AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 1998
REGISTRATION NOS. 333-43811 AND 333-43811-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ENSERCH Corporation
(Exact name of registrant as specified in its charter)
TEXAS 75-0399066
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
ENSERCH CAPITAL I
(Exact name of registrant as specified in its charter)
DELAWARE TO BE APPLIED FOR
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
ENERGY PLAZA, 1601 BRYAN STREET
DALLAS, TEXAS 75201
(214) 812-4600
(Address, including zip code, and telephone number, including
area code, of registrants principal executive offices)
ROBERT A. WOOLDRIDGE, PETER B. TINKHAM ROBERT J. REGER, JR.,
ESQ. EXECUTIVE VICE PRESIDENT ESQ.
WORSHAM, FORSYTHE TEXAS UTILITIES SERVICES INC. REID & PRIEST LLP
& WOOLDRIDGE, L.L.P. ENERGY PLAZA 40 WEST 57TH STREET
ENERGY PLAZA, 1601 1601 BRYAN STREET NEW YORK, NEW YORK
BRYAN STREET DALLAS, TEXAS 75201 10019
Dallas, Texas 75201 (214) 812-4600 (212) 603-2000
(214) 979-3000
(Names, addresses, including zip codes, and telephone numbers,
including area codes, of agents for service)
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IT IS RESPECTFULLY REQUESTED THAT THE COMMISSION SEND COPIES OF
ALL NOTICES, ORDERS AND COMMUNICATIONS TO:
STEPHEN K. WAITE, ESQ.
WINTHROP, STIMSON, PUTNAM & ROBERTS
ONE BATTERY PARK PLAZA
NEW YORK, NEW YORK 10004
(212) 858-1000
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Pursuant to Rule 429 under the Securities Act of 1933, the
combined prospectus filed as a part of this Post-Effective
Amendment No. 1 to the Registration Statement also relates to
$225,000,000 aggregate amount of Debt Securities registered
pursuant to Registration Statement No. 33-52525.
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Information contained herein is subject to completion or
amendment. A post-effective amendment to the registration
statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not
be sold nor may offers to buy be accepted prior to the time the
post-effective amendment to the registration statement becomes
effective. This prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any
sale of these securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any
such jurisdiction.
SUBJECT TO COMPLETION, DATED JANUARY 21, 1998
PROSPECTUS
ENSERCH CORPORATION
DEBT SECURITIES
ENSERCH CAPITAL I
PREFERRED TRUST SECURITIES
fully and unconditionally guaranteed as set forth herein by
ENSERCH CORPORATION
ENSERCH Corporation, a Texas corporation (Company), may
offer, from time to time, unsecured debt securities of the
Company consisting of debentures, notes or other unsecured
evidences of indebtedness (excluding the Junior Subordinated
Debentures described herein, Debt Securities). ENSERCH Capital I
(Trust), a statutory business trust created under the laws of the
State of Delaware, may offer, from time to time, securities
representing preferred undivided beneficial interests in the
assets of the Trust (Preferred Trust Securities). Debt
Securities and Preferred Trust Securities are collectively
referred to herein as "Securities."
The Securities may be offered in amounts, at prices and on
terms to be determined at the time of offering; provided, however,
that (i) the aggregate initial public offering price of Preferred
Trust Securities shall not exceed $275,000,000 and (ii) the
aggregate initial public offering price of all Securities shall
not exceed $500,000,000.
The payment of periodic cash distributions (Distributions)
with respect to Preferred Trust Securities out of moneys held by
the Trust, and payment on liquidation, redemption or otherwise
with respect to Preferred Trust Securities, will be guaranteed by
the Company to the extent described herein (Guarantee). See
DESCRIPTION OF THE GUARANTEE herein. The Company's obligations
under the Guarantee are subordinate and junior in right of
payment to all other liabilities of the Company. The Trust
exists for the sole purposes of issuing the common undivided
beneficial interests in its assets (Common Trust Securities) and
the Preferred Trust Securities (together, the Trust Securities)
and investing the proceeds thereof in a series of Junior
Subordinated Debentures issued by the Company (Junior
Subordinated Debentures) in an aggregate principal amount equal
to the aggregate liquidation preference of Trust Securities. In
connection with the dissolution of the Trust upon the occurrence
of certain events and after satisfaction of liabilities to
creditors of the Trust, if any, as provided by applicable law,
the Junior Subordinated Debentures purchased by the Trust
subsequently may be distributed pro rata to registered owners of
Trust Securities.
Specific terms of each issue of Debt Securities in respect
of which this Prospectus is being delivered (Offered Debt
Securities) will be set forth in one or more Prospectus
Supplements with respect to such Offered Debt Securities. The
applicable Prospectus Supplement will describe, without
limitation and where applicable or additional to the terms in the
Prospectus, the following: the title, aggregate principal amount,
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denomination, maturity, premium, if any, rate of interest (which
may be fixed or variable) or method of calculation thereof, time
of payment of interest, any terms for redemption, any sinking
fund provisions, the initial public offering price, the principal
amounts, if any, to be purchased by underwriters and any other
special terms of the Offered Debt Securities.
Specific terms of the Preferred Trust Securities in respect
of which this Prospectus is being delivered (Offered Trust
Securities) and the terms of the related Junior Subordinated
Debentures held by the Trust will be set forth in a Prospectus
Supplement with respect to such Offered Trust Securities. The
applicable Prospectus Supplement will describe, without
limitation and where applicable or additional to the terms
described in this Prospectus, the following: the title, number of
securities, liquidation amount per security, initial public
offering price, any listing on a securities exchange,
Distribution rate (or method of calculation thereof), dates on
which Distributions shall be payable and dates from which
Distributions shall accrue, voting rights, terms for any
conversion or exchange into other securities, any redemption,
exchange or sinking fund provisions, any other rights,
preferences, privileges, limitations or restrictions relating to
the Offered Trust Securities and the terms upon which the
proceeds of the sale of the Offered Trust Securities shall be
used to purchase a specific series of Junior Subordinated
Debentures of the Company.
The Company or the Trust, as the case may be, may sell the
Securities through underwriters, dealers or agents designated
from time to time, or directly to one or more of a limited number
of purchasers. If any agents of the Company and/or the Trust or
any underwriters or dealers are involved in the sales of the
Offered Debt Securities or Offered Trust Securities, as the case
may be, the names of such agents or such underwriters or dealers
and any applicable commissions or discounts will be set forth in
the related Prospectus Supplement. See PLAN OF DISTRIBUTION.
This Prospectus may not be used to consummate sales of
Securities unless accompanied by a Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is January , 1998.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company, File No. 1-
3183, with the Securities and Exchange Commission (Commission)
pursuant to the Securities Exchange Act of 1934, as amended (1934
Act), are incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December
31, 1996 (1996 10-K).
2. Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997.
3. Current Reports on Form 8-K, dated January 14, 1997,
March 12, 1997, June 5, 1997, July 3, 1997, August 4,
1997, August 6, 1997 and January 6, 1998.
All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act and prior to
the termination of the offering hereunder shall be deemed to be
incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents; provided,
however, that the documents enumerated above or subsequently
filed by the Company pursuant to Section 13(a), 13(c) or 15(d) of
the 1934 Act prior to the filing with the Commission of the
Company's most recent Annual Report on Form 10-K shall not be
incorporated by reference in this Prospectus or be a part hereof
from and after the filing of such Annual Report on Form 10-K. The
documents which are incorporated by reference in this Prospectus
are sometimes hereinafter referred to as the "Incorporated
Documents."
Any statement contained in an Incorporated Document shall be
deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in
any other subsequently filed document which is deemed to be
incorporated by reference herein or in the Prospectus Supplement
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO
EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF
THIS PROSPECTUS HAS BEEN DELIVERED, UPON WRITTEN OR ORAL REQUEST
OF ANY SUCH PERSON, A COPY OF ANY AND ALL OF THE INCORPORATED
DOCUMENTS WHICH HAVE BEEN OR MAY BE INCORPORATED IN THIS
PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS
(UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
INTO SUCH DOCUMENTS). REQUESTS SHOULD BE DIRECTED TO: SECRETARY,
ENSERCH CORPORATION, 1601 BRYAN STREET, DALLAS, TEXAS 75201,
TELEPHONE NUMBER (214) 812-4600.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the 1934 Act and in accordance therewith files reports, proxy and
information statements and other information with the Commission.
Such reports, proxy and information statements and other
information filed by the Company can be inspected and copied at
the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the following Regional Offices of the Commission: Chicago
Regional Office, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and New York Regional Office, 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such
material can also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. In addition, the Commission maintains
a World Wide Web site (http://www.sec.gov) that contains reports,
proxy and information statements, and other information filed by
the Company. Certain Depositary Shares representing fractional
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interests in shares of cumulative preferred stock of the Company
are listed on the New York Stock Exchange, where reports and other
information concerning the Company may be inspected.
Securityholders of the Company may obtain, upon request,
copies of an Annual Report on Form 10-K containing financial
statements as of the end of the most recent fiscal year audited
and reported upon (with an opinion expressed) by independent
auditors.
No separate financial statements of the Trust are included
herein. The Company considers that such financial statements
would not be material to holders of the Securities because the
Company is a reporting company under the 1934 Act and the Trust
has no independent operations, but exists for the sole purpose of
issuing the Trust Securities and holding Junior Subordinated
Debentures as trust assets. The Trust intends not to file
separate reports under the 1934 Act but must apply for and be
granted relief by the Commission to avoid the requirement to file
such reports.
THE COMPANY
The Company was incorporated under the laws of the State of
Texas in 1942 and has perpetual existence under the provisions of
the Texas Business Corporation Act. The Company, a wholly owned
subsidiary of Texas Utilities Company (Texas Utilities), is an
integrated company focused on natural gas. Its major business
operations are natural gas pipeline, processing, marketing and
distribution. Through these business operations, the Company is
engaged in owning and operating interconnected natural gas
transmission lines, underground storage reservoirs, compressor
stations and related properties in Texas; gathering and
processing natural gas to remove impurities and extract liquid
hydrocarbons for sale, and the wholesale and retail marketing of
natural gas in several areas of the United States, and owning and
operating approximately 550 local gas utility distribution
systems in Texas. The principal executive offices of the Company
are located at 1601 Bryan Street, Dallas, Texas 75201; the
telephone number is (214) 812-4600.
On August 5, 1997 (Merger Date), Texas Utilities became
the holding company for both the Company and Texas Energy
Industries, Inc. (TEI). Immediately prior to the transaction
(Merger), the Company's ownership interests in Enserch Exploration,
Inc. and Lone Star Energy Plant Operations, Inc. (together,
the Unacquired Business) were distributed to the holders of the
Company's common stock. Pursuant to the Merger, Lone Star Gas
Company and Lone Star Pipeline Company, the local distribution and
pipeline divisions of the Company, and other businesses, excluding
the Unacquired Businesses, were acquired by Texas Utilities.
TEI is a holding company formerly known as Texas Utilities
Company. The principal subsidiary of TEI is Texas Utilities
Electric Company (TU Electric), which is an electric utility
engaged in the generation, purchase, transmission, distribution
and sale of electric energy wholly within the State of Texas.
The other electric utility subsidiaries of TEI are Southwestern
Electric Service Company, which is engaged in the purchase,
transmission, distribution and sale of electric energy in ten
counties in the eastern and central parts of Texas with a
population estimated at 126,900, and Texas Utilities Australia
Pty. Ltd., owner of Eastern Energy Limited, which is engaged
in the purchase, distribution, marketing and sale of electric
energy to approximately 481,000 customers in the State of
Victoria, Australia. TEI also has three other subsidiaries
which perform specialized functions within the Texas Utilities
system: Texas Utilities Fuel Company owns a natural gas pipeline
system, acquires, stores and delivers fuel gas and provides other
fuel services at cost for the generation of electric energy by
TU Electric; Texas Utilities Mining Company owns, leases and
operates fuel production facilities for the surface mining and
recovery of lignite at cost for the generation of electric energy
by TU Electric; and Texas Utilities Services Inc. provides
financial, accounting, information technology, environmental
services, customer services, personnel, procurement and other
administrative services at cost. In addition, in November 1997,
Texas Utilities acquired Lufkin-Conroe Communications Co. (LCC).
LCC offers long-distance, cellular, internet and other services
and provides local telephone services in Southeast Texas.
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THE TRUST
The Trust is a statutory business trust created under
Delaware law pursuant to (i) a trust agreement executed by the
Company, as depositor for the Trust, The Bank of New York as the
Property Trustee (Property Trustee) and The Bank of New York
(Delaware) as the Delaware Trustee (Delaware Trustee) and a
certain individual who is an employee of the Company or one of
its affiliates as Administrative Trustee (such person and all
other such persons so appointed with respect to the Trust,
hereinafter the Administrative Trustees) and (ii) the filing of a
certificate of trust, with respect to the Trust, with the
Delaware Secretary of State. The trust agreement will be amended
and restated in its entirety (as so amended and restated, the
Trust Agreement) substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.
The Trust Agreement will be qualified as an indenture under the
Trust Indenture Act of 1939, as amended (Trust Indenture Act).
The Trust exists for the exclusive purposes of (i) issuing Trust
Securities, (ii) holding the Junior Subordinated Debentures as
trust assets and (iii) engaging only in other activities
necessary or incidental thereto. All of the Common Trust
Securities will be owned by the Company. The Common Trust
Securities will rank pari passu, and payments will be made
thereon pro rata, with the Preferred Trust Securities, except
that upon the occurrence and continuance of a default under the
Trust Agreement, the rights of the holder of the Common Trust
Securities to payment in respect of Distributions and payments
upon liquidation, redemption and otherwise will be subordinated
to the rights of the holders of the Preferred Trust Securities.
The Company will acquire Common Trust Securities having an
aggregate liquidation preference amount equal to at least 3% of
the total capital of the Trust. The Trust has a term of
approximately 52 years, but may dissolve earlier as provided in
the Trust Agreement. The Trust's business and affairs will be
conducted by its Administrative Trustees. The office of the
Delaware Trustee in the State of Delaware is White Clay Center,
Route 273, Newark, Delaware 19711. The principal place of
business of the Trust is c/o ENSERCH Corporation, Energy Plaza,
1601 Bryan Street, Dallas, Texas 75201.
USE OF PROCEEDS
The Company and/or the Trust, as the case may be, are
offering hereby an aggregate of $275,000,000 of Securities. The
net proceeds to be received by the Trust from the sale of the
Preferred Trust Securities will be used to purchase Junior
Subordinated Debentures of the Company. The net proceeds to be
received by the Company from the sale of the Debt Securities and
the Junior Subordinated Debentures, together with funds from
operations, are expected to be used for the redemption or
repurchase of certain of its outstanding debt and preferred
stock, and may also be used to meet expenditures for its
construction program and for other corporate purposes, including
the repayment of short-term borrowings incurred for similar
purposes and outstanding at the time of any such sale. Proceeds
may be temporarily invested in short-term instruments pending
their application to the foregoing purposes.
Reference is made to the Prospectus Supplement applicable
to each issuance of Offered Debt Securities or Offered Trust
Securities, as the case may be.
HISTORICAL AND PRO FORMA RATIOS OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
On the Merger Date, the Company became a wholly-owned
subsidiary of Texas Utilities. Immediately prior to the Merger
Date, the Company distributed to its common shareholders its
interests in the Unacquired Businesses. Texas Utilities
accounted for its acquisition of the Company as a purchase. As a
result, the Company has made certain purchase accounting
adjustments which are reflected in ratios for periods subsequent
to the Merger Date. Historical ratios for periods ending prior
to the Merger Date were prepared using the Company's historical
basis of accounting. Amounts for the period from January 1, 1997
through the Merger Date have been restated to reflect the
Unacquired Businesses as discontinued operations.
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Adjusted ratios are based on unaudited "pro forma"
financial information, which is included in the Current Report on
Form 8-K of the Company dated January 6, 1998 which is
incorporated herein by reference. The "pro forma" financial
information gives effect to (i) the distribution by the Company
of its interests in the Unacquired Businesses and (ii) the
purchase accounting adjustments as a result of the acquisition of
the Company by Texas Utilities, all on a pro forma basis as if
the events had occurred at the beginning of each period
presented.
The ratio of earnings to fixed charges for each of the
years ended December 31, 1994, 1995 and 1996 was 1.09, 1.06 and
1.44. For each of the years ended December 31, 1992 and 1993,
the period from January 1, 1997 through the Merger Date and the
period from the Merger Date through September 30, 1997, fixed
charges exceeded earnings by $0.2 million, $8.3 million, $19.0
million and $19.8 million, respectively. The ratio of earnings
to fixed charges, as adjusted, for the year ended December 31,
1996 was 1.24. For the nine months ended September 30, 1997, as
adjusted, fixed charges exceeded earnings by $17.3 million.
The ratio of earnings to combined fixed charges and
preferred dividends for the year ended December 31, 1996 was
1.24. For each of the years ended December 31, 1992 through
1995, the period from January 1, 1997 through the Merger Date and
the period from the Merger Date through September 30, 1997,
combined fixed charges and preferred dividends exceeded earnings
by $13.2 million, $21.0 million, $3.7 million, $6.3 million,
$27.7 million and $22.5 million, respectively. The ratio of
earnings to fixed charges, as adjusted, for the year ended
December 31, 1996, was 1.01. For the nine months ended September
30, 1997, as adjusted, combined fixed charges and preferred
dividends exceeded earnings by 40.2 million.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued in one or more series
under an indenture or indentures (each an Indenture) between the
Company and The Bank of New York or other financial institutions
to be named, as Trustee (each an Indenture Trustee), a form of
which is filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. The following description of
the terms of the Debt Securities does not purport to be complete
and is qualified in its entirety by reference to (i) the
respective Indenture and (ii) one or more officer's certificates
establishing the Debt Securities to which a form of Debt Security
will be attached. Whenever particular provisions or defined
terms in an Indenture are referred to under this DESCRIPTION OF
DEBT SECURITIES, such provisions or defined terms are
incorporated by reference herein.
General. Each Indenture will provide for the issuance of
Debt Securities in an unlimited amount from time to time. All
Debt Securities will be unsecured obligations of the Company.
All Debt Securities issued under an Indenture will rank equally
and ratably with all other Debt Securities issued under such
Indenture. An Indenture will not limit other unsecured debt.
The Company's financial statements included in the Incorporated
Documents show the amount of such other debt at the date of such
statements. See the Prospectus Supplement applicable to each
series of Offered Debt Securities.
The applicable Prospectus Supplement or Prospectus
Supplements will describe the following terms of the Debt
Securities: (1) the title of the Debt Securities; (2) any limit
upon the aggregate principal amount of the Debt Securities; (3)
the date or dates on which the principal of the Debt Securities
is payable or the method of determination thereof; (4) the rate
or rates, if any, or the method by which such rate will be
determined, at which the Debt Securities will bear interest, if
any, the date or dates from which any such interest will accrue,
the Interest Payment Dates on which any such interest will be
payable and the Regular Record Date for any interest payable on
any Interest Payment Date and the Person or Persons to whom
interest on such Debt Securities will be payable on any Interest
Payment Date, if other than the Persons in whose names such Debt
Securities are registered at the close of business on the Regular
Record Date for such interest; (5) the place or places where,
subject to the terms of the respective Indenture as described
below under "Payment and Paying Agents," the principal of and
premium, if any, and interest on the Debt Securities will be
payable and where, subject to the terms of such Indenture as
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described below under "Registration and Transfer," the Debt
Securities may be presented for registration of transfer or
exchange and the place or places where notices and demands to or
upon the Company in respect of the Debt Securities and such
Indenture may be served; the Security Registrar for such Debt
Securities; and, if such is the case, that the principal of such
Debt Securities will be payable without presentment or surrender
thereof; (6) the period or periods within, or date or dates on,
which, the price or prices at which and the terms and conditions
upon which Debt Securities may be redeemed, in whole or in part,
at the option of the Company; (7) the obligation or obligations,
if any, of the Company to redeem or purchase any of the Debt
Securities pursuant to any sinking fund or other mandatory
redemption provisions or at the option of the Holder thereof, and
the period or periods within which, or the date or dates on
which, the price or prices at which and the terms and conditions
upon which the Debt Securities will be redeemed or purchased, in
whole or in part, pursuant to such obligation, and applicable
exceptions to the requirements of a notice of redemption in the
case of mandatory redemption or redemption at the option of the
Holder; (8) the denominations in which any Debt Securities will
be issuable, if other than denominations of $1,000 and any
integral multiple thereof; (9) the currency or currencies,
including composite currencies in which the principal of or any
premium or interest on the Debt Securities will be payable (if
other than in Dollars); (10) if the principal of or any premium
or interest on the Debt Securities is to be payable, at the
election of the Company or the Holder thereof, in a coin or
currency other than that in which the Debt Securities are stated
to be payable, the period or periods within which and the terms
and conditions upon which, such election is to be made; (11) if
the principal of or premium or interest on the Debt Securities is
to be payable, or is to be payable at the election of the Company
or a Holder thereof, in securities or other property, the type
and amount of such securities or other property, or the method or
other means by which such amount will be determined, and the
period or periods within which, and the terms and conditions upon
which, any such election may be made; (12) if the amount payable
in respect of principal of or any premium or interest on the Debt
Securities may be determined with reference to an index or other
fact or event ascertainable outside of the respective Indenture,
the manner in which such amounts will be determined; (13) if
other than the principal amount thereof, the portion of the
principal amount of the Debt Securities which will be payable
upon declaration of acceleration of the Maturity thereof; (14)
any Events of Default, in addition to those specified in the
respective Indenture, with respect to the Debt Securities and any
covenants of the Company for the benefit of the Holders of the
Debt Securities, in addition to those specified in such
Indenture; (15) the terms, if any, pursuant to which the Debt
Securities may be converted into or exchanged for shares of
capital stock or other securities of the Company or any other
Person; (16) the obligations or instruments, if any, which will
be considered to be Eligible Obligations in respect of such Debt
Securities denominated in a currency other than Dollars or in a
composite currency, and any additional or alternative provisions
for the reinstatement of the Company's indebtedness in respect of
such Debt Securities after the satisfaction and discharge
thereof; (17) if the Debt Securities are to be issued in global
form, (i) any limitations on the rights of the Holder or Holders
of such Debt Securities to transfer or exchange the same or to
obtain the registration of transfer thereof, (ii) any limitations
on the rights of the Holder or Holders thereof to obtain
certificates therefor in definitive form in lieu of temporary
form and (iii) any and all other matters incidental to such Debt
Securities; (18) if the Debt Securities are to be issuable as
bearer securities any and all matters incidental thereto; (19) to
the extent not addressed in item (17) above, any limitations on
the rights of the Holders of the Debt Securities to transfer or
exchange the Debt Securities or to obtain the registration of
transfer thereof, and if a service charge will be made for the
registration of transfer or exchange of the Debt Securities, the
amount or terms thereof; (20) any exceptions to the provisions
governing payments due on legal holidays or any variations in the
definition of Business Day with respect to such Debt Securities;
and (21) any other terms of the Debt Securities, not inconsistent
with the provisions of the respective Indenture (Indenture,
Section 301).
Debt Securities may be sold at a discount below their
principal amount. Certain special United States federal income
tax considerations, if any, applicable to Debt Securities sold at
an original issue discount may be described in the applicable
Prospectus Supplement. In addition, certain special United States
federal income tax or other considerations, if any, applicable to
any Debt Securities which are denominated in a currency or
currency unit other than Dollars may be described in the
applicable Prospectus Supplement.
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Except as may otherwise be described in the applicable
Prospectus Supplement, the covenants contained in an Indenture
will not afford Holders of Debt Securities protection in the
event of a highly-leveraged transaction involving the Company.
Payment and Paying Agents. Except as may be provided in the
applicable Prospectus Supplement, interest, if any, on each Debt
Security payable on each Interest Payment Date will be paid to
the Person in whose name such Debt Security is registered as of
the close of business on the Regular Record Date relating to such
Interest Payment Date; provided, however, that interest payable
at maturity (whether at stated maturity, upon redemption or
otherwise, herein a Maturity) will be paid to the Person to whom
principal is paid. However, if there has been a default in the
payment of interest on any Debt Security, such defaulted interest
may be payable to the Holder of such Debt Security as of the
close of business on a date selected by the respective Indenture
Trustee which is not more than 15 days and not less than 10 days
prior to the date proposed by the Company for payment on such
defaulted interest or in any other lawful manner not inconsistent
with the requirements of any securities exchange on which such
Debt Security may be listed, if such Indenture Trustee deems such
manner of payment practicable (Indenture, Section 307).
Unless otherwise specified in the applicable Prospectus
Supplement, the principal of and premium, if any, and interest
on, the Debt Securities at Maturity will be payable upon
presentation of the Debt Securities at the corporate trust office
of The Bank of New York, in The City of New York, as Paying Agent
for the Company. The Company may change the Place of Payment on
the Debt Securities, may appoint one or more additional Paying
Agents (including the Company) and may remove any Paying Agent,
all at its discretion (Indenture, Section 602).
Registration and Transfer. Unless otherwise specified in
the applicable Prospectus Supplement, the transfer of Debt
Securities may be registered, and Debt Securities may be
exchanged for other Debt Securities of the same series or
tranche, of authorized denominations and of like tenor and
aggregate principal amount, at the corporate trust office of The
Bank of New York in The City of New York, as Security Registrar
for the Debt Securities. The Company may change the place for
registration of transfer and exchange of the Debt Securities and
may designate one or more additional places for such registration
and exchange, all at its discretion. Except as otherwise provided
in the applicable Prospectus Supplement, no service charge will
be made for any transfer or exchange of the Debt Securities, but
the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of the
Debt Securities. The Company will not be required to execute or
to provide for the registration of transfer of, or the exchange
of, (a) any Debt Security during a period of 15 days prior to
giving any notice of redemption or (b) any Debt Security selected
for redemption in whole or in part, except the unredeemed portion
of any Debt Security being redeemed in part (Indenture, Section
305).
Defeasance. The principal amount of any series of Debt
Securities issued under an Indenture will be deemed to have been
paid for purposes of such Indenture and the entire indebtedness
of the Company in respect thereof will be deemed to have been
satisfied and discharged if there shall have been irrevocably
deposited with the respective Indenture Trustee or any paying
agent, in trust: (a) money in an amount which will be
sufficient, or (b) in the case of a deposit made prior to the
maturity of the Debt Securities, Eligible Obligations (as defined
below), the principal of and the interest on which when due,
without any regard to reinvestment thereof, will provide moneys
which, together with the money, if any, deposited with or held by
such Indenture Trustee, will be sufficient, or (c) a combination
of (a) and (b) which will be sufficient, to pay when due the
principal of and premium, if any, and interest, if any, due and
to become due on the Debt Securities of such series that are
Outstanding. For this purpose, Eligible Obligations include
direct obligations of, or obligations unconditionally guaranteed
by, the United States of America entitled to the benefit of the
full faith and credit thereof and certificates, depositary
receipts or other instruments which evidence a direct ownership
interest in such obligations or in any specific interest or
principal payments due in respect thereof and which do not
contain provisions permitting the redemption or other prepayment
thereof at the option of the issuer thereof (Indenture, Section
701).
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Consolidation, Merger, and Sale of Assets. Under the terms
of an Indenture, the Company may not consolidate with or merge
into any other entity or convey, transfer or lease its properties
and assets substantially as an entirety to any entity, unless
(i) the entity formed by such consolidation or into which the
Company is merged or the entity which acquires by conveyance or
transfer, or which leases, the property and assets of the Company
substantially as an entirety shall be a entity organized and
validly existing under the laws of any domestic jurisdiction and
such entity expressly assumes the Company's obligations on all
Debt Securities and under such Indenture, (ii) immediately after
giving effect to the transaction, 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
(iii) the Company shall have delivered to the respective
Indenture Trustee an Officer's Certificate and an Opinion of
Counsel as provided in such Indenture (Indenture, Section 1101).
The terms of an Indenture will not restrict the Company in a
merger in which the Company is the surviving entity.
Events of Default. Each of the following will constitute an
Event of Default under the Indenture with respect to the Debt
Securities of any series: (a) failure to pay any interest on the
Debt Securities of such series within 30 days after the same
becomes due and payable; (b) failure to pay principal or premium,
if any, on the Debt Securities of such series when due and
payable; (c) failure to perform, or breach of, any other covenant
or warranty of the Company in such Indenture (other than a
covenant or warranty of the Company in such Indenture solely for
the benefit of one or more series of Debt Securities other than
such series) for 90 days after written notice to the Company by
the respective Indenture Trustee, or to the Company and such
Indenture Trustee by the Holders of at least 33% in principal
amount of the Debt Securities of such series Outstanding under
such Indenture as provided in such Indenture; (d) the entry by a
court having jurisdiction in the premises of (1) a decree or
order for relief in respect of the Company in an involuntary case
or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or (2) a decree
or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition by one or more Persons
other than the Company seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official for the Company or for any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and any such decree or order for relief or any such
other decree or order shall have remained unstayed and in effect
for a period of 90 consecutive days; and (e) the commencement by
the Company of a voluntary case or proceeding under any
applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in
respect of the Company in a case or other similar proceeding or
to the commencement of any bankruptcy or insolvency case or
proceeding against it under any applicable federal or state law
or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official
of the Company of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or
the admission by it in writing of its inability to pay its debts
generally as they become due, or the authorization of such action
by the Board of Directors (Indenture, Section 801).
An Event of Default with respect to the Debt Securities of a
particular series may not necessarily constitute an Event of
Default with respect to Debt Securities of any other series
issued under the same Indenture or Debt Securities issued under
any other Indenture.
Remedies. If an Event of Default due to the default in
payment of principal of or interest on any series of Debt
Securities or due to the default in the performance or breach of
any other covenant or warranty of the Company applicable to the
Debt Securities of such series but not applicable to all series
of Debt Securities issued under the same Indenture occurs and is
continuing, then either the respective Indenture Trustee or the
Holders of not less than 33% in principal amount of the
outstanding Debt Securities of such series may declare the
principal of all of the Debt Securities of such series and
interest accrued thereon to be due and payable immediately. If
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<PAGE>
an Event of Default due to the default in the performance of any
other covenants or agreements in an Indenture applicable to all
Outstanding Debt Securities under such Indenture or due to
certain events of bankruptcy, insolvency or reorganization of the
Company has occurred and is continuing, either the respective
Indenture Trustee or the Holders of not less than 33% in
principal amount of all such Outstanding Debt Securities,
considered as one class, and not the Holders of the Debt
Securities of any one of such series, may make such declaration
of acceleration.
At any time after the declaration of acceleration with
respect to the Debt Securities of any series has been made and
before a judgment or decree for payment of the money due has been
obtained, the Event or Events of Default giving rise to such
declaration of acceleration will, without further act, be deemed
to have been waived, and such declaration and its consequences
will, without further act, be deemed to have been rescinded and
annulled, if:
(a) the Company has paid or deposited with the respective
Indenture Trustee a sum sufficient to pay
(1) all overdue interest on all Debt Securities of
such series;
(2) the principal of and premium, if any, on any Debt
Securities of such series which have become due otherwise
than by such declaration of acceleration and interest
thereon at the rate or rates prescribed therefor in such
Debt Securities;
(3) interest upon overdue interest at the rate or
rates prescribed therefor in such Debt Securities, to the
extent that payment of such interest is lawful; and
(4) all amounts due to such Indenture Trustee under
the respective Indenture; and
(b) any other Event or Events of Default with respect to
Debt Securities of such series, other than the nonpayment of the
principal of the Debt Securities of such series which has become
due solely by such declaration of acceleration, have been cured
or waived as provided in such Indenture (Indenture, Section 802).
There is no automatic acceleration, even in the event of
bankruptcy, insolvency or reorganization of the Company.
Subject to the provisions of an Indenture relating to the
duties of the Indenture Trustee in case an Event of Default shall
occur and be continuing, the respective Indenture Trustee will be
under no obligation to exercise any of its rights or powers under
such Indenture at the request or direction of any of the Holders,
unless such Holders shall have offered to such Indenture Trustee
reasonable security or indemnity (Indenture, Section 903). If an
Event of Default has occurred and is continuing in respect of a
series of Debt Securities, subject to such provisions for the
indemnification of such Indenture Trustee, the Holders of a
majority in principal amount of the Outstanding Debt Securities
of such series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to
such Indenture Trustee, or exercising any trust or power
conferred on such Indenture Trustee, with respect to the Debt
Securities of such series; provided, however, that if an Event of
Default occurs and is continuing with respect to more than one
series of Debt Securities under an Indenture, the Holders of a
majority in aggregate principal amount of the Outstanding Debt
Securities of all such series, considered as one class, will have
the right to make such direction, and not the Holders of the Debt
Securities of any one of such series; and provided, further, that
such direction will not be in conflict with any rule of law or
with such Indenture (Indenture, Section 812).
No Holder of Debt Securities of any series will have any
right to institute any proceeding with respect to the respective
Indenture, or for the appointment of a receiver or a trustee, or
for any other remedy thereunder, unless (i) such Holder has
previously given to the respective Indenture Trustee written
notice of a continuing Event of Default with respect to the Debt
Securities of such series, (ii) the Holders of not less than a
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<PAGE>
majority in aggregate principal amount of the Outstanding Debt
Securities of all series under such Indenture in respect of which
an Event of Default shall have occurred and be continuing,
considered as one class, have made written request to such
Indenture Trustee, and such Holder or Holders have offered
reasonable indemnity to such Indenture Trustee to institute such
proceeding in respect of such Event of Default in its own name as
trustee and (iii) such Indenture Trustee has failed to institute
any proceeding, and has not received from the Holders of a
majority in aggregate principal amount of the Outstanding Debt
Securities of such series a direction inconsistent with such
request, within 60 days after such notice, request and offer
(Indenture, Section 807). However, such limitations do not apply
to a suit instituted by a Holder of a Debt Security for the
enforcement of payment of the principal of or any premium or
interest on such Debt Security on or after the applicable due
date specified in such Debt Security (Indenture, Section 808).
The Company will be required to furnish to each Indenture
Trustee annually a statement by an appropriate officer as to such
officer's knowledge of the Company's compliance with all
conditions and covenants under the respective Indenture, such
compliance to be determined without regard to any period of grace
or requirement of notice under such Indenture (Indenture, Section
606).
Modification and Waiver. Without the consent of any Holder
of Debt Securities, the Company and the Indenture Trustee under
an Indenture may enter into one or more supplemental indentures
for any of the following purposes: (a) to evidence the assumption
by any permitted successor to the Company of the covenants of the
Company in the such Indenture and in any of the Debt Securities
Outstanding under such Indenture; or (b) to add one or more
covenants of the Company or other provisions for the benefit of
all Holders or for the benefit of the Holders of, or to remain in
effect only so long as there shall be Outstanding, Debt
Securities of one or more specified series, or one or more
specified Tranches thereof, or to surrender any right or power
conferred upon the Company by such Indenture; or (c) to add any
additional Events of Default with respect to Outstanding Debt
Securities; or (d) to change or eliminate any provision of such
Indenture or to add any new provision to such Indenture, provided
that if such change, elimination or addition will adversely
affect the interests of the Holders of Debt Securities of any
series or Tranche in any material respect, such change,
elimination or addition will become effective with respect to
such series or Tranche only (1) when the consent of the Holders
of Debt Securities of such series or Tranche has been obtained in
accordance with such Indenture, or (2) when no Debt Securities of
such series or Tranche remain Outstanding under such Indenture;
or (e) to provide collateral security for all but not part of the
Debt Securities issued under such Indenture; or (f) to establish
the form or terms of Debt Securities of any other series or
Tranche as permitted by such Indenture; or (g) to provide for the
authentication and delivery of bearer securities and coupons
appertaining thereto representing interest, if any, thereon and
for the procedures for the registration, exchange and replacement
thereof and for the giving of notice to, and the solicitation of
the vote or consent of, the Holders thereof, and for any and all
other matters incidental thereto; or (h) to evidence and provide
for the acceptance of appointment of a successor Indenture
Trustee or co-trustee with respect to the Debt Securities of one
or more series and to add to or change any of the provisions of
such Indenture as shall be necessary to provide for or to
facilitate the administration of the trusts under such Indenture
by more than one trustee; or (i) to provide for the procedures
required to permit the utilization of a noncertificated system of
registration for the Debt Securities of all or any series or
Tranche; or (j) to change any place where (1) the principal of
and premium, if any, and interest, if any, on all or any series
or Tranche of Debt Securities shall be payable, (2) all or any
series or Tranche of Debt Securities may be surrendered for
registration of transfer or exchange and (3) notices and demands
to or upon the Company in respect of Debt Securities and such
Indenture may be served; or (k) to cure any ambiguity or
inconsistency or to add or change any other provisions with
respect to matters and questions arising under an Indenture,
provided such changes or additions shall not adversely affect the
interests of the Holders of Debt Securities of any series or
Tranche Outstanding under such Indenture in any material respect
(Indenture, Section 1201).
The Holders of a majority in aggregate principal amount of
the Debt Securities of all series then Outstanding under an
Indenture may waive compliance by the Company with certain
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<PAGE>
restrictive provisions of such Indenture (Indenture, Section
607). The Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of any series may waive
any past default under an Indenture with respect to such series,
except a default in the payment of principal, premium, or
interest and certain covenants and provisions of such Indenture
that cannot be modified or be amended without the consent of the
Holder of each Outstanding Debt Security of such series affected
(Indenture, Section 813).
Without limiting the generality of the foregoing, if the
Trust Indenture Act is amended after the date of an Indenture in
such a way as to require changes to such Indenture or the
incorporation therein of additional provisions or so as to permit
changes to, or the elimination of, provisions which, at the date
of such Indenture or at any time thereafter, were required by the
Trust Indenture Act to be contained in such Indenture, such
Indenture will be deemed to have been amended so as to conform to
such amendment of the Trust Indenture Act or to effect such
changes, additions or elimination, and the Company and the
Indenture Trustee may, without the consent of any Holders, enter
into one or more supplemental indentures to evidence or effect
such amendment (Indenture, Section 1201).
Except as provided above, the consent of the Holders of a
majority in aggregate principal amount of the Debt Securities of
all series then Outstanding under an Indenture, considered as one
class, is required for the purpose of adding any provisions to,
or changing in any manner, or eliminating any of the provisions
of, such Indenture or modifying in any manner the rights of the
Holders of such Debt Securities under such Indenture pursuant to
one or more supplemental indentures; provided, however, that if
less than all of the series of Debt Securities Outstanding under
an Indenture are directly affected by a proposed supplemental
indenture, then the consent only of the Holders of a majority in
aggregate principal amount of Outstanding Debt Securities of all
series under such Indenture so directly affected, considered as
one class, shall be required; and provided, further, that if the
Debt Securities of any series shall have been issued in more than
one Tranche and if the proposed supplemental indenture shall
directly affect the rights of the Holders of Debt Securities of
one or more, but less than all, of such Tranches, then the
consent only of the Holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of all Tranches of such
series so directly affected, considered as one class, will be
required; and provided further, that no such amendment or
modification may (a) change the Stated Maturity of the principal
of, or any installment of principal of or interest on, any Debt
Security, or reduce the principal amount thereof or the rate of
interest thereon (or the amount of any installment of interest
thereon) or change the method of calculating such rate or reduce
any premium payable upon the redemption thereof, or change the
coin or currency (or other property) in which any Debt Security
or any premium or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment
on or after the Stated Maturity of any Debt Security (or, in the
case of redemption, on or after the redemption date) without, in
any such case, the consent of the Holder of such Debt Security,
(b) reduce the percentage in principal amount of the Outstanding
Debt Securities of any series, or any Tranche thereof, the
consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with any provision of such
Indenture or any default thereunder and its consequences, or
reduce the requirements for quorum or voting, without, in any
such case, the consent of the Holder of each outstanding Debt
Security of such series or Tranche, or (c) modify certain of the
provisions of such Indenture relating to supplemental indentures,
waivers of certain covenants and waivers of past defaults with
respect to the Debt Securities of any series or Tranche, without
the consent of the Holder of each Outstanding Debt Security under
such Indenture affected thereby. A supplemental indenture which
changes or eliminates any covenant or other provision of an
Indenture which has expressly been included solely for the
benefit of one or more particular series of Debt Securities or
one or more Tranches thereof, or modifies the rights of the
Holders of Debt Securities of such series with respect to such
covenant or other provision, will be deemed not to affect the
rights under such Indenture of the Holders of the Debt Securities
of any other series or Tranche (Indenture, Section 1202).
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 under such Indenture, or
whether a quorum is present at the meeting of the Holders of Debt
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<PAGE>
Securities, Debt Securities owned by the Company or any other
obligor upon the Debt Securities or any affiliate of the Company
or of such other obligor (unless the Company, such affiliate or
such obligor owns all Debt Securities Outstanding under such
Indenture, determined without regard to this provision) shall be
disregarded and deemed not to be Outstanding.
If the Company shall solicit from Holders any request,
demand, authorization, direction, notice, consent, election,
waiver or other Act, the Company may, at its option, fix in
advance a record date for the determination of Holders entitled
to give such request, demand, authorization, direction, notice,
consent, waiver or other such Act, but the Company shall have no
obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record
date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for the purposes
of determining whether Holders of the requisite proportion of the
Outstanding Debt Securities have authorized or agreed or
consented to such request, demand, authorization, direction,
notice, consent, waiver or other Act, and for that purpose the
Outstanding Debt Securities shall be computed as of the record
date. Any request, demand, authorization, direction, notice,
consent, election, waiver or other Act of a Holder shall bind
every future Holder of the same Debt Security and the Holder of
every Debt Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by an Indenture
Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Debt Security
(Indenture, Section 104).
Resignation of an Indenture Trustee. An Indenture Trustee
may resign at any time by giving written notice thereof to the
Company or may be removed at any time with respect to the
respective Indenture by Act of the Holders of a majority in
principal amount of all series of Debt Securities then
Outstanding under such Indenture delivered to such Indenture
Trustee and the Company. No resignation or removal of an
Indenture Trustee and no appointment of a successor trustee will
become effective until the acceptance of appointment by a
successor trustee in accordance with the requirements of the
respective Indenture. So long as no Event of Default or event
which, after notice or lapse of time, or both, would become an
Event of Default has occurred and is continuing and except with
respect to an Indenture Trustee appointed by Act of the Holders,
if the Company has delivered to the Indenture Trustee a
resolution of its Board of Directors appointing a successor
trustee and such successor has accepted such appointment in
accordance with the terms of the respective Indenture, such
Indenture Trustee will be deemed to have resigned and the
successor will be deemed to have been appointed as trustee in
accordance with such Indenture (Indenture, Section 910).
Notices. Notices to Holders of Debt Securities will be
given by mail to the addresses of such Holders as they may appear
in the security register therefor (Indenture, Section 106).
Title. The Company, the respective Indenture Trustee, and
any agent of the Company or such Indenture Trustee, may treat the
Person in whose name Debt Securities are registered as the
absolute owner thereof (whether or not such Debt Securities may
be overdue) for the purpose of making payments and for all other
purposes irrespective of notice to the contrary (Indenture,
Section 308).
Governing Law. Each Indenture and the Debt Securities will
be governed by, and construed in accordance with, the laws of the
State of New York (Indenture, Section 112).
Regarding the Indenture Trustee. The Indenture Trustee
under the first Indenture will be The Bank of New York. In
addition to acting as Indenture Trustee, The Bank of New York
acts, and may act, as trustee under various indentures and trusts
of the Company and its affiliates including, but not limited to,
the Trust Agreement, Subordinated Indenture and Guarantee, each
as described herein. The Company and its affiliates also
maintain various banking and trust relationships with The Bank of
New York.
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DESCRIPTION OF THE PREFERRED TRUST SECURITIES
Pursuant to the terms of the Trust Agreement for the Trust,
the Administrative Trustees on behalf of the Trust will issue
Preferred Trust Securities and Common Trust Securities. The
Preferred Trust Securities will represent preferred undivided
beneficial interests in the assets of the Trust and will entitle
the holders thereof to a preference over the Common Trust
Securities of the Trust in certain circumstances with respect to
distributions and amounts payable on redemption or liquidation,
as well as other benefits as described in the Trust Agreement.
The Trust Agreement will be qualified as an indenture under the
Trust Indenture Act, and a form of the Trust Agreement has been
filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. The following summary of certain
provisions of the Trust Agreement does not purport to be complete
and is subject to, and is qualified in its entirety by reference
to, the provisions of the Trust Agreement, including the
definitions therein of certain terms, and by reference to the
Trust Indenture Act. Wherever particular sections or defined
terms of the Trust Agreement are referred to, such sections or
defined terms are incorporated herein by reference.
General. The terms of the Common Trust Securities issued by
the Trust will be substantially identical to the terms of the
Preferred Trust Securities issued by the Trust, and the Common
Trust Securities will rank pari passu, and payments will be made
thereon pro rata, with the Preferred Trust Securities except
that, upon an event of default under the Trust Agreement, the
rights of the Holder of the Common Trust Securities to payment in
respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of
the Holders of the Preferred Trust Securities. Except in certain
limited circumstances, the Common Trust Securities will also
carry the right to vote to appoint, remove or replace any of the
Trustees of the Trust. All of the Common Trust Securities of the
Trust initially will be owned by the Company. The Common Trust
Securities will not be transferable by the Company except in
connection with a consolidation, merger or transfer or lease of
assets that would be permitted under the Subordinated Indenture
(as defined herein). See DESCRIPTION OF JUNIOR SUBORDINATED
DEBENTURES -- "Consolidation, Merger, and Sale of Assets."
Junior Subordinated Debentures in an aggregate principal
amount equal to the aggregate liquidation amount of the Trust
Securities will be held by the Property Trustee in trust for the
benefit of the Holders of the Trust Securities. (Section 2.09).
The aggregate of the following rights and obligations with
respect to the Preferred Trust Securities constitutes a full and
unconditional guarantee by the Company of payments due on the
Preferred Trust Securities: the obligations of the Company under
the related Junior Subordinated Debentures to pay principal and
interest, the obligations of the Company under the Junior
Subordinated Debentures and pursuant to the Trust Agreement to
pay amounts equal to all expenses of the Trust, the obligations
of the Company under the Guarantee and the rights of the Holders
of Preferred Trust Securities to directly enforce the Company's
obligations with respect to the Junior Subordinated Debentures.
See DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES --
"Additional Interest" and DESCRIPTION OF THE GUARANTEE -- "Events
of Default."
Distributions. It is anticipated that the income of the
Trust available for Distribution to the Holders of the Trust
Securities will be limited to payments on the Junior Subordinated
Debentures which the Trust will purchase with the proceeds of the
Trust Securities. See DESCRIPTION OF THE JUNIOR SUBORDINATED
DEBENTURES. If the Company does not make interest payments on
the Junior Subordinated Debentures held by the Trust, the
Property Trustee will not have funds available to pay
Distributions on the Preferred Trust Securities. The payment of
Distributions (if and to the extent the Trust has sufficient
funds available for the payment of such Distributions) is
guaranteed on a limited basis by the Company as set forth herein
under DESCRIPTION OF THE GUARANTEE.
If so provided in the applicable Prospectus Supplement and
subject to the terms and conditions specified therein, the
Company has the right under the indenture (Subordinated
Indenture), between the Company and The Bank of New York, as
trustee (Debenture Trustee), pursuant to which the Company will
issue the Junior Subordinated Debentures to extend the interest
payment period from time to time on the Junior Subordinated
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Debentures for one or more periods (each an Extension Period),
with the consequence that Distributions on the Trust Securities
would be deferred (but would continue to accrue with interest
payable on unpaid Distributions at a specified rate) by the Trust
during any such Extension Period. In the event that the Company
exercises this right, during such period, or during any period in
which the Company is in default under the Guarantee or with
respect to payments on the Junior Subordinated Debentures, the
Company may not declare or pay any dividend or distribution on
(other than dividends paid in shares of Common Stock of the
Company), or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its capital stock, or make any
guarantee payments with respect to the foregoing or redeem any
indebtedness that is pari passu with the Junior Subordinated
Debentures. Any Extension Period with respect to payment of
interest on the Junior Subordinated Debentures, or any extended
interest payment period in respect of other securities issued
under the Subordinated Indenture (collectively with the Junior
Subordinated Debentures, the Subordinated Indenture Securities)
or on any similar securities will apply to all such securities
and will also apply to Distributions with respect to the Trust
Securities and all other securities with terms substantially the
same as the Trust Securities. Prior to the termination of any
such Extension Period, the Company may further extend the
interest payment period, provided that such Extension Period
together with all such previous and further extensions thereof
may not exceed 20 consecutive quarters or extend beyond the
maturity of the Junior Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all
amounts then due, the Company may select a new extended interest
payment period, subject to the foregoing requirements. See
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES -- "Interest"
and "Option to Extend Interest Payment Period." The Holders of
Preferred Trust Securities do not have a right to appoint a
special representative in the event that the Company defers
interest on the Junior Subordinated Debentures.
Redemption of Trust Securities. Upon the repayment of the
Junior Subordinated Debentures, whether at maturity or upon
earlier redemption as provided in the Subordinated Indenture, the
proceeds from such repayment shall be applied by the Property
Trustee to redeem a Like Amount (as defined herein) of Trust
Securities, upon not less than 30 nor more than 60 days' notice,
at the Redemption Price plus accrued and unpaid Distributions.
See DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES --
"Optional Redemption."
Like Amount means (i) with respect to a redemption of Trust
Securities, an amount of Trust Securities having a liquidation
value equal to the principal amount of Junior Subordinated
Debentures to be contemporaneously redeemed in accordance with
the Subordinated Indenture, the proceeds of which are to be used
to pay the Redemption Price, plus accrued and unpaid
Distributions, of the Trust Securities and (ii) with respect to a
distribution of Junior Subordinated Debentures to Holders of
Trust Securities in connection with the bankruptcy, dissolution
or liquidation of the Trust, Junior Subordinated Debentures
having a principal amount equal to the liquidation value of the
Trust Securities of the Holders to which the Junior Subordinated
Debentures are distributed.
Redemption Procedures. Trust Securities redeemed on each
Redemption Date shall be redeemed at the Redemption Price plus
accrued and unpaid Distributions with the proceeds from the
contemporaneous redemption of Junior Subordinated Debentures.
Redemptions of the Trust Securities shall be made and the
Redemption Price plus accrued and unpaid Distributions shall be
deemed payable on each Redemption Date only to the extent that
the Trust has funds available for such payment (Section 4.02(c)).
See also "Subordination of Common Trust Securities."
If the Trust gives a notice of redemption in respect of
Preferred Trust Securities (which notice will be irrevocable),
then, on or before the Redemption Date, the Trust will
irrevocably deposit with the Paying Agent for the Preferred Trust
Securities funds sufficient to pay the applicable Redemption
Price plus accrued and unpaid Distributions and will give the
Paying Agent irrevocable instructions and authority to pay the
Redemption Price plus accrued and unpaid Distributions to the
Holders thereof upon surrender of their certificates evidencing
Preferred Trust Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption shall be payable to the
Holders of such Trust Securities on the relevant record dates for
the related Distribution Dates. If notice of redemption shall
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have been given and funds deposited as required, then on the
Redemption Date, all rights of Holders of the Trust Securities so
called for redemption will cease, except the right of such
Holders to receive the Redemption Price plus accrued and unpaid
Distributions, but without interest thereon, and such Trust
Securities will cease to be outstanding. In the event that any
date fixed for redemption of Trust Securities is not a Business
Day, then payment of the amount payable on such date will be made
on the next succeeding day which is a Business Day (and without
any interest or other payment in respect of any such delay). In
the event that payment of the Redemption Price plus accrued and
unpaid Distributions in respect of Trust Securities called for
redemption is improperly withheld or refused and not paid either
by the Trust or by the Company pursuant to the Guarantee
described herein under DESCRIPTION OF THE GUARANTEE,
Distributions on the Trust Securities will continue to accrue at
the then applicable rate, from the original Redemption Date to
the date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of
calculating the Redemption Price plus accrued and unpaid
Distributions (Section 4.02(d)).
Subject to applicable law (including, without limitation,
United States federal securities law), the Company may at any
time and from time to time purchase outstanding Preferred Trust
Securities by tender, in the open market or by private agreement.
If less than all the Trust Securities are to be redeemed on
a Redemption Date, then the aggregate liquidation preference of
such securities to be redeemed shall be allocated on a pro rata
basis to the Common Trust Securities and the Preferred Trust
Securities. The particular Preferred Trust Securities to be
redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Property Trustee from the outstanding
Preferred Trust Securities not previously called for redemption,
by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for
redemption of Preferred Trust Securities in liquidation
preference amounts equal to the denominations in which they were
issued or integral multiples thereof. The Property Trustee shall
promptly notify the Security Registrar in writing of the
Preferred Trust Securities selected for redemption and, in the
case of any Preferred Trust Securities selected for partial
redemption, the liquidation preference amount thereof to be
redeemed. For all purposes of the Trust Agreement, unless the
context otherwise requires, all provisions relating to the
redemption of Preferred Trust Securities shall relate, in the
case of any Preferred Trust Securities redeemed or to be redeemed
only in part, to the portion of the liquidation preference amount
of Preferred Trust Securities that has been or is to be redeemed
(Section 4.02(f)).
Subordination of Common Trust Securities. Payment of
Distributions on, and the Redemption Price plus accrued and
unpaid distributions of, the Trust Securities, shall be made pro
rata based on the liquidation preference of the Trust Securities;
provided, however, that if on any Distribution Date or Redemption
Date an Event of Default (as described below, see "Events of
Default; Notice") under the Trust Agreement shall have occurred
and be continuing, no payment of any Distribution on, or
Redemption Price of, any Common Trust Security, and no other
payment on account of the redemption, liquidation or other
acquisition of Common Trust Securities, shall be made unless
payment in full in cash of all accumulated and unpaid
Distributions on all outstanding Preferred Trust Securities for
all distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price plus accumulated and
unpaid Distributions, the full amount of such Redemption Price
plus accumulated and unpaid Distributions on all Outstanding
Preferred Trust Securities, shall have been made or provided for,
and all funds immediately available to the Property Trustee shall
first be applied to the payment in full in cash of all
Distributions on, or Redemption Price of plus accumulated and
unpaid Distributions of, Preferred Trust Securities then due and
payable (Section 4.03(a)).
In the case of any Event of Default under the Trust
Agreement resulting from an Event of Default under the
Subordinated Indenture, the Holder of Common Trust Securities
will be deemed to have waived any such default under the Trust
Agreement until the effect of all such defaults with respect to
the Preferred Trust Securities has been cured, waived or
otherwise eliminated. Until any such default under the Trust
Agreement with respect to the Preferred Trust Securities has been
so cured, waived or otherwise eliminated, the Property Trustee
shall act solely on behalf of the Holders of the Preferred Trust
Securities and not the Holder of the Common Trust Securities, and
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only Holders of Preferred Trust Securities will have the right to
direct the Property Trustee to act on their behalf (Section
4.03(b)).
Liquidation Distribution upon Dissolution. Pursuant to the
Trust Agreement, the Trust shall dissolve and shall be liquidated
by the Property Trustee on the first to occur of: (i) the
expiration of the term of the Trust; (ii) the bankruptcy,
dissolution or liquidation of the Company; (iii) the redemption
of all of the Preferred Trust Securities and (iv) at any time, at
the election of the Company (Sections 9.01 and 9.02).
If an early dissolution occurs as described in clause (ii)
above, the Trust shall be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be
appropriate by adequately providing for the satisfaction of
liabilities of creditors, if any, and by distributing to each
Holder of Preferred Trust Securities and Common Trust Securities
a Like Amount of Junior Subordinated Debentures, unless such
distribution is determined by the Property Trustee not to be
practical, in which event such Holders will be entitled to
receive, out of the assets of the Trust available for
distribution to Holders after adequate provision, as determined
by the Property Trustee, has been made for the satisfaction of
liabilities of creditors, if any, an amount equal to, in the case
of Holders of Preferred Trust Securities, the aggregate
liquidation preference of the Preferred Trust Securities plus
accrued and unpaid distributions thereon to the date of payment
(such amount being the Liquidation Distribution). If such
Liquidation Distribution can be paid only in part because the
Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Trust Securities shall be paid on a
pro rata basis. The Company, as Holder of the Common Trust
Securities, will be entitled to receive a Liquidation
Distribution upon any such dissolution pro rata with the Holders
of the Preferred Trust Securities, except that if an Event of
Default has occurred and is continuing under the Trust Agreement,
the Preferred Trust Securities shall have a preference over the
Common Trust Securities (Sections 9.04(a) and 9.04(e)).
Events of Default; Notice. Any one of the following events
constitutes an Event of Default under the Trust Agreement
(whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or
governmental body):
(i) the occurrence of an Event of Default as defined in
Section 801 of the Subordinated Indenture (see DESCRIPTION
OF THE JUNIOR SUBORDINATED DEBENTURES "Events of Default");
or
(ii) default by the Trust in the payment of any
Distribution when it becomes due and payable, and
continuation of such default for a period of 30 days; or
(iii) default by the Trust in the payment of any
Redemption Price, plus accrued and unpaid Distributions, of
any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any
material respect, of any covenant or warranty of the
Trustees in the Trust Agreement (other than a covenant or
warranty a default in the performance of which or the breach
of which is specifically dealt with in clause (ii) or (iii)
above), and continuation of such default or breach for a
period of 60 days after there has been given, by registered
or certified mail, to the Trust by the Holders of Preferred
Trust Securities having at least 10% of the total
liquidation preference of the Outstanding Preferred Trust
Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such
notice is a Notice of Default thereunder; or
(v) the occurrence of certain events of bankruptcy or
insolvency with respect to the Trust.
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Within ninety days after the occurrence of any default, the
Property Trustee shall transmit to the Holders of Trust
Securities and the Company notice of any such default actually
known to the Property Trustee, unless such default shall have
been cured or waived (Section 8.02).
A Holder of Preferred Trust Securities may directly
institute a proceeding for enforcement of payment to such Holder
directly of the principal of or interest on Junior Subordinated
Debentures having a principal amount equal to the aggregate
liquidation preference amount of the Preferred Trust Securities
of such Holder on or after the respective due dates specified in
the Junior Subordinated Debentures. The Holders of the Preferred
Trust Securities would not be able to exercise directly any other
remedies available to the holder of the Junior Subordinated
Debentures unless the Property Trustee fails to do so or the
Debenture Trustee, acting for the benefit of the Property
Trustee, fails to do so for 60 days after receipt of a written
request from the Property Trustee. See "Voting Rights" and
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES -- "Enforcement
of Certain Rights by Holders of Preferred Trust Securities"
(Section 6.01).
Unless an Event of Default shall have occurred and be
continuing, the Property Trustee may be removed at any time by
act of the Holder of the Common Trust Securities. If an Event of
Default has occurred and is continuing, the Property Trustee may
be removed at such time by act of the Holders of Preferred Trust
Securities having a majority of the liquidation preference of the
Preferred Trust Securities. No resignation or removal of the
Property Trustee and no appointment of a successor trustee shall
be effective until the acceptance of appointment by the successor
Property Trustee in accordance with the provisions of the Trust
Agreement. (Section 8.10).
If an Event of Default described in clause (i) above has not
occurred with respect to the Trust solely by reason of the
requirement that time lapse or notice be given, and is
continuing, the Preferred Trust Securities shall have a
preference over the Common Trust Securities upon dissolution of
the Trust as described above. See "Liquidation Distribution upon
Dissolution" (Section 9.04(a)).
Merger or Consolidation of the Property Trustee or the
Delaware Trustee. Any entity into which the Property Trustee or
the Delaware Trustee may be merged or with which it may be
consolidated, or any entity resulting from any merger, conversion
or consolidation to which the Property Trustee or the Delaware
Trustee shall be a party, or any entity succeeding to all or
substantially all the corporate trust business of the Property
Trustee or the Delaware Trustee, shall be the successor to the
Property Trustee or the Delaware Trustee under the Trust
Agreement, provided such entity shall be otherwise qualified and
eligible (Section 8.12).
Voting Rights. Except as described below and under
"Amendments to the Trust Agreement," and under DESCRIPTION OF THE
GUARANTEE -- "Amendments and Assignment" and as otherwise
required by law and the Trust Agreement, the Holders of the
Preferred Trust Securities will have no voting rights (Section
6.01(a)).
So long as any Junior Subordinated Debentures are held by
the Property Trustee, the Property Trustee shall not (i) direct
the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee, or executing any trust
or power conferred on the Debenture Trustee with respect to the
Junior Subordinated Debentures, (ii) waive any past default which
is waivable under Section 813 of the Subordinated Indenture,
(iii) exercise any right to rescind or annul a declaration that
the principal of all the Junior Subordinated Debentures shall be
due and payable or (iv) consent to any amendment, modification or
termination of the Subordinated Indenture or the Junior
Subordinated Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the
Holders of Preferred Trust Securities having at least 66 2/3% of
the aggregate liquidation preference amount of the Outstanding
Preferred Trust Securities; provided, however, that where a
consent under the Subordinated Indenture would require the
consent of each Holder of Junior Subordinated Debentures affected
thereby, no such consent shall be given by the Property Trustee
without the prior written consent of each Holder of Preferred
Trust Securities. The Property Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders
of the Preferred Trust Securities, except pursuant to a
subsequent vote of the Preferred Trust Securities. If the
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<PAGE>
Property Trustee fails to enforce its rights under the Junior
Subordinated Debentures or the Trust Agreement, a Holder of
Preferred Trust Securities may institute a legal proceeding
directly against the Company to enforce the Property Trustee's
rights under the Junior Subordinated Debentures or the Trust
Agreement to the fullest extent permitted by law, without first
instituting any legal proceeding against the Property Trustee or
any other Person. The Property Trustee shall notify all Holders
of the Preferred Trust Securities of any notice of default
received from the Debenture Trustee. In addition to obtaining
the foregoing approvals of the Holders of the Preferred Trust
Securities, prior to taking any of the foregoing actions, the
Property Trustee shall receive an Opinion of Counsel experienced
in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation for United
States federal income tax purposes on account of such action
(Section 6.01(a) and (b)).
Any required approval of Holders of Trust Securities may be
given at a meeting of Holders of Trust Securities convened for
such purpose or pursuant to written consent (Section 6.06). The
Administrative Trustees will cause a notice of any meeting at
which Holders of Preferred Trust Securities are entitled to vote,
or of any matter upon which action by written consent of such
Holders is to be taken, to be given to each Holder of Preferred
Trust Securities in the manner set forth in the Trust Agreement
(Section 6.02).
No vote or consent of the Holders of Preferred Trust
Securities will be required for the Trust to redeem and cancel
Preferred Trust Securities in accordance with the Trust Agreement
(Section 4.02).
Notwithstanding that Holders of Preferred Trust Securities
are entitled to vote or consent under any of the circumstances
described above, any of the Preferred Trust Securities that are
owned by the Company, any Trustee or any affiliate of the Company
or any Trustee, shall, for purposes of such vote or consent, be
treated as if they were not outstanding (Section 1.01).
Holders of the Preferred Trust Securities will have no
rights to appoint or remove the Administrative Trustees, who may
be appointed, removed or replaced solely by the Company as the
Holder of the Common Trust Securities (Section 8.10).
Amendments. The Trust Agreement may be amended from time to
time by the Trust (on approval of a majority of the
Administrative Trustees and the Company, without the consent of
any Holders of Trust Securities), (i) to cure any ambiguity,
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 the Trust Agreement or (ii) to modify, eliminate or add to
any provisions of the Trust Agreement to such extent as shall be
necessary to ensure that the Trust will not be classified for
United States federal income tax purposes as an association
taxable as a corporation at any time that any Trust Securities
are outstanding or to ensure the Trust's exemption from the
status of an "investment company" under the Investment Company
Act of 1940, as amended (1940 Act); provided, however, that such
action shall not adversely affect in any material respect the
interests of any Holder of Trust Securities and, in the case of
clause (i), any such amendments of the Trust Agreement shall
become effective when notice thereof is given to the Holders of
Trust Securities (Section 6.01(c) and 10.03(a)).
Except as provided below, any provision of the Trust
Agreement may be amended by the Administrative Trustees and the
Company with (i) the consent of Holders of the Trust Securities
representing not less than a majority in liquidation preference
of the Trust Securities then outstanding and (ii) receipt by the
Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in
accordance with such amendment will not cause the Trust to be
classified for United States federal income tax purposes as an
association taxable as a corporation or affect the Trust's
exemption from status of an "investment company" under the 1940
Act (Section 10.03(b)).
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Without the consent of each affected Holder of Trust
Securities, the Trust Agreement may not be amended to (i) change
the amount or timing of any Distribution with respect to the
Trust Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of the Trust
Securities as of a specified date or (ii) restrict the right of a
Holder of Trust Securities to institute suit for the enforcement
of any such payment on or after such date (Section 10.03(c)).
Co-trustees and Separate Trustee. Unless an Event of
Default under the Trust Agreement shall have occurred and be
continuing, at any time or times, for the purpose of meeting the
legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust Property (as defined
in the Trust Agreement) may at the time be located, the Holder of
the Common Trust Securities and the Property Trustee shall have
power to appoint, and upon the written request of the Property
Trustee, the Company, as Depositor, shall for such purpose join
with the Property Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper
to appoint one or more persons approved by the Property Trustee
either to act as co-trustee, jointly with the Property Trustee,
of all or any part of such Trust Property, or to act as separate
trustee of any such property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in
such person or persons in such capacity, any property, title,
right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. If the Company, as Depositor,
does not join in such appointment within 15 days after the
receipt by it of a request so to do, or in case an Event of
Default under the Subordinated Indenture has occurred and is
continuing, the Property Trustee alone shall have power to make
such appointment (Section 8.09).
Form, Exchange, and Transfer. At the option of the Holder,
subject to the terms of the Trust Agreement, Preferred Trust
Securities will be exchangeable for other Preferred Trust
Securities of the same series in any authorized denomination and
of like tenor and aggregate liquidation preference.
Subject to the terms of the Trust Agreement, Preferred Trust
Securities may be presented for exchange as provided above or for
registration of transfer (duly endorsed or accompanied by a duly
executed instrument of transfer) at the office of the Security
Registrar or at the office of any transfer agent designated by
the Company for such purpose. The Company or an Affiliate may be
designated the Security Registrar. No service charge will be
made for any registration of transfer or exchange of Preferred
Trust Securities, but payment may be required of a sum sufficient
to cover any tax or other governmental charge payable in
connection therewith. Such transfer or exchange will be effected
upon 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 may at any time
designate additional transfer agents or rescind the designation
of any transfer agent or approve a change in the office through
which any transfer agent acts, except that the Company will be
required to maintain a transfer agent in each place of payment
for the Preferred Trust Securities.
The Trust will not be required to (i) issue, register the
transfer of, or exchange any Preferred Trust Securities during a
period beginning at the opening of business 15 calendar days
before the day of mailing of a notice of redemption of any
Preferred Trust Securities called for redemption and ending at
the close of business on the day of such mailing or (ii) register
the transfer of or exchange any Preferred Trust Securities so
selected for redemption, in whole or in part, except the
unredeemed portion of any such Preferred Trust Securities being
redeemed in part (Section 5.04).
Registrar and Transfer Agent. Texas Utilities Services Inc.
will act as registrar and transfer agent for the Preferred Trust
Securities.
Registration of transfers of Preferred Trust Securities will
be effected without charge by or on behalf of the Trust, but upon
payment (with the giving of such indemnity as the Trust or the
Company may require) in respect of any tax or other governmental
charges which may be imposed in relation to it (Section 5.04).
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Regarding the Property Trustee. In addition to acting as
the Property Trustee, The Bank of New York acts, and may act, as
trustee under various indentures and trusts of the Company and
its affiliates, including, but not limited to any Indenture, the
Subordinated Indenture and the Guarantee, each as described
herein. The Company and its affiliates also maintain various
banking and trust relationships with The Bank of New York.
Miscellaneous. The Delaware Trustee will act as the
resident trustee in the State of Delaware and will have no other
significant duties. The Property Trustee will hold the Junior
Subordinated Debentures on behalf of the Trust and will maintain
a payment account with respect to the Trust Securities, and will
also act as trustee under the Trust Agreement for the purposes of
the Trust Indenture Act. See "Events of Default; Notice." The
Administrative Trustees will administer the day to day operations
of the Trust. See "Voting Rights."
The Administrative Trustees are authorized and directed to
conduct the affairs of the Trust and to operate the Trust so that
the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or taxed as a
corporation for United States federal income tax purposes and so
that the Junior Subordinated Debentures will be treated as
indebtedness of the Company for United States federal income tax
purposes. In this connection, the Administrative Trustees are
authorized to take any action, not inconsistent with applicable
law, the certificate of trust or the Trust Agreement, that the
Administrative Trustees determine in their discretion to be
necessary or desirable for such purposes, as long as such action
does not materially adversely affect the interests of the Holders
of the Preferred Trust Securities (Section 2.07).
Holders of the Preferred Trust Securities have no preemptive
or similar rights (Section 5.13).
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the
Guarantee that will be executed and delivered by the Company for
the benefit of the Holders from time to time of the Preferred
Trust Securities. The Guarantee will be qualified as an
indenture under the Trust Indenture Act. The Bank of New York
will act as Guarantee Trustee under the Guarantee for the
purposes of compliance with the Trust Indenture Act. The terms
of the Guarantee will be those set forth in the Guarantee and
those made part of the Guarantee by the Trust Indenture Act.
This summary does not purport to be complete and is subject in
all respects to the provisions of, and is qualified in its
entirety by reference to, the Guarantee, a form of which is filed
as an exhibit to the Registration Statement of which this
Prospectus forms a part, and the Trust Indenture Act. The
Guarantee Trustee will hold the Guarantee for the benefit of the
Holders of the Preferred Trust Securities.
General. The Company will fully and unconditionally agree,
to the extent set forth herein, to pay the Guarantee Payments (as
defined herein) in full to the Holders of the Preferred Trust
Securities (except to the extent paid by or on behalf of the
Trust), as and when due, regardless of any defense, right of
set-off or counterclaim that the Company may have or assert. The
following payments with respect to the Preferred Trust
Securities, to the extent not paid by or on behalf of the Trust
(Guarantee Payments), will be subject to the Guarantee (without
duplication): (i) any accrued and unpaid Distributions required
to be paid on the Preferred Trust Securities, to the extent the
Trust has funds available therefor, (ii) the Redemption Price,
plus all accrued and unpaid Distributions, with respect to any
Preferred Trust Securities called for redemption by the Trust, to
the extent the Trust has funds available therefor and (iii) upon
a voluntary or involuntary dissolution, winding-up or termination
of the Trust (other than in connection with the distribution of
Junior Subordinated Debentures to the Holders in exchange for
Preferred Trust Securities as provided in the Trust Agreement or
upon a redemption of all of the Preferred Trust Securities upon
maturity or redemption of the Junior Subordinated Debentures as
provided in the Trust Agreement), the lesser of (a) the aggregate
of the liquidation preference and all accrued and unpaid
Distributions on the Preferred Trust Securities to the date of
payment and (b) the amount of assets of the Trust remaining
available for distribution to Holders of Preferred Trust
Securities in liquidation of the Trust. The Company's obligation
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to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Company to the Holders of Preferred
Trust Securities or by causing the Trust to pay such amounts to
such Holders (Section 5.01).
The Guarantee will be a guarantee with respect to the
Preferred Trust Securities, but will not apply to (i) any payment
of Distributions if and to the extent that the Trust does not
have funds available to make such payments, or (ii) collection of
payment. If the Company does not make interest payments on the
Junior Subordinated Debentures held by the Trust, the Trust will
not have funds available to pay Distributions on the Preferred
Trust Securities. The Guarantee will rank subordinate and junior
in right of payment to all liabilities of the Company (except
those made pari passu by their terms). See "Status of the
Guarantee."
The Company will enter into agreements to provide funds to
the Trust as needed to pay obligations of the Trust to parties
other than Holders of Preferred Trust Securities (Expense
Agreement). The Junior Subordinated Debentures and the
Guarantee, together with the obligations of the Company with
respect to the Preferred Trust Securities under the Subordinated
Indenture, the Trust Agreement and the Expense Agreement,
constitute a full and unconditional guarantee of the Preferred
Trust Securities by the Company. No single document standing
alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of
providing a full and unconditional guarantee by the Company of
the Preferred Trust Securities.
Amendments and Assignment. Except with respect to any
changes that do not materially adversely affect the rights of
Holders of Preferred Trust Securities (in which case no vote will
be required), the terms of the Guarantee may be changed only with
the prior approval of the Holders of Preferred Trust Securities
having at least 66 2/3% of the liquidation preference amount of
the outstanding Preferred Trust Securities (Section 8.02). All
guarantees and agreements contained in the Guarantee shall bind
the successors, assigns, receivers, trustees and representatives
of the Company and shall inure to the benefit of the Holders of
the Preferred Trust Securities then outstanding (Section 8.01).
Events of Default. An event of default under the Guarantee
will occur upon the failure of the Company to perform any of its
payment obligations thereunder (Section 1.01). The Holders of
Preferred Trust Securities having a majority of the liquidation
preference of the Preferred Trust Securities have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee in respect of
the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee (Section
5.04).
If the Guarantee Trustee fails to enforce a Guarantee, any
Holder of Preferred Trust Securities may enforce the Guarantee,
or institute a legal proceeding directly against the Company to
enforce the Guarantee Trustee's rights under the Guarantee
without first instituting a legal proceeding against the Trust,
the Guarantee Trustee or any other person or entity.
The Company will be required to provide annually to the
Guarantee Trustee a statement as to the performance by the
Company of certain of its obligations under the Guarantee and as
to any default in such performance.
The Company will also be required to file annually with the
Guarantee Trustee an officer's certificate as to the Company's
compliance with all conditions under the Guarantee (Section
2.05).
Regarding the Guarantee Trustee. The Guarantee Trustee,
prior to the occurrence of a default by the Company in
performance of the Guarantee, will undertake to perform only such
duties as are specifically set forth in the Guarantee and, after
default with respect to the Guarantee, must exercise the same
degree of care as a prudent individual would exercise in the
conduct of his or her own affairs (Section 3.01(b)). Subject to
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this provision, the Guarantee Trustee is under no obligation to
exercise any of the powers vested in it by the Guarantee at the
request of any Holder of Preferred Trust Securities unless it is
offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby (Section 3.01(c)).
See DESCRIPTION OF THE TRUST SECURITIES - "Regarding the Property
Trustee."
Termination of the Guarantee. The Guarantee will terminate
and be of no further force and effect upon full payment of the
Redemption Price, plus accrued and unpaid Distributions, of all
Preferred Trust Securities, the distribution of Junior
Subordinated Debentures to Holders of the Preferred Trust
Securities in exchange for all of the Preferred Trust Securities
or full payment of the amounts payable upon liquidation of the
Trust. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of
Preferred Trust Securities must restore payment of any sums paid
under the Preferred Trust Securities or the Guarantee (Section
7.01).
Status of the Guarantee. The Guarantee will constitute an
unsecured obligation of the Company and will rank (i) subordinate
and junior in right of payment to all liabilities of the Company
(except liabilities that may be made pari passu by their terms),
(ii) pari passu with the most senior preferred or preference
stock now or hereafter issued by the Company and with any
guarantee now or hereafter entered into by the Company in respect
of any preferred or preference stock of any affiliate of the
Company and (iii) senior to the Company's common stock (Section
6.01). The Trust Agreement provides that each Holder of
Preferred Trust Securities by acceptance thereof agrees to the
subordination provisions and other terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not
of collection (i.e., the guaranteed party may institute a legal
proceeding directly against the Guarantor to enforce its rights
under the Guarantee without first instituting a legal proceeding
against any other person or entity) (Section 5.05).
Governing Law. The Guarantee will be governed by and
construed in accordance with the laws of the State of New York
(Section 8.06).
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of
the Junior Subordinated Debentures which the Trust will hold as
trust assets. The following description does not purport to be
complete and is qualified in its entirety by reference to the
description in the Subordinated Indenture, a form of which is
filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. Whenever particular provisions or
defined terms in the Subordinated Indenture are referred to
herein, such provisions or defined terms are incorporated by
reference herein. Section references used herein are references
to provisions of the Subordinated Indenture unless otherwise
noted. The Subordinated Indenture provides for the issuance of
debentures (including the Junior Subordinated Debentures), notes
or other evidences of indebtedness by the Company in an unlimited
amount from time to time.
General. The Junior Subordinated Debentures will be limited
in aggregate principal amount to the sum of the aggregate
liquidation preference amount of the Preferred Trust Securities
and the consideration paid by the Company for the Common Trust
Securities. The Junior Subordinated Debentures are unsecured,
subordinated obligations of the Company which rank junior to all
of the Company's Senior Indebtedness (Section 1501). The amounts
payable as principal and interest on the Junior Subordinated
Debentures will be sufficient to provide for payment of
distributions payable on Preferred Trust Securities.
If Junior Subordinated Debentures are distributed to Holders
of Preferred Trust Securities in a dissolution of the Trust, such
Junior Subordinated Debentures will be issued in fully registered
certificated form in the denominations and integral multiples
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thereof in which the Preferred Trust Securities have been issued
and may be transferred or exchanged at the offices described
below (Section 201).
Payments of principal and interest on Junior Subordinated
Debentures will be payable, the transfer of Junior Subordinated
Debenture will be registrable, and Junior Subordinated Debentures
will be exchangeable for Junior Subordinated Debentures of other
denominations of a like aggregate principal amount, at the
corporate trust office of the Debenture Trustee in The City of
New York (Section 602); provided that payment of interest may be
made at the option of the Company by check mailed to the address
of the persons entitled thereto and that the payment in full of
principal with respect to any Junior Subordinated Debenture will
be made only upon surrender of the Junior Subordinated Debenture
to the Debenture Trustee.
Optional Redemption. For so long as the Trust is the Holder
of all the outstanding Junior Subordinated Debentures, the
proceeds of any optional redemption will be used by the Trust to
redeem Preferred Trust Securities and Common Trust Securities in
accordance with their terms.
Any optional redemption of Junior Subordinated Debentures
shall be made upon not less than 30 nor more than 60 days' notice
from the Debenture Trustee to the Holders of the Junior
Subordinated Debentures, as provided in the Subordinated
Indenture. All notices of redemption shall state the redemption
date; the redemption price plus accrued and unpaid interest; if
less than all the Junior Subordinated Debentures are to be
redeemed, the identification of those to be redeemed and the
portion of the principal amount of any Junior Subordinated
Debentures to be redeemed in part; that on the redemption date,
subject to the Debenture Trustee's receipt of the redemption
monies, the redemption price plus accrued and unpaid interest
will become due and payable upon the Junior Subordinated
Debenture to be redeemed and that interest thereon will cease to
accrue on and after said date; and the place or places where the
Junior Subordinated Debentures are to be surrendered for payment
of the redemption price plus accrued and unpaid interest (Section
404).
Interest. Except as provided in the applicable Prospectus
Supplement, the amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months
and for any period shorter than a full month, on the basis of the
actual number of days elapsed (Section 310). In the event that
any date on which interest is payable on the Junior Subordinated
Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on the
date the payment was originally payable (Section 113).
Option to Extend Interest Payment Period. So long as it is
not in default in the payment of interest on the Junior
Subordinated Debentures, the Company shall have the right under
the Subordinated Indenture to extend the interest payment period
from time to time on the Junior Subordinated Debentures to a
period not exceeding the period provided in the Prospectus
Supplement with respect to the Offered Trust Securities (Section
311). At the end of an Extension Period, the Company must pay
all interest then accrued and unpaid (together with interest
thereon at the rate specified for the Junior Subordinated
Debentures, to the extent permitted by applicable law). However,
during any such Extension Period, the Company shall not declare
or pay any dividend or distribution (other than a dividend or
distribution in Common Stock of the Company) on, or redeem,
purchase, acquire or make a liquidation payment with respect to,
any of its capital stock, redeem any indebtedness that is pari
passu with the Junior Subordinated Debentures, or make any
guarantee payments with respect to the foregoing (Section 608).
Prior to the termination of any such Extension Period, the
Company may further extend the interest payment period, provided
that such Extension Period together with all such previous and
further extensions thereof shall not exceed the permitted length
of an Extension Period at any one time or extend beyond the
maturity date of the Junior Subordinated Debentures. Any
extension period with respect to payment of interest on the
Junior Subordinated Debentures, other securities issued pursuant
to the Subordinated Indenture (collectively with the Junior
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Subordinated Debentures, the Subordinated Indenture Securities)
or on any similar securities will apply to all such securities
and will also apply to distributions with respect to the Trust
Securities and all other securities with terms substantially the
same as the Trust Securities. Upon the termination of any such
Extension Period and the payment of all amounts then due, the
Company may select a new Extension Period, subject to the above
requirements. No interest shall be due and payable during an
Extension Period, except at the end thereof. The Company will
give the Trust and the Debenture Trustee notice of its election
of an Extension Period prior to the earlier of (i) one Business
Day prior to the record date for the distribution which would
occur but for such election or (ii) the date the Company is
required to give notice to the NYSE or other applicable
self-regulatory organization of the record date and will cause
the Trust to send notice of such election to the Holders of
Preferred Trust Securities.
Additional Interest. So long as any Preferred Trust
Securities remain outstanding, if the Trust shall be required to
pay, with respect to its income derived from the interest
payments on the Junior Subordinated Debentures any amounts for or
on account of any taxes, duties, assessments or governmental
charges of whatever nature imposed by the United States, or any
other taxing authority, then, in any such case, the Company will
pay as interest on the Junior Subordinated Debentures such
additional interest (Additional Interest) as may be necessary in
order that the net amounts received and retained by the Trust
after the payment of such taxes, duties, assessments or
governmental charges shall result in the Trust's having such
funds as it would have had in the absence of the payment of such
taxes, duties, assessments or governmental charges (Section 312).
Defeasance. The principal amount of Subordinated Indenture
Securities issued under the Subordinated Indenture will be deemed
to have been paid for purposes of the Subordinated Indenture and
the entire indebtedness of the Company in respect thereof will be
deemed to have been satisfied and discharged, if there shall have
been irrevocably deposited with the Debenture Trustee or any
paying agent, in trust: (a) money in an amount which will be
sufficient, or (b) in the case of a deposit made prior to the
maturity of the Subordinated Indenture Securities, Government
Obligations (as defined herein), which do not contain provisions
permitting the redemption or other prepayment thereof at the
option of the issuer thereof, the principal of and the interest
on which when due, without any regard to reinvestment thereof,
will provide moneys which, together with the money, if any,
deposited with or held by the Debenture Trustee, will be
sufficient, or (c) a combination of (a) and (b) which will be
sufficient, to pay when due the principal of and premium, if any,
and interest, if any, due and to become due on the Subordinated
Indenture Securities that are outstanding (Section 701). For
this purpose, Government Obligations, include direct obligations
of, or obligations unconditionally guaranteed by, the United
States of America entitled to the benefit of the full faith and
credit thereof and certificates, depositary receipts or other
instruments which evidence a direct ownership interest in such
obligations or in any specific interest or principal payments due
in respect thereof (Section 101).
Subordination. The Junior Subordinated Debentures will be
subordinate and junior in right of payment to all Senior
Indebtedness of the Company as provided in the Subordinated
Indenture (Section 1501). No payment of principal of (including
redemption and sinking fund payments), or interest on, the Junior
Subordinated Debentures may be made (i) upon the occurrence of
certain events of bankruptcy, insolvency or reorganization, (ii)
if any Senior Indebtedness is not paid when due, (iii) if any
other default has occurred pursuant to which the Holders of
Senior Indebtedness have accelerated the maturity thereof and
with respect to (ii) and (iii), such default has not been cured
or waived, or (iv) if the maturity of Subordinated Indenture
Securities has been accelerated, because of an event of default
with respect thereto, which remains uncured. Upon any
distribution of assets of the Company to creditors upon any
dissolution, winding-up, liquidation or reorganization, whether
voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all principal of, and premium,
if any, and interest due or to become due on, all Senior
Indebtedness must be paid in full before the Holders of the
Junior Subordinated Debentures are entitled to receive or retain
any payment thereon (Section 1502). Subject to the prior payment
of all Senior Indebtedness, the rights of the Holders of the
Junior Subordinated Debentures will be subrogated to the rights
of the Holders of Senior Indebtedness to receive payments or
distributions applicable to Senior Indebtedness until all amounts
owing on the Junior Subordinated Debentures are paid in full
(Section 1504).
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The term Senior Indebtedness is defined in the Subordinated
Indenture to mean all obligations (other than non-recourse
obligations and the indebtedness issued under the Subordinated
Indenture) of, or guaranteed or assumed by, the Company for
borrowed money, including both senior and subordinated
indebtedness for borrowed money (other than the Subordinated
Indenture Securities), or for the payment of money relating to
any lease which is capitalized on the consolidated balance sheet
of the Company and its subsidiaries in accordance with generally
accepted accounting principles as in effect from time to time, or
evidenced by bonds, debentures, notes or other similar
instruments, and in each case, amendments, renewals, extensions,
modifications and refundings of any such indebtedness or
obligations, whether existing as of the date of the Subordinated
Indenture or subsequently incurred by the Company unless, in the
case of any particular indebtedness, renewal, extension or
refunding, the instrument creating or evidencing the same or the
assumption or guarantee of the same expressly provides that such
indebtedness, renewal, extension or refunding is not superior in
right of payment to or is pari passu with the Junior Subordinated
Debentures; provided that the Company's obligations under the
Guarantee shall not be deemed to be Senior Indebtedness (Section
101).
The Subordinated Indenture does not limit the aggregate
amount of Senior Indebtedness that may be issued. As of December
31, 1997 the Company had approximately $675 million principal
amount of indebtedness for borrowed money constituting Senior
Indebtedness. In addition, as of December 31, 1997, there were
no contingent obligations constituting Senior Indebtedness where
there exists a financially viable and unrelated primary obligor
and where the risk of loss to the Company is, in the opinion of
the Company, remote.
Consolidation, Merger, and Sale of Assets. Under the terms
of the Subordinated Indenture, the Company may not consolidate
with or merge into any other entity or convey, transfer or lease
its properties and assets substantially as an entirety to any
entity, unless (i) the entity formed by such consolidation or
into which the Company is merged or the entity which acquires by
conveyance or transfer, or which leases, the property and assets
of the Company substantially as an entirety shall be an entity
organized and validly existing under the laws of any domestic
jurisdiction and such entity expressly assumes the Company's
obligations on all Subordinated Indenture Securities and under
the Subordinated Indenture, (ii) immediately after giving effect
to the transaction, 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 (iii) the
Company shall have delivered to the Debenture Trustee an
Officer's Certificate and an Opinion of Counsel as provided in
the Subordinated Indenture (Section 1101).
Events of Default. Each of the following will constitute an
Event of Default under the Subordinated Indenture with respect to
the Subordinated Indenture Securities of any series: (a) failure
to pay any interest on the Subordinated Indenture Securities of
such series within 30 days after the same becomes due and
payable; (b) failure to pay principal or premium, if any, on the
Subordinated Indenture Securities of such series when due and
payable; (c) failure to perform, or breach of, any other covenant
or warranty of the Company in the Subordinated Indenture (other
than a covenant or warranty of the Company in the Subordinated
Indenture solely for the benefit of one or more series of
Subordinated Indenture Securities other than such series) for 90
days after written notice to the Company by the Debenture
Trustee, or to the Company and the Debenture Trustee by the
Holders of at least 33% in principal amount of the Subordinated
Indenture Securities of such series outstanding under the
Subordinated Indenture as provided in the Subordinated Indenture;
(d) the entry by a court having jurisdiction in the premises of
(1) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law
or (2) a decree or order adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition by one or
more Persons other than the Company seeking reorganization,
arrangement, adjustment or composition of or in respect of the
Company under any applicable federal or state law, or appointing
a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official for the Company or for any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and any such decree or order for
relief or any such other decree or order shall have remained
unstayed and in effect for a period of 90 consecutive days; or
(e) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other
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case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in
respect of the Company in a case or other similar proceeding or
to the commencement of any bankruptcy or insolvency case or
proceeding against it under any applicable federal or state law
or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal or state
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official
of the Company or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or
the admission by it in writing of its inability to pay its debts
generally as they become due, or the authorization of such action
by the Board of Directors (Section 801).
An Event of Default with respect to the Subordinated
Indenture Securities of a particular series may not necessarily
constitute an Event of Default with respect to Subordinated
Indenture Securities of any other series issued under the
Subordinated Indenture.
If an Event of Default due to the default in payment of
principal of or interest on any series of Subordinated Indenture
Securities or due to the default in the performance or breach of
any other covenant or warranty of the Company applicable to the
Subordinated Indenture Securities of such series but not
applicable to all series occurs and is continuing, then either
the Debenture Trustee or the Holders of 33% in principal amount
of the outstanding Subordinated Indenture Securities of such
series may declare the principal of all of the Subordinated
Indenture Securities of such series and interest accrued thereon
to be due and payable immediately (subject to the subordination
provisions of the Subordinated Indenture). If an Event of
Default due to the default in the performance of any other
covenants or agreements in the Subordinated Indenture applicable
to all outstanding Subordinated Indenture Securities or due to
certain events of bankruptcy, insolvency or reorganization of the
Company has occurred and is continuing, either the Debenture
Trustee or the Holders of not less than 33% in principal amount
of all outstanding Subordinated Indenture Securities, considered
as one class, and not the Holders of the Subordinated Indenture
Securities of any one of such series may make such declaration of
acceleration (subject to the subordination provisions of the
Subordinated Indenture).
At any time after the declaration of acceleration with
respect to the Subordinated Indenture Securities of any series
has been made and before a judgment or decree for payment of the
money due has been obtained, the Event or Events of Default
giving rise to such declaration of acceleration will, without
further act, be deemed to have been waived, and such declaration
and its consequences will, without further act, be deemed to have
been rescinded and annulled, if
(a) the Company has paid or deposited with the Debenture
Trustee a sum sufficient to pay
(1) all overdue interest on all Subordinated Indenture
Securities of such series;
(2) the principal of and premium, if any, on any
Subordinated Indenture Securities of such series which have
become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates
prescribed therefor inthe Subordinated Indenture Securities;
(3) interest upon overdue interest at the rate or
rates prescribed therefor in the Subordinated Indenture
Securities, to the extent that payment of such interest is
lawful; and
(4) all amounts due to the Debenture Trustee under the
Subordinated Indenture;
(b) any other Event or Events of Default with respect to
Subordinated Indenture Securities of such series, other than the
nonpayment of the principal of the Subordinated Indenture
Securities of such series which has become due solely by such
declaration of acceleration, have been cured or waived as
provided in the Subordinated Indenture (Section 802).
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Subject to the provisions of the Subordinated Indenture
relating to the duties of the Debenture Trustee in case an Event
of Default shall occur and be continuing, the Debenture Trustee
will be under no obligation to exercise any of its rights or
powers under the Subordinated Indenture at the request or
direction of any of the Holders, unless such Holders shall have
offered to the Debenture Trustee reasonable indemnity (Section
903). If an Event of Default has occurred and is continuing in
respect of a series of Subordinated Indenture Securities, subject
to such provisions for the indemnification of the Debenture
Trustee, the Holders of a majority in principal amount of the
outstanding Subordinated Indenture Securities of such series will
have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee,
or exercising any trust or power conferred on the Debenture
Trustee, with respect to the Subordinated Indenture Securities of
such series; provided, however, that if an Event of Default
occurs and is continuing with respect to more than one series of
Subordinated Indenture Securities, the Holders of a majority in
aggregate principal amount of the outstanding Subordinated
Indenture Securities of all such series, considered as one class,
will have the right to make such direction, and not the Holders
of the Subordinated Indenture Securities of any one of such
series; and provided, further, that such direction will not be in
conflict with any rule of law or with the Subordinated Indenture.
(Section 812).
No Holder of Subordinated Indenture Securities of any series
will have any right to institute any proceeding with respect to
the Subordinated Indenture, or for the appointment of a receiver
or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Debenture Trustee written
notice of a continuing Event of Default with respect to the
Subordinated Indenture Securities of such series, (ii) the
Holders of not less than a majority in aggregate principal amount
of the outstanding Subordinated Indenture Securities of all
series in respect of which an Event of Default shall have
occurred and be continuing, considered as one class, have made
written request to the Debenture Trustee, and such Holder or
Holders have offered reasonable indemnity to the Debenture
Trustee to institute such proceeding in respect of such Event of
Default in its own name as trustee and (iii) the Debenture
Trustee has failed to institute any proceeding, and has not
received from the Holders of a majority in aggregate principal
amount of the outstanding Subordinated Indenture Securities of
such series a direction inconsistent with such request, within 60
days after such notice, request and offer (Section 807).
However, such limitations do not apply to a suit instituted by a
Holder of a Subordinated Indenture Security for the enforcement
of payment of the principal of or any premium or interest on such
Subordinated Indenture Security on or after the applicable due
date specified in such Subordinated Indenture Security (Section
808).
The Company will be required to furnish to the Debenture
Trustee annually a statement by an appropriate officer as to such
officer's knowledge of the Company's compliance with all
conditions and covenants under the Subordinated Indenture, such
compliance to be determined without regard to any period of grace
or requirement of notice under the Subordinated Indenture
(Section 606).
Enforcement of Certain Rights by Holders of Preferred Trust
Securities. If an Event of Default has occurred and is
continuing, then the Holders of Trust Securities would rely on
the enforcement by the Property Trustee or the Debenture Trustee,
acting for the benefit of the Property Trustee, of its rights as
a holder of the Junior Subordinated Debentures against the
Company. Notwithstanding the foregoing, a Holder of Preferred
Trust Securities may enforce the Subordinated Indenture directly
against the Company to the same extent as if such Holder of
Preferred Trust Securities held a principal amount of Junior
Subordinated Debentures equal to the aggregate liquidation amount
of the Preferred Trust Securities of such Holder (Section 610).
See DESCRIPTION OF THE PREFERRED TRUST SECURITIES - "Events Of
Default; Notice."
The Holders of the Preferred Trust Securities would not be
able to exercise directly against the Company any rights other
than those set forth in the preceding paragraph available to the
holders of the Junior Subordinated Debentures unless the Property
Trustee fail to exercise its rights against the Company or the
Debenture Trustee, acting for the benefit of the Property
Trustee, fails to do so for 60 days after receipt of a written
request from the Property Trustee. In such event, to the fullest
extent permitted by law, the holders of a majority of the
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aggregate liquidation amount of the outstanding Preferred Trust
Securities would have the right to directly institute proceedings
for enforcement of such rights (Section 807).
Modification and Waiver. Without the consent of any Holder
of Subordinated Indenture Securities, the Company and the
Debenture Trustee may enter into one or more supplemental
indentures for any of the following purposes: (a) to evidence the
assumption by any permitted successor to the Company of the
covenants of the Company in the Subordinated Indenture and in the
Subordinated Indenture Securities; or (b) to add one or more
covenants of the Company or other provisions for the benefit of
the Holders of outstanding Subordinated Indenture Securities or
to surrender any right or power conferred upon the Company by the
Subordinated Indenture; or (c) to add any additional Events of
Default with respect to outstanding Subordinated Indenture
Securities; or (d) to change or eliminate any provision of the
Subordinated Indenture or to add any new provision to the
Subordinated Indenture, provided that if such change, elimination
or addition will adversely affect the interests of the Holders of
Subordinated Indenture Securities of any series in any material
respect, such change, elimination or addition will become
effective with respect to such series only (1) when the consent
of the Holders of Subordinated Indenture Securities of such
series has been obtained in accordance with the Subordinated
Indenture, or (2) when no Subordinated Indenture Securities of
such series remain outstanding under the Subordinated Indenture;
or (e) to provide collateral security for all but not part of the
Subordinated Indenture Securities; (f) to establish the form or
terms of Subordinated Indenture Securities of any other series as
permitted by the Subordinated Indenture; or (g) to provide for
the authentication and delivery of bearer securities and coupons
appertaining thereto representing interest, if any, thereon and
for the procedures for the registration, exchange and replacement
thereof and for the giving of notice to, and the solicitation of
the vote or consent of, the Holders thereof, and for any and all
other matters incidental thereto; or (h) to evidence and provide
for the acceptance of appointment of a successor trustee under
the Subordinated Indenture with respect to the Subordinated
Indenture Securities of one or more series and to add to or
change any of the provisions of the Subordinated Indenture as
shall be necessary to provide for or to facilitate the
administration of the trusts under the Subordinated Indenture by
more than one trustee; or (i) to provide for the procedures
required to permit the utilization of a noncertificated system of
registration for the Subordinated Indenture Securities of all or
any series; or (j) to change any place where (1) the principal of
and premium, if any, and interest, if any, on all or any series
of Subordinated Indenture Securities shall be payable, (2) all or
any series of Subordinated Indenture Securities may be
surrendered for registration of transfer or exchange and (3)
notices and demands to or upon the Company in respect of
Subordinated Indenture Securities and the Subordinated Indenture
may be served; or (k) to cure any ambiguity or inconsistency or
to add or change any other provisions with respect to matters and
questions arising under the Subordinated Indenture, provided such
changes or additions shall not adversely affect the interests of
the Holders of Subordinated Indenture Securities of any series in
any material respect (Section 1201).
The Holders of at least a majority in aggregate principal
amount of the Subordinated Indenture Securities of all series
then outstanding may waive compliance by the Company with certain
restrictive provisions of the Subordinated Indenture (Section
607). The Holders of not less than a majority in principal
amount of the outstanding Subordinated Indenture Securities of
any series may waive any past default under the Subordinated
Indenture with respect to such series, except a default in the
payment of principal, premium, or interest and certain covenants
and provisions of the Subordinated Indenture that cannot be
modified or be amended without the consent of the Holder of each
outstanding Subordinated Indenture Security of such series
affected (Section 813).
Without limiting the generality of the foregoing, if the
Trust Indenture Act is amended after the date of the Subordinated
Indenture in such a way as to require changes to the Subordinated
Indenture or the incorporation therein of additional provisions
or so as to permit changes to, or the elimination of, provisions
which, at the date of the Subordinated Indenture or at any time
thereafter, were required by the Trust Indenture Act to be
contained in the Subordinated Indenture, the Subordinated
Indenture will be deemed to have been amended so as to conform to
such amendment of the Trust Indenture Act or to effect such
changes, additions or elimination, and the Company and the
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Debenture Trustee may, without the consent of any Holders, enter
into one or more supplemental indentures to evidence or effect
such amendment (Section 1201).
Except as provided above, the consent of the Holders of not
less than a majority in aggregate principal amount of the
Subordinated Indenture Securities of all series then outstanding,
considered as one class, is required for the purpose of adding
any provisions to, or changing in any manner, or eliminating any
of the provisions of, the Subordinated Indenture or modifying in
any manner the rights of the Holders of the Subordinated
Indenture Securities under the Subordinated Indenture pursuant to
one or more supplemental indentures; provided, however, that if
less than all of the series of Subordinated Indenture Securities
outstanding are directly affected by a proposed supplemental
indenture, then the consent only of the Holders of a majority in
aggregate principal amount of outstanding Subordinated Indenture
Securities of all series so directly affected, considered as one
class, will be required; and provided further, that no such
amendment or modification may (a) change the Stated Maturity of
the principal of, or any installment of principal of or interest
on, any Subordinated Indenture Security, or reduce the principal
amount thereof or the rate of interest thereon (or the amount of
any installment of interest thereon) or change the method of
calculating such rate or reduce any premium payable upon the
redemption thereof, or change the coin or currency (or other
property) in which any Subordinated Indenture Security or any
premium or the interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment on or
after the Stated Maturity of any Subordinated Indenture Security
(or, in the case of redemption, on or after the Redemption Date)
without, in any such case, the consent of the Holder of such
Subordinated Indenture Security, (b) reduce the percentage in
principal amount of the outstanding Subordinated Indenture
Securities of any series, (or, if applicable, in liquidation
preference of Preferred Trust Securities) the consent of the
Holders of which is required for any such supplemental indenture,
or the consent of the Holders of which is required for any waiver
of compliance with any provision of the Subordinated Indenture or
any default thereunder and its consequences, or reduce the
requirements for quorum or voting, without, in any such case, the
consent of the Holder of each outstanding Subordinated Indenture
Security of such series, or (c) modify certain of the provisions
of the Subordinated Indenture relating to supplemental
indentures, waivers of certain covenants and waivers of past
defaults with respect to the Subordinated Indenture Securities of
any series, without the consent of the Holder of outstanding
Subordinated Indenture Securities affected thereby. A
supplemental indenture which changes or eliminates any covenant
or other provision of the Subordinated Indenture which has
expressly been included solely for the benefit of one or more
particular series of Subordinated Indenture Securities, or
modifies the rights of the Holders of Subordinated Indenture
Securities of such series with respect to such covenant or other
provision, will be deemed not to affect the rights under the
Subordinated Indenture of the Holders of the Subordinated
Indenture Securities of any other series. Notwithstanding the
foregoing, so long as any of the Preferred Trust Securities remain
outstanding, the Debenture Trustee may not consent to a
supplemental indenture without the prior consent, obtained as
provided in the Trust Agreement, of the holders of not less than
a majority in aggregate liquidation preference of all Preferred
Trust Securities, considered as one class, or, in the case of
changes described in clauses (a), (b) and (c) above, 100% in
aggregate liquidation preference of all such Preferred Trust
Securities then outstanding which would be affected thereby,
considered as one class. A supplemental indenture which changes
or eliminates any covenant or other provision of the Subordinated
Indenture which has expressly been included solely for the benefit
of one or more particular series of Subordinated Indenture
Securities, or which modifies the rights of the Holders of
Subordinated Indenture Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect
the rights under the Subordinated Indenture of the Holders of
Subordinated Indenture Securities of any other series (Section
1202).
The Subordinated Indenture provides that in determining
whether the Holders of the requisite principal amount of the
outstanding Subordinated Indenture Securities have given any
request, demand, authorization, direction, notice, consent or
waiver under the Subordinated Indenture, or whether a quorum is
present at the meeting of the Holders of Subordinated Indenture
Securities, Subordinated Indenture Securities owned by the
Company or any other obligor upon the Subordinated Indenture
Securities or any affiliate of the Company or of such other
obligor (unless the Company, such affiliate or such obligor owns
all Subordinated Indenture Securities outstanding under the
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Subordinated Indenture, determined without regard to this
provision) shall be disregarded and deemed not to be outstanding
(Section 101).
If the Company shall solicit from Holders any request,
demand, authorization, direction, notice, consent, election,
waiver or other Act, the Company may, at its option, fix in
advance a record date for the determination of Holders entitled
to give such request, demand, authorization, direction, notice,
consent, waiver or other such act, but the Company shall have no
obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record
date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for the purposes
of determining whether Holders of the requisite proportion of the
outstanding Subordinated Indenture Securities have authorized or
agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for that
purpose the outstanding Subordinated Indenture Securities shall
be computed as of the record date. Any request, demand,
authorization, direction, notice, consent, election, waiver or
other Act of a Holder shall bind every future Holder of the same
Subordinated Indenture Security and the Holder of every
Subordinated Indenture Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the
Debenture Trustee or the Company in reliance thereon, whether or
not notation of such action is made upon such Subordinated
Indenture Security (Section 104).
Resignation of Debenture Trustee. The Debenture Trustee may
resign at any time by giving written notice thereof to the
Company or may be removed at any time by Act of the Holders of a
majority in principal amount of all series of Subordinated
Indenture Securities then outstanding delivered to the Debenture
Trustee and the Company. No resignation or removal of the
Debenture Trustee and no appointment of a successor trustee will
become effective until the acceptance of appointment by a
successor trustee in accordance with the requirements of the
Subordinated Indenture. So long as no Event of Default or event
which, after notice or lapse of time, or both, would become an
Event of Default has occurred and is continuing and except with
respect to a Debenture Trustee appointed by Act of the Holders,
if the Company has delivered to the Debenture Trustee a
resolution of its Board of Directors appointing a successor
trustee and such successor has accepted such appointment in
accordance with the terms of the Subordinated Indenture, the
Debenture Trustee will be deemed to have resigned and the
successor will be deemed to have been appointed as trustee in
accordance with the Subordinated Indenture (Section 910).
Notices. Notices to Holders of Subordinated Indenture
Securities will be given by mail to the addresses of such Holders
as they may appear in the security register therefor (Section
106).
Title. The Company, the Debenture Trustee, and any agent of
the Company or the Debenture Trustee, may treat the Person in
whose name Subordinated Indenture Securities are registered as
the absolute owner thereof (whether or not such Subordinated
Indenture Securities may be overdue) for the purpose of making
payments and for all other purposes irrespective of notice to the
contrary (Section 308).
Governing Law. The Subordinated Indenture and Subordinated
Indenture Securities will be governed by, and construed in
accordance with, the laws of the State of New York (Section 112).
Regarding the Debenture Trustee. The Debenture Trustee
under the Subordinated Indenture is The Bank of New York. In
addition to acting as Debenture Trustee under the Subordinated
Indenture, The Bank of New York acts, and may act, as trustee
under various indentures and trusts of the Company and its
affiliates, including, but not limited to the Trust Agreement,
the Guarantee and any Indenture, each as described herein. The
Company and its affiliates also maintain various banking and
trust relationships with The Bank of New York. The Bank of New
York (Delaware) acts as the Delaware Trustee under the Trust
Agreement. See DESCRIPTION OF THE PREFERRED TRUST SECURITIES --
"Regarding the Property Trustee."
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
RELATING TO THE PREFERRED TRUST SECURITIES
The following summary describes certain United States
federal income tax consequences of the ownership of Preferred
Trust Securities as of the date hereof and represents the opinion
of Reid & Priest LLP, counsel to the Company, insofar as it
relates to matters of law or legal conclusions. Except where
noted, it deals only with Preferred Trust Securities held as
capital assets and does not deal with special situations, such as
those of dealers in securities or currencies, financial
institutions, life insurance companies, persons holding Preferred
Trust Securities as a part of a hedging or conversion transaction
or a straddle, United States Holders (as defined herein) whose
"functional currency" is not the U.S. dollar, or persons who are
not United States Holders. In addition, this discussion does not
address the tax consequences to persons who purchase Preferred
Trust Securities other than pursuant to their initial issuance
and distribution. Furthermore, the discussion below is based
upon the provisions of the Internal Revenue Code of 1986, as
amended (Code), and regulations, rulings and judicial decisions
thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified so as to result in federal income
tax consequences different from those discussed below.
PROSPECTIVE PURCHASERS OF PREFERRED TRUST SECURITIES,
INCLUDING PERSONS WHO ARE NOT UNITED STATES HOLDERS AND PERSONS
WHO PURCHASE PREFERRED TRUST SECURITIES IN THE SECONDARY MARKET,
ARE ADVISED TO CONSULT WITH THEIR TAX ADVISORS AS TO THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND
DISPOSITION OF PREFERRED TRUST SECURITIES IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE,
LOCAL OR OTHER TAX LAWS.
UNITED STATES HOLDERS
As used herein, a "United States Holder" means a Holder that
is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof,
an estate the income of which is subject to United States federal
income taxation regardless of its source, or a trust the
administration of which is subject to the primary supervision of
a court within the United States and for which one or more United
States individuals have the authority to control all substantial
decisions.
CLASSIFICATION OF THE TRUST
Reid & Priest LLP, tax counsel to the Company and the Trust,
is of the opinion that, under current law and assuming full
compliance with the terms of the Subordinated Indenture and the
instruments establishing the Trust (and certain other documents),
the Trust will be classified as a "grantor trust" for federal
income tax purposes and will not be classified as an association
taxable as a corporation. Each Holder will be treated as owning
an undivided beneficial interest in the Junior Subordinated
Debentures. Investors should be aware that the opinion of Reid &
Priest LLP does not address any other issue and is not binding on
the Internal Revenue Service or the courts.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
Based on the advice of Reid & Priest LLP, the Company
believes and intends to take the position that the Junior
Subordinated Debentures will constitute indebtedness for United
States federal income tax purposes. No assurance can be given
that such position will not be challenged by the Internal Revenue
Service or, if challenged, that such a challenge will not be
successful. By purchasing and accepting Preferred Trust
Securities, each Holder covenants to treat the Junior
Subordinated Debentures as indebtedness and the Preferred Trust
Securities as evidence of an indirect beneficial ownership in the
Junior Subordinated Debentures. The remainder of this discussion
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assumes that the Junior Subordinated Debentures will be
classified as indebtedness of the Company for United States
federal income tax purposes.
PAYMENTS OF INTEREST
Except as set forth below, stated interest on a Junior
Subordinated Debenture will generally be taxable to a United
States Holder as ordinary income at the time it is paid or
accrued in accordance with the United States Holder's method of
accounting for tax purposes.
ORIGINAL ISSUE DISCOUNT
Under the income tax regulations that recently became
effective, the Company believes that the Junior Subordinated
Debentures will not be treated as issued with OID. It should be
noted that these regulations have not yet been addressed in any
rulings or other interpretations by the IRS. Accordingly, it is
possible that the IRS could take a position contrary to the
interpretation described herein.
Under the Subordinated Indenture, the Company has the right
to defer the payment of interest on the Junior Subordinated
Debentures at any time or from time to time for a period not
exceeding 10 consecutive semi-annual periods with respect to each
Extension Period, provided, however, that no Extension Period may
extend beyond the Stated Maturity (as defined in the Subordinated
Indenture) of the Junior Subordinated Debentures. Should the
Company exercise its rights to defer payments of interest, the
Junior Subordinated Debentures would at that time be treated as
issued with OID for so long as they remained outstanding. As a
result, all United States Holders would, in effect, be required
to accrue interest income even if such United States Holders are
on a cash method of accounting. Consequently, in the event that
the payment of interest is deferred, a United States Holder could
be required to include OID in income on an economic accrual
basis, notwithstanding that the Company will not make any
interest payments during such period on the Junior Subordinated
Debentures.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON
LIQUIDATION OF THE TRUST
As described under the caption DESCRIPTION OF THE PREFERRED
TRUST SECURITIES -- "Distribution of the Junior Subordinated
Debentures," Junior Subordinated Debentures may be distributed to
Holders of Preferred Trust Securities in exchange for the
Preferred Trust Securities upon liquidation of the Trust. Under
current law, for United States federal income tax purposes, such
a distribution would be treated as a non-taxable event to each
United States Holder, and each United States Holder would receive
an aggregate tax basis in the Junior Subordinated Debentures
equal to such Holder's aggregate tax basis in its Preferred Trust
Securities. A United States Holder's holding period for the
Junior Subordinated Debentures received in liquidation of the
Trust would include the period during which such Holder held the
Preferred Trust Securities.
Under certain circumstances, as described under the caption
DESCRIPTION OF THE PREFERRED TRUST SECURITIES -- "Redemption of
Preferred Trust Securities," the Junior Subordinated Debentures
may be redeemed for cash and the proceeds of such redemption
distributed to Holders of Preferred Trust Securities in
redemption of the Preferred Trust Securities. Under current law,
such a redemption would, for United States federal income tax
purposes, constitute a taxable disposition of the Preferred Trust
Securities, and a Holder would recognize gain or loss as if such
Holder had sold such redeemed Preferred Trust Securities. See
"Sale, Exchange and Redemption of the Preferred Trust
Securities."
SALE, EXCHANGE AND REDEMPTION OF THE PREFERRED TRUST
SECURITIES
Upon the sale, exchange or redemption of Preferred Trust
Securities, a United States Holder will recognize gain or loss
equal to the difference between the amount realized upon the sale
(other than amounts attributable to accrued, unpaid interest),
exchange or redemption and such Holder's adjusted tax basis in
the Preferred Trust Securities. Such gain or loss will be
capital gain or loss and will be long-term capital gain or loss
33
<PAGE>
if at the time of sale, exchange or redemption, the Preferred
Trust Securities have been held for more than one year. Generally,
for non-corporate United States Holders, net capital gains on
assets held for more than one year but not more than 18 months
will be subject to federal income tax at a maximum rate of 28%
and net capital gains on assets held for more than 18 months will
be subject to federal income tax at a maximum rate of 20%. Under
current law, deductibility of capital losses is subject to
limitations.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Subject to the qualification discussed below, income on the
Preferred Trust Securities will be reported to Holders on Forms
1099, which should be mailed to such Holders by January 31
following each calendar year.
The Trust will report annually to the holder of record of
the Preferred Trust Securities, the interest income paid or OID
accrued during the year with respect to the Junior Subordinated
Debentures. The Trust currently intends to report such
information on Form 1099 prior to January 31 following each
calendar year. Under current law, holders of record of Preferred
Trust Securities who hold as nominees for beneficial holders will
not have any obligation to report information regarding the
beneficial holders to the Trust. The Trust, moreover, will not
have any obligation to report to beneficial holders who are not
also record holders. Thus, beneficial holders of Preferred Trust
Securities who hold their Preferred Trust Securities through
nominee holders will typically receive Forms 1099 reflecting the
income on their Preferred Trust Securities from such nominee
holders rather than from the Trust.
Payments made in respect of, and proceeds from the sale of,
Preferred Trust Securities (or Junior Subordinated Debentures
distributed to holders of Preferred Trust Securities) may be
subject to "backup" withholding tax of 31% if the holder fails to
comply with certain identification requirements, or has
previously failed to report in full dividend and interest income,
or does not otherwise establish its entitlement to an exemption.
Any withheld amounts will be allowed as a refund or a credit
against the holder's United States federal income tax liability,
provided the required information is provided to the Internal
Revenue Service.
EXPERTS AND LEGALITY
The consolidated financial statements included in the latest
Annual Report of the Company on Form 10-K, incorporated herein by
reference, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report included in said
latest Annual Report of the Company on Form 10-K, and have been
incorporated by reference herein in reliance upon such report
given upon authority of the firm as experts in accounting and
auditing.
With respect to any unaudited condensed consolidated interim
financial information included in the Company's Quarterly Reports
on Form 10-Q which are or will be incorporated herein by
reference, Deloitte & Touche LLP has applied limited procedures
in accordance with professional standards for reviews of such
information. As stated in any of their reports included in the
Company's Quarterly Reports on Form 10-Q, which are or will be
incorporated herein by reference, Deloitte & Touche LLP did not
audit and did not express an opinion on such interim financial
information. Deloitte & Touche LLP is not subject to the
liability provisions of Section 11 of the 1933 Act for any of
their reports on such unaudited condensed consolidated interim
financial information because such reports are not "reports" or a
"part" of the Registration Statement filed under the 1933 Act
with respect to the Securities prepared or certified by an
accountant within the meaning of Sections 7 and 11 of the 1933
Act.
Certain matters of Delaware law relating to the validity of
the Preferred Trust Securities, the enforceability of the Trust
Agreement and the creation of the Trust are being passed upon by
Richards, Layton & Finger, P. A., Special Delaware counsel for
the Company and the Trust. Statements as to United States
federal income taxation under CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES RELATING TO THE PREFERRED TRUST
SECURITIES herein have been passed upon for the Company and the
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<PAGE>
Trust by Reid & Priest LLP, New York, New York, of counsel to the
Company. The legality of the other securities offered hereby
will be passed upon for the Company and the Trust by Worsham,
Forsythe & Wooldridge, L.L.P. and by Reid & Priest LLP, and for
the Underwriters by Winthrop, Stimson, Putnam & Roberts, New
York, New York. However, all matters pertaining to incorporation
of the Company and all other matters of Texas law will be passed
upon only by Worsham, Forsythe & Wooldridge, L.L.P. At October
31, 1997, members of the firm of Worsham, Forsythe & Wooldridge,
L.L.P. owned approximately 41,200 shares of the common stock of
Texas Utilities, which owns all of the common stock of the
Company.
PLAN OF DISTRIBUTION
The Company may sell the Securities in any of three ways:
(i) through underwriters or dealers; (ii) directly to a limited
number of purchasers or to a single purchaser; or (iii) through
agents. The Prospectus Supplement with respect to the Offered
Securities sets forth the terms of the offering of the Offered
Securities, including the name or names of any underwriters,
dealers or agents, the purchase price of such Offered Securities
and the proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers. Any
initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time
to time.
If underwriters are used in the sale, the Offered Securities
will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of the sale.
The underwriter or underwriters with respect to a particular
underwritten offering of Offered Securities are named in the
Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or
underwriters are set forth on the cover page of such Prospectus
Supplement. Unless otherwise set forth in the Prospectus
Supplement, the obligations of the underwriters to purchase the
Offered Securities will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all
such Offered Securities if any are purchased.
Offered Trust Securities may be sold directly by the Company
or through agents designated by the Company from time to time.
The Prospectus Supplement sets forth the name of any agent
involved in the offer or sale of the Offered Trust Securities in
respect of which the Prospectus Supplement is delivered as well
as any commissions payable by the Company to such agent. Unless
otherwise indicated in the Prospectus Supplement, any such agent
will be acting on a best efforts basis for the period of its
appointment.
If so indicated in the Prospectus Supplement, the Company
will authorize agents, underwriters or dealers to solicit offers
by certain specified institutions to purchase Offered Trust
Securities from the Company at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date
in the future. Such contracts will be subject to those conditions
set forth in the Prospectus Supplement, and the Prospectus
Supplement will set forth the commission payable for solicitation
of such contracts.
Subject to certain conditions, the Company may agree to
indemnify the several underwriters or agents and their
controlling persons against certain liabilities, including
liabilities under the 1933 Act arising out of or based upon,
among other things, any untrue statement or alleged untrue
statement of a material fact contained in the registration
statement, this Prospectus, a Prospectus Supplement or the
Incorporated Documents or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. See the
applicable Prospectus Supplement.
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<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT
IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OTHER PERSON, UNDERWRITER, DEALER OR AGENT.
NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF.
THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE
AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
36
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
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 post-effective amendment to the
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York,
and State of New York, on the 21st day of January, 1998.
ENSERCH CORPORATION
By: /s/ Robert J. Reger, Jr.
---------------------------
(Robert J. Reger, Jr., Esq.,
Attorney-in-fact)
Pursuant to the requirements of the Securities Act of 1933,
this post-effective amendment to the registration statement has
been signed below by the following persons in the capacities and
on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Erle Nye* Principal
------------------------ Executive January 21, 1998
(Erle Nye, Chairman of Officer and
the Board and Chief Director
Executive)
/s/ Robert S. Shapard* Principal
------------------------- Financial January 21, 1998
(Robert S. Shapard) Officer
/s/ Jerry W. Pinkerton* Principal
------------------------- Accounting January 21, 1998
(Jerry W. Pinkerton) Officer
/s/ D. W. Biegler* Director
-------------------------- January 21, 1998
(D. W. Biegler)
/s/ Barbara B. Curry* Director
-------------------------- January 21, 1998
(Barbara B. Curry)
/s/ H. Jarrell Gibbs* Director
-------------------------- January 21, 1998
(H. Jarrell Gibbs)
/s/ Michael J. McNally* Director
-------------------------- January 21, 1998
(Michael J. McNally)
/s/ Robert A. Wooldridge* Director
-------------------------- January 21, 1998
(Robert A. Wooldridge)
*By: /s/ Robert J. Reger, Jr.
---------------------------------
(Robert J. Reger, Jr., Esq.,
Attorney-in-fact)
II-1
<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 post-effective amendment to the
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York,
and State of New York, on the 21st day of January, 1998.
ENSERCH CAPITAL I
By: /s/ Robert J. Reger, Jr.
----------------------------
Robert J. Reger, Jr., Esq.,
Attorney-in-fact
II-2
