and backup withholding rules.
Information reporting and backup withholding ordinarily do not apply to
payments made outside the United States by the Company or a Paying Agent on a
Bearer Debt Security described in clause (1)(iii) under "United States Alien
Holders" or on a Registered Debt Security described in clause (1)(iv) under
"United States Alien Holders," provided that the payor does not have actual
knowledge that the Holder is a United States person. Payments made outside the
United States will be subject to information reporting, however, if collected by
a custodian, nominee, or other agent that is either a United States person, a
controlled foreign corporation for United States tax purposes, or a foreign
person 50% or more of whose gross income over a specified three-year period is
effectively connected with the conduct of a trade or business within the United
States, unless such custodian, nominee, or other agent has documentary evidence
of the beneficial owner's foreign status and has no actual knowledge to the
contrary, or unless the owner otherwise establishes entitlement to an exemption.
In general, payment of the proceeds from the sale of a Debt Security to or
through the foreign office of a broker will not be subject to information
reporting or backup reporting; however, if the broker is a United States person,
a controlled foreign corporation for United States tax purposes, or a foreign
person 50% or more of whose gross income over a specified three-year period is
effectively connected with the conduct of a trade or business within the United
48
<PAGE>
States, such payments will be subject to information reporting unless such
broker has documentary evidence in its files of the owner's foreign status and
has no actual knowledge to the contrary, or unless the owner otherwise
establishes entitlement to an exemption.
With respect to United States Holders, backup withholding ordinarily
applies only to certain noncorporate Holders who fail to supply accurate
taxpayer identification numbers or who fail to report all interest and dividend
income required to be shown on their federal income tax returns.
On October 6, 1997, the Treasury Department issued new regulations (the
"New Regulations") which make modifications to the withholding, backup
withholding and information reporting rules described above. The New Regulations
will generally be effective for payments made after December 31, 1999, subject
to certain transition rules. Prospective investors are urged to consult their
own tax advisors regarding the New Regulations.
PLAN OF DISTRIBUTION
The Company may sell Securities to one or more underwriters for public
offering and sale by them or may sell Securities to institutional investors
directly or through agents which solicit or receive offers on behalf of the
Company or through dealers or through a combination of any such methods of sale.
The prospectus supplement or prospectus supplements with respect to particular
Securities will set forth the terms of the offering of such Securities,
including the name or names of any underwriters or agents, the public offering
or purchase price and the proceeds to the Company from such sale, any discounts
and commissions to be allowed or paid to the underwriters or agents, all other
items constituting underwriting compensation, the discounts and commissions to
be allowed or paid to dealers, if any, and the securities exchanges, if any, on
which the Securities will be listed.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, or from time to time at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company also may offer and sell Securities in exchange
for one or more of its outstanding issues of debt. The Company may, from time to
time, authorize agents acting on a best or reasonable efforts basis as agents of
the Company to solicit or receive offers to purchase the Securities upon the
terms and conditions as are set forth in the applicable prospectus supplement.
In connection with the sale of Securities, underwriters or agents may be deemed
to have received compensation from the Company in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of
Securities for whom they may act as agent. 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 who participate in the distribution of
Securities may be entitled, under agreements which may be entered into with the
Company, to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the underwriters, dealers or agents may be required to make in
respect thereof.
If so indicated in the applicable prospectus supplement, the Company may
authorize underwriters 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
institutional purchaser under any such contract will not be subject to any
conditions except (i) the purchase by such institution of the Securities covered
by such contract shall not at the time of delivery be prohibited under the laws
of the jurisdiction to which such institution is subject, and (ii) if such
Securities are being sold to underwriters, the Company shall have sold to such
underwriters the total principal amount of such Securities less the principal
amount thereof covered by delayed delivery contracts.
49
<PAGE>
Certain of the underwriters, dealers or agents and their affiliates may
engage in transactions with and perform services for the Company in the ordinary
course of business.
VALIDITY OF THE SECURITIES
The validity of the Securities offered hereby will be passed upon for the
Company by McGuire, Woods, Battle & Boothe LLP, Richmond, Virginia. Robert L.
Burrus, Jr., a partner of McGuire, Woods, Battle & Boothe LLP, is a director of
the Company and owns 8,181 shares of the Company's Common Stock. Any underwriter
will be advised about other issues relating to any offering by its own legal
counsel.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the Company's
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 26, 1997, as set forth in their report,
which is incorporated in this prospectus by reference. The Company's
consolidated financial statements are incorporated by reference in reliance on
their report, given on their authority as experts in accounting and auditing.
50
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
The following table sets forth the expenses other than underwriting
discounts and commissions and (all of which will be paid by the Company) to be
incurred in connection with the registration and sale of the Securities:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee.......................... $222,400
Rating agency fees..................................................... 100,000
Legal fees, Blue Sky fees and expenses................................. 400,000
Accounting fees and expenses........................................... 100,000
Transfer Agents', Trustees' and Depositary's fees and expenses......... 50,000
Printing and engraving................................................. 80,000
Miscellaneous.......................................................... 15,000
Total............................................................. $967,400
</TABLE>
_____________________
All of the above amounts, other than the Securities and Exchange Commission
filing fee, are estimates.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 10 of the Virginia Stock Corporation Act allows, in general, for
indemnification, in certain circumstances, by a corporation of any person
threatened with or made a party to any action, suit or proceeding by reason of
the fact that he or she is, or was, a director, officer, employee or agent of
such corporation. Indemnification is also authorized with respect to a criminal
action or proceeding where the person had no reasonable cause to believe that
his or her conduct was unlawful. Article 9 of the Virginia Stock Corporation Act
provides limitations on damages payable by officers and directors, except in
cases of willful misconduct or knowing violation of criminal law or any federal
or state securities law.
Article VII of the Company's Amended and Restated Articles of Incorporation
provides for mandatory indemnification of any director or officer of the Company
who is, was or is threatened to be made a party to any proceeding (including any
proceeding by or on behalf of the Company) by reason of the fact that he or she
is or was a director or officer of the Company against all liabilities and
reasonable expenses incurred in the proceeding, except such liabilities and
expenses as are incurred because of such director's or officer's willful
misconduct or knowing violation of the criminal law.
The Company's Amended and Restated Articles of Incorporation also provide
that in every instance permitted under Virginia corporate law in effect from
time to time, the liability of a director of officer of the Company to the
Company or its shareholders arising out of a single transaction, occurrence or
course of conduct shall be limited to one dollar.
The Company maintains a standard policy of officers' and directors'
liability insurance.
The underwriting, distribution or similar agreements filed or to be filed
as exhibits to the registration statement will contain provisions regarding
indemnification of the Company's officers, directors and controlling persons
against certain liabilities.
II-1
<PAGE>
ITEM 16. EXHIBITS
1.1 Form of Underwriting Agreement Basic Provisions for Debt Securities
(a)
1.2 Form of Underwriting Agreement Basic Provisions for the other
Securities registered hereby (a)
4.1 Amended and Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3 to the Company's Form 10-K
dated February 15, 1991)
4.2 By-Laws of the Company, as amended (incorporated by reference to
Exhibit 3.2 to the Company's Form 10-K dated March 4, 1997)
4.3 Rights Agreement, dated as of May 29, 1998, between CSX and Harris
Trust Company of New York, as Rights Agent (incorporated by reference
to Exhibit 99.1 to the Company's Registration on Form 8-A filed May
29, 1998 (File No. 2-62373))
4.4 Indenture, dated August 1, 1990, between the Company and The Chase
Manhattan Bank, as Trustee (incorporated herein by reference to the
Company's Form SE, dated September 7, 1990, filed with the
Commission)
4.5 First Supplemental Indenture, dated as of June 15, 1991, between the
Company and The Chase Manhattan Bank, as Trustee (incorporated herein
by reference to Exhibit 4(c) to the Company's Form SE, dated May 28,
1992, filed with the Commission)
4.6 Second Supplemental Indenture, dated as of May 6, 1997, between the
Company and The Chase Manhattan Bank, as Trustee (incorporated herein
by reference to Exhibit 4.3 to the Company's Registration Statement
on Form S-4 (Registration No. 333-28523) filed with the Commission on
June 5, 1997)
4.7 Third Supplemental Indenture, dated as of April 22, 1998, between the
Company and The Chase Manhattan Bank, as Trustee (incorporated herein
by reference to Exhibit 4.2 to the Company's Current Report on Form
8-K filed with the Commission on May 12, 1998)
4.8 Form of Subordinated Indenture (a)
4.9 Form of Articles of Amendment for Preferred Stock (a)
4.10 Form of Senior Debt Security (a)
4.11 Form of Subordinated Debt Security (a)
4.12 Form of Deposit Agreement including form of Depositary Receipt (a)
4.13 Form of Debt Securities Warrant Agreement (a)
4.14 Form of Preferred Stock Warrant Agreement (a)
4.15 Form of Common Stock Warrant Agreement (a)
5.1 Opinion of McGuire, Woods, Battle & Boothe LLP as to the validity of
the Securities (a)
8.1 Opinion of McGuire, Woods, Battle & Boothe LLP as to certain tax
matters (a)
12.1 Computation of Ratio of Earnings to Fixed Charges (b)
23.1 Consent of Ernst & Young LLP, Independent Auditors (b)
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants (b)
23.3 Consents of McGuire, Woods, Battle & Boothe LLP (a)
24.1 Power of Attorney of certain officers and directors (b)
25.1 Statement of Eligibility of the Senior Trustee on Form T-1 (a)
25.2 Statement of Eligibility of the Subordinated Trustee on Form T-1 (a)
________________________
(a) To be filed by amendment or as an exhibit to a document to be
incorporated by reference in the Registration Statement in connection
with an offering of Debt Securities, Preferred Stock, Depositary Shares
or Securities Warrants.
(b) Filed herewith.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any acts or events arising after
the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement
(notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
under the Securities Act of 1933 if, in the aggregate, the
changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement);
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
subparagraphs is contained in periodic reports filed by the Company
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant, pursuant to the provisions described under Item 15 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification by it is against public policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Richmond, Commonwealth of Virginia, on the 14th day
of December, 1998.
CSX CORPORATION
By /s/ Gregory R. Weber
-----------------------------------
Gregory R. Weber
Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 14th day of December, 1998.
Signature Title
--------- -----
/s/ John W. Snow* Chairman, President, Chief Executive Officer
- --------------------------------
John W. Snow and Director (Principal Executive Officer)
/s/ Paul R. Goodwin* Executive Vice President-Finance and Chief
- --------------------------------
Paul R. Goodwin Financial Officer (Principal Financial
Officer)
/s/ James L. Ross* Vice President and Controller
- --------------------------------
James L. Ross (Principal Accounting Officer)
/s/ Elizabeth E. Bailey* Director
- --------------------------------
Elizabeth E. Bailey
/s/ H. Furlong Baldwin* Director
- --------------------------------
H. Furlong Baldwin
/s/ Claude S. Brinegar* Director
- --------------------------------
Claude S. Brinegar
/s/ Robert L. Burrus, Jr.* Director
- --------------------------------
Robert L. Burrus, Jr.
/s/ Bruce C. Gottwald* Director
- --------------------------------
Bruce C. Gottwald
<PAGE>
/s/ John R. Hall* Director
- ----------------------------------
John R. Hall
/s/ E. Bradley Jones* Director
- ----------------------------------
E. Bradley Jones
/s/ Robert D. Kunisch* Director
- ----------------------------------
Robert D. Kunisch
Director
- ----------------------------------
James W. McGlothlin
/s/ Southwood J. Morcott* Director
- ----------------------------------
Southwood J. Morcott
/s/ Charles E. Rice* Director
- ----------------------------------
Charles E. Rice
/s/ William C. Richardson* Director
---------------------------------
William C. Richardson
/s/ Frank S. Royal* Director
- ----------------------------------
Frank S. Royal
*By: /s/ Ellen M. Fitzsimmons
-----------------------------
Ellen M. Fitzsimmons
Attorney-in-Fact
<PAGE>
EXHIBITS
- --------
1.1 Form of Underwriting Agreement Basic Provisions for Debt Securities (a)
1.2 Form of Underwriting Agreement Basic Provisions for the other Securities
registered hereby (a)
4.1 Amended and Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3 to the Company's Form 10-K dated
February 15, 1991)
4.2 By-Laws of the Company, as amended (incorporated by reference to Exhibit
3.2 to the Company's Form 10-K dated March 4, 1997)
4.3 Rights Agreement, dated as of May 29, 1998, between CSX and Harris Trust
Company of New York, as Rights Agent, (incorporated by reference to
Exhibit 99.1 to the Company's Registration on Form 8-A filed May 29, 1998
(File No. 2-62373))
4.4 Indenture, dated August 1, 1990, between the Company and The Chase
Manhattan Bank, as Trustee (incorporated herein by reference to the
Company's Form SE, dated September 7, 1990, filed with the Commission)
4.5 First Supplemental Indenture, dated as of June 15, 1991, between the
Company and The Chase Manhattan Bank, as Trustee (incorporated herein by
reference to Exhibit 4(c) to the Company's Form SE, dated May 28, 1992,
filed with the Commission)
4.6 Second Supplemental Indenture, dated as of May 6, 1997, between the
Company and The Chase Manhattan Bank, as Trustee (incorporated herein by
reference to Exhibit 4.3 to the Company's Registration Statement on Form
S-4 (Registration No. 333-28523) filed with the Commission on June 5,
1997)
4.7 Third Supplemental Indenture, dated as of April 22, 1998, between the
Company and The Chase Manhattan Bank, as Trustee (incorporated herein by
reference to Exhibit 4.2 to the Company's Current Report on Form 8-K
filed with the Commission on May 12, 1998)
4.8 Form of Subordinated Indenture (a)
4.9 Form of Articles of Amendment for Preferred Stock (a)
4.10 Form of Senior Debt Security (a)
4.11 Form of Subordinated Debt Security (a)
4.12 Form of Deposit Agreement including form of Depositary Receipt (a)
4.13 Form of Debt Securities Warrant Agreement (a)
4.14 Form of Preferred Stock Warrant Agreement (a)
4.15 Form of Common Stock Warrant Agreement (a)
5.1 Opinion of McGuire, Woods, Battle & Boothe LLP as to the validity of the
Securities (a)
8.1 Opinion of McGuire, Woods, Battle & Boothe LLP as to certain tax matters
(a)
12.1 Computation of Ratio of Earnings to Fixed Charges (b)
23.1 Consent of Ernst & Young LLP, Independent Auditors (b)
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants (b)
23.3 Consents of McGuire, Woods, Battle & Boothe LLP (a)
24.1 Power of Attorney of certain officers and directors (b)
25.1 Statement of Eligibility of the Senior Trustee on Form T-1 (a)
25.2 Statement of Eligibility of the Subordinated Trustee on Form T-1 (a)
________________________
(a) To be filed by amendment or as an exhibit to a document to be incorporated
by reference in the Registration Statement in connection with an offering
of Debt Securities, Preferred Stock, Depositary Shares or Securities
Warrants.
(b) Filed herewith.
<PAGE>
Exhibit 12.1
Computation of Ratio of Earnings to Fixed Charges
CSX Corporation
Ratio of Earnings to Fixed Charges
(Millions of Dollars)
<TABLE>
<CAPTION>
For the Nine
Months Ended For the Fiscal Years Ended
----------------------- -------------------------------------------------------
Sept. 25, Sept. 26, Dec. 26, Dec. 27, Dec. 29, Dec. 30, Dec. 31,
1998 1997 1997 1996 1995 1994 1993
---------- ---------- -------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS:
Earnings Before Income Taxes $629 $873 $1,183 $1,316 $974 $1,006 $633
Interest Expense 367 320 451 249 270 281 298
Amortization of Debt Discount 1 - 4 2 2 3 1
Interest Portion of Fixed Rent 137 146 197 189 184 206 206
Undistributed (Earnings) Loss of Affiliates
Accounted for Using the Equity Method (152) (98) (150) (6) 3 10 7
Minority Interest 24 31 41 42 32 21 14
---------- ---------- -------- --------- --------- -------- ---------
Earnings, as Adjusted $1,006 $1,272 $1,726 $1,792 $1,465 $1,527 $1,159
========== ========== ======== ========= ========= ======== =========
FIXED CHARGES:
Interest Expense 367 320 451 249 270 281 298
Capitalized Interest 7 2 3 5 6 9 6
Amortization of Debt Discount 1 - 4 2 2 3 1
Interest Portion of Fixed Rent 137 146 197 189 184 206 206
---------- ---------- -------- --------- --------- -------- ---------
Fixed Charges $512 $468 $655 $445 $462 $499 $511
========== ========== ======== ========= ========= ======== =========
Ratio of Earnings to Fixed Charges 2.0x 2.7x 2.6x 4.0x 3.2x 3.1x 2.3x
========== ========== ======== ========= ========= ======== =========
</TABLE>
<PAGE>
Exhibit 23.1
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of CSX Corporation and
subsidiaries and to the incorporation by reference therein of our report dated
January 30, 1998, with respect to the consolidated financial statements of CSX
Corporation and subsidiaries included in its Annual Report on Form 10-K for the
year ended December 26, 1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Richmond, Virginia
December 10, 1998
<PAGE>
Exhibit 23.2
Consent of PricewaterhouseCoopers LLP, Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 of CSX Corporation
of our report dated January 19, 1998 relating to the consolidated financial
statements of Conrail Inc. for the year ended December 31, 1997, which appears
in the Annual Report on Form 10-K of CSX Corporation for the fiscal year ended
December 26, 1997.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Philadelphia, PA
December 11, 1998
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned officers
or directors of CSX CORPORATION, a Virginia corporation (the "Corporation"),
hereby constitutes and appoints Ellen M. Fitzsimmons, David D. Owen, Peter J.
Shudtz and Gregory R. Weber, and each of them acting individually, his or her
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign and file (i) one or more Registration Statements on
Form S-3 (or other appropriate form) for filing with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), and any other documents in support thereof or supplemental or
amendatory thereto, with respect to the issuance of debentures, notes, and other
debt obligations, preferred stock, common stock, common stock issuable upon
exchange or conversion of such debt obligations or preferred stock which, by
their terms, are exchangeable for or convertible into common stock, warrants or
rights to purchase debt obligations, preferred stock or common stock, and
depositary shares representing fractional interests in preferred stock of the
Corporation, and (ii) a Registration Statement, and any and all amendments
thereto, relating to the offering covered thereby filed pursuant to Rule 462(b)
under the Securities Act, with the Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary or desirable to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, or their substitutes or his substitute, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney this 9th day of December, 1998.
/s/ John W. Snow /s/ John R. Hall
- ------------------------------- -------------------------------
John W. Snow John R. Hall
/s/ Paul R. Goodwin /s/ E. Bradley Jones
- ------------------------------- -------------------------------
Paul R. Goodwin E. Bradley Jones
/s/ James L. Ross /s/ Robert D. Kunish
- ------------------------------- -------------------------------
James L. Ross Robert D. Kunish
/s/ Elizabeth E. Bailey
- ------------------------------- -------------------------------
Elizabeth E. Bailey James W. McGlothlin
/s/ H. Furlong Baldwin /s/ Southwood J. Morcott
- ------------------------------- -------------------------------
H. Furlong Baldwin Southwood J. Morcott
/s/ Claude S. Brinegar /s/ Charles E. Rice
- ------------------------------- -------------------------------
Claude S. Brinegar Charles E. Rice
/s/ Robert L. Burrus, Jr. /s/ William C. Richardson
- ------------------------------- -------------------------------
Robert L. Burrus, Jr. William C. Richardson
/s/ Bruce C. Gottwald /s/ Frank S. Royal, M.D.
- ------------------------------- -------------------------------
Bruce C. Gottwald Frank S. Royal, M.D.
