<PAGE>
As filed with the Securities and Exchange Commission on February 2, 1999
Registration Nos. 333-70665
333-70665-01
333-70665-02
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
HOUSTON INDUSTRIES INCORPORATED
HI Trust I
HI Trust II
(Exact name of each registrant as specified in its charter or trust agreement)
Texas 74-0694415
Delaware 76-6145023
Delaware 76-6145024
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Nos.)
1111 Louisiana Hugh Rice Kelly
Houston, Texas 77002 Executive Vice President, General
(713) 207-3000 Counsel and
(Address, including zip code, and Corporate Secretary
telephone 1111 Louisiana
number, including area code, of Houston, Texas 77002
each registrant's (713) 207-3000
principal executive offices) (Name, address, including zip code,
and telephone number, including area
code, of agent for service for each
registrant)
----------------
Copies to:
Margo S. Scholin Steven R. Loeshelle
Baker & Botts, L.L.P. Dewey Ballantine LLP
910 Louisiana 1301 Avenue of the Americas
One Shell Plaza New York, New York 10019-6092
Houston, Texas 77002-4995 (212) 259-8000
(713) 229-1234
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Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
Subject to Completion, dated February 2, 1999
Prospectus
$500,000,000
Houston Industries Incorporated
Junior Subordinated Debt Securities
HI Trust I
HI Trust II
Trust Preferred Securities fully and unconditionally guaranteed, as set forth
herein, by
Houston Industries Incorporated
Houston Industries Incorporated The Trusts
1111 Louisiana
Houston, Texas 77002 HI Trust I and HI Trust II are subsidiaries of
(713) 207-3000 Houston Industries Incorporated. The Trusts are
statutory business trusts created under Delaware law.
They exist for the purpose of issuing trust preferred
securities.
The information in
this prospectus is
not complete and may The Offering
be changed. We may
not sell these Junior Subordinated Debt Securities
securities until the
registration By this prospectus, the Company may offer junior
statement filed with subordinated debt securities. The Company's
the Securities and obligations under these debt securities will be
Exchange Commission unsecured and subordinate and junior in right of
is effective. This payment to all other Senior Debt (as defined herein)
prospectus is not an of the Company. The Company may issue and sell these
offer to sell these junior subordinated debt securities to the Trusts in
securities and it is connection with the Trusts' investment of proceeds
not soliciting an from the sale of their trust preferred securities and
offer to buy these common securities. Under certain circumstances the
securities in any Trusts may be dissolved and these junior subordinated
state where the debt securities will be distributed to holders of the
offer or sale is not Trusts' trust preferred securities.
permitted.
Trust Preferred Securities
We will provide
additional terms of By this prospectus, the Trusts may offer and sell
our securities in trust preferred securities representing undivided
one or more beneficial interests in the assets of the issuing
supplements to this Trust. The Trusts will use the proceeds from the sale
prospectus. You of their trust preferred securities and common
should read this securities to purchase junior subordinated debt
prospectus and the securities of the Company.
related prospectus
supplement carefully Guarantee
before you invest in
our securities. This The Company will fully and unconditionally
prospectus may not guarantee the Trusts' payment obligations with
be used to offer and respect to their trust preferred securities on the
sell our securities terms described in this prospectus and the
unless accompanied accompanying prospectus supplement.
by a prospectus
supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The date of this prospectus is , 1999
<PAGE>
TABLE OF CONTENTS
Prospectus
<TABLE>
<S> <C>
About this Prospectus.................................................... 2
Where You Can Find More Information...................................... 3
Disclosure Regarding Forward-looking Statements.......................... 4
The Company.............................................................. 4
Ratio of Earnings to Fixed Charges....................................... 5
Use of Proceeds.......................................................... 5
The Trusts............................................................... 5
Description of the Preferred Securities.................................. 10
Description of the Preferred Securities Guarantees....................... 11
Description of the Junior Subordinated Debt Securities................... 14
Plan of Distribution..................................................... 21
Legal Matters............................................................ 22
Experts.................................................................. 22
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with
the Securities and Exchange Commission (the "Commission") using a "shelf"
registration process. By using this process, we may offer the securities
described in this prospectus in one or more public offerings with a total
aggregate initial offering price of up to $500,000,000. This prospectus
provides you with a general description of the securities we may offer. Each
time we offer securities, we will provide a prospectus supplement. The
prospectus supplement will describe the specific terms of the offering. The
prospectus supplement may also add, update or change the information contained
in this prospectus. Please carefully read this prospectus and the applicable
prospectus supplement, in addition to the information contained in the
documents we refer to under the heading "Where You Can Find More Information."
You should rely only on the information contained or incorporated by
reference in this prospectus and any accompanying prospectus supplement. We
have not authorized anyone else to provide you with any different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. The information
contained in this prospectus is current only as of the date of this prospectus.
We have not included separate financial statements of the Trusts in this
prospectus. We do not consider that such financial statements would be material
to holders of the Trusts' trust preferred securities because:
. Each Trust is a newly created special purpose entity;
. Each Trust has no operating history or independent operations; and
. Neither Trust is engaged in nor does it propose to engage in any activity
other than holding the Junior Subordinated Debt Securities (as defined
herein), issuing the Trust Securities (as defined herein) and any other
activity related thereto or specifically authorized by the Trust's
Declaration (as defined herein).
Furthermore, taken together, the Company's obligations under the Junior
Subordinated Debt Securities, the Indenture, the Declarations and the Preferred
Securities Guarantees (each, as defined herein) provide, in the aggregate, a
full, irrevocable and unconditional guarantee of payments of distributions and
other amounts due on the Trusts' preferred securities. See "The Trusts,"
"Description of the Preferred Securities," "Description of the Preferred
Securities Guarantees" and "Description of the Junior Subordinated Debt
Securities." In addition, we do not expect that the Trusts will file reports
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
with the Commission.
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WHERE YOU CAN FIND MORE INFORMATION
We file reports and other information with the Commission. You may read and
copy any document we file with the Commission at the Commission's Public
Reference Room located at 450 Fifth Street, N.W., Washington, D.C. 20549, at
the regional offices of the Commission located at the Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and
at 7 World Trade Center, Suite 1300, New York, New York 10048. You may obtain
further information regarding the operation of the Commission's Public
Reference Room by calling the Commission at 1-800-SEC-0330. Our filings are
also available to the public on the Commission's Internet site located at
http://www.sec.gov. In addition, you may inspect our reports at the offices of
the New York Stock Exchange, Inc. at 20 Broad Street, New York, New York 10005.
The Commission allows us to "incorporate by reference" into this prospectus
the information we file with the Commission, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, unless we update or supersede that information by the information
contained in this prospectus or a prospectus supplement or by information that
we file subsequently that is incorporated by reference into this prospectus. We
are incorporating by reference into this prospectus the following documents
that the Company has filed with the Commission and the Company's future filings
with the Commission under Sections 13(a), 13(c), 14, or 15(d) of the Exchange
Act, until the offering of the securities offered hereby is completed:
. The Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1997;
. The Company's Quarterly Reports on Form 10-Q for its quarterly periods
ended March 31, 1998, June 30, 1998 and September 30, 1998;
. The Company's Current Report on Form 8-K filed with the Commission on
October 21, 1998; and
. The Company's Current Report on Form 8-K filed with the Commission on
February 1, 1999.
This prospectus is part of a registration statement we have filed with the
Commission relating to our securities. As permitted by Commission rules, this
prospectus does not contain all of the information included in the registration
statement and the accompanying exhibits and schedules we file with the
Commission. You should read the registration statement, the exhibits and
schedules for more information about us and our securities. The registration
statement, exhibits and schedules are also available at the Commission's Public
Reference Room or through its web site.
You may also obtain a copy of our filings with the Commission at no cost, by
writing to or telephoning us at the following address:
Houston Industries Incorporated
1111 Louisiana
Houston, Texas 77002
Attn: Corporate Secretary
(713) 207-3000
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this prospectus and any accompanying prospectus
supplement, including the documents that are incorporated by reference as set
forth in "Where You Can Find More Information," that are not historical facts
are forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are based on the beliefs of the
Company's management as well as assumptions made by and information currently
available to management. The Company and the Trusts caution that assumptions,
projections, expectations, intentions or beliefs about future events may and
often do vary materially from actual results and the differences between
assumptions, projections, expectations, intentions or beliefs and actual
results can be material. Accordingly, there can be no assurance actual results
will not differ materially from those expressed or implied by forward-looking
statements.
The following are some of the factors that could cause actual results to
differ from those expressed or implied in the forward-looking statements
contained herein:
. state and federal legislative and regulatory initiatives that affect cost
and investment recovery, have an impact on rate restructuring and affect
the speed and degree to which competition enters the electric and natural
gas industries;
. industrial, commercial and residential growth in our service territories;
. the weather and other natural phenomena;
. the timing and extent of changes in commodity prices and interest rates;
. changes in environmental and other laws and regulations to which the
Company and its subsidiaries are subject or other external factors over
which the Company has no control;
. the results of financing efforts;
. growth in opportunities for the Company's subsidiaries and diversified
operations;
. risks incidental to the Company's overseas operations (including the
effects of fluctuations in foreign currency exchange rates);
. the effect of the Company's accounting policies; and
. other factors discussed in this and other filings by the Company with the
Commission.
When used in the Company's documents, the words "anticipate," "estimate,"
"expect," "forecast," "goal," "objective," "projection" or similar words are
intended to identify forward-looking statements.
THE COMPANY
Houston Industries Incorporated (the "Company") is a diversified
international energy services company. Houston Lighting & Power Company, the
Company's electric utility division, serves approximately 1.6 million customers
in the City of Houston, Texas, and surrounding areas of the Texas Gulf Coast.
NorAm Energy Corp. ("NorAm"), the Company's largest subsidiary, is a natural
gas utility serving over 2.8 million customers in Arkansas, Louisiana,
Minnesota, Mississippi, Oklahoma and Texas. NorAm, through its subsidiaries, is
also a major interstate natural gas pipeline company and a provider of energy
marketing services.
The Company's other principal subsidiaries include (i) Houston Industries
Energy, Inc., which participates in the privatization of foreign generating and
distribution facilities and the development and acquisition of foreign
independent power projects and (ii) Houston Industries Power Generation, Inc.,
which participates in the acquisition, development and operation of domestic
non-rate regulated power generation facilities.
The Company, subject to certain limited exceptions, is exempt from
regulation as a public utility holding company pursuant to Section 3(a)(2) of
the Public Utility Holding Company Act of 1935, as amended.
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The Company's executive offices are located at Houston Industries Plaza,
1111 Louisiana, Houston, Texas 77002 (telephone number: (713) 207-3000).
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the periods indicated:
<TABLE>
<CAPTION>
Nine Months
Ended
September 30, Year Ended December 31,
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1998 1997 1997 1996 1995 1994 1993
------ ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings from continuing
operations to fixed charges before
cumulative effect of change in
accounting (1)(2)..................... 1.97 3.05 2.41 2.76 2.71 2.89 2.78
</TABLE>
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(1) The Company believes that the ratios for the nine-month periods are not
necessarily indicative of the ratios for the twelve-month periods due to
the seasonal nature of the Company's business and adjustments to the
Company's financial statements resulting from its acquisition of NorAm on
August 6, 1997.
(2) Includes the results of NorAm from the date of its acquisition which was
accounted for under the purchase method.
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, the
Company anticipates that any net proceeds from the sale of the securities
offered hereby will be used for general corporate purposes, which may include,
but are not limited to, working capital, capital expenditures, acquisitions and
the repayment or refinancing of the Company's indebtedness, including inter-
company indebtedness.
Each Trust will use all proceeds received from the sale of its Trust
Securities to purchase Junior Subordinated Debt Securities from the Company.
THE TRUSTS
HI Trust I and HI Trust II (each a "Trust", and collectively the "Trusts")
are statutory business trusts created on January 11, 1999, under the Delaware
Business Trust Act (the "Business Trust Act") pursuant to separate declarations
of trust among the Trustees (as defined herein) of each Trust and the Company
and the filing of a certificate of trust with the Secretary of State of the
State of Delaware. Each such declaration will be amended and restated in its
entirety (as so amended and restated, the "Declaration" and together, the
"Declarations") as of the date the respective Trust initially issues trust
preferred securities representing preferred undivided beneficial interests in
the assets of such Trust (the "Preferred Securities"). Each Declaration will be
qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
The following description summarizes the material terms of the Declarations
and is qualified in its entirety by reference to the form of Declaration, which
has been filed as an exhibit to the registration statement of which this
prospectus is a part, and the Trust Indenture Act.
The address of the principal office of each Trust is c/o Houston Industries
Incorporated, 1111 Louisiana, Houston, Texas 77002, and the telephone number of
each Trust at such address is (713) 207-3000.
Preferred Securities
Upon issuance of any Preferred Securities by a Trust, the holders thereof
will own all of the issued and outstanding Preferred Securities of such Trust.
The Company will, directly or indirectly, acquire common securities
representing common undivided beneficial interests in the assets of each Trust
(the "Common
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Securities" and, together with the Preferred Securities, the "Trust
Securities") in an amount equal to 3% of the total capital of such Trust and
will own, directly or indirectly, all of the issued and outstanding Common
Securities of each Trust. The Preferred Securities and the Common Securities
will rank pari passu with each other and will have equivalent terms; provided
that (i) if a Declaration Event of Default (as defined under "--Events of
Default") under the Declaration of a Trust occurs and is continuing, the
holders of Preferred Securities of such Trust will have a priority over holders
of the Common Securities of such Trust with respect to payments in respect of
distributions and payments upon liquidation, redemption and maturity and (ii)
the holders of Common Securities have the exclusive right to appoint, remove or
replace the Trustees and to increase or decrease the number of Trustees. Each
Trust exists for the purposes of (a) issuing its Preferred Securities, (b)
issuing its Common Securities to the Company, (c) investing the gross proceeds
from the sale of its Trust Securities in Junior Subordinated Debt Securities of
the Company and (d) engaging in only such other activities as are necessary,
convenient or incidental thereto or are specifically authorized in its
Declaration. The rights of the holders of the Preferred Securities of a Trust,
including economic rights, rights to information and voting rights, are set
forth in the applicable Declaration, the Business Trust Act and the Trust
Indenture Act.
Powers and Duties of Trustees
The number of trustees (the "Trustees") of each Trust will initially be
five. Three of the Trustees (the "Regular Trustees") are individuals who are
officers, directors or employees of the Company. The fourth Trustee is The Bank
of New York, which is unaffiliated with the Company and serves as the property
trustee (the "Property Trustee") and acts as the indenture trustee under the
Declaration for purposes of the Trust Indenture Act. The fifth Trustee is The
Bank of New York (Delaware) which has its principal place of business in the
State of Delaware (the "Delaware Trustee"). Pursuant to each Declaration, legal
title to the Junior Subordinated Debt Securities purchased by a Trust will be
owned by and held of record in the name of the Property Trustee in trust for
the benefit of the holders of the Trust Securities of such Trust, and the
Property Trustee will have the legal power to exercise all rights, powers and
privileges under the Indenture (as defined under "Description of the Junior
Subordinated Debt Securities") with respect to such Junior Subordinated Debt
Securities. In addition, the Property Trustee will maintain exclusive control
of a segregated non-interest bearing bank account (the "Property Account") to
hold all payments in respect of the Junior Subordinated Debt Securities
purchased by a Trust for the benefit of the holders of its Trust Securities.
The Property Trustee will promptly make distributions to the holders of the
Trust Securities out of funds from the Property Account. The Preferred
Securities Guarantees are separately qualified under the Trust Indenture Act
and will be held by The Bank of New York (the "Guarantee Trustee"), acting in
its capacity as indenture trustee with respect thereto, for the benefit of the
holders of the applicable Preferred Securities. As used in this prospectus and
any accompanying prospectus supplement, the term "Property Trustee" with
respect to a Trust refers to The Bank of New York acting either in its capacity
as a Trustee under the related Declaration and the holder of legal title to the
Junior Subordinated Debt Securities purchased by such Trust or in its capacity
as the Guarantee Trustee under the applicable Preferred Securities Guarantee,
as the context may require. The Company, as the direct or indirect owner of all
of the Common Securities of each Trust, will have the exclusive right to
appoint, remove or replace Trustees and to increase or decrease the number of
Trustees, provided that the number of Trustees will be, except under certain
circumstances, at least five and the majority of Trustees will be Regular
Trustees. The term of a Trust will be set forth in the applicable prospectus
supplement but may dissolve earlier as provided in the applicable Declaration.
The duties and obligations of the Trustees of a Trust will be governed by
the Declaration of such Trust, the Business Trust Act and the Trust Indenture
Act. Under its Declaration, each Trust will not, and the Trustees will cause
such Trust not to, engage in any activity other than in connection with the
purposes of such Trust or other than as required or authorized by the related
Declaration. In particular, each Trust will not and the Trustees will cause
each Trust not to (a) invest any proceeds received by such Trust from holding
the Junior Subordinated Debt Securities purchased by such Trust but shall
promptly distribute from the Property Account all such proceeds to holders of
its Trust Securities pursuant to the terms of the related Declaration and of
its
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Trust Securities; (b) acquire any assets other than as expressly provided in
the related Declaration; (c) possess property of such Trust for other than a
Trust purpose; (d) make any loans, other than loans represented by the Junior
Subordinated Debt Securities; (e) possess any power or otherwise act in such a
way as to vary the assets of such Trust or the terms of its Trust Securities in
any way whatsoever, except as expressly provided in the related Declaration;
(f) issue any securities or other evidences of beneficial ownership of, or
beneficial interests in, such Trust other than its Trust Securities; (g) incur
any indebtedness for borrowed money; (h) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee (as
defined under "Description of the Junior Subordinated Debt Securities") or
exercising any trust or power conferred upon the Indenture Trustee with respect
to the Junior Subordinated Debt Securities deposited in such Trust as trust
assets; (i) waive any past default that is waivable under the Indenture; (j)
exercise any right to rescind or annul a declaration of acceleration of the
maturity of the principal of all of the Junior Subordinated Debt Securities
deposited in such Trust as trust assets, without, in the case of clauses (h),
(i) and (j), obtaining the prior approval of the holders of a majority in
liquidation amount of all outstanding Trust Securities of such Trust; (k)
consent to any amendment, modification or termination of the Indenture or the
Junior Subordinated Debt Securities deposited in such Trust as trust assets,
where such consent is required, unless in the case of this clause (k) the
Property Trustee shall have received an opinion of counsel experienced in such
matters to the effect that such amendment, modification or termination will not
cause more than an insubstantial risk that for United States federal income tax
purposes such Trust will not be classified as a grantor trust; (l) take or
consent to any action that would result in the placement of a lien, pledge,
charge, mortgage or other encumbrance on any of the property of such Trust; (m)
vary the investment (within the meaning of Treasury Regulation Section
301.7701-4(c)) of such Trust or of the holders of its Trust Securities; (n)
after the issuance of its Preferred Securities, enter into any contract or
agreement (other than any depositary agreement or any agreement with any
securities exchange or automated quotation system) that does not expressly
provide that the holders of such Preferred Securities, in their capacities as
such, have limited liability (in accordance with the provisions of the Business
Trust Act) for the liabilities and obligations of such Trust or (o) revoke any
action previously authorized or approved by a vote of the holders of its
Preferred Securities except by subsequent vote of such holders.
Books and Records
The books and records of each Trust will be maintained at the principal
office of such Trust and will be open for inspection by a holder of Preferred
Securities of such Trust or his authorized representative for any purpose
reasonably related to his interest in such Trust during normal business hours.
Voting
Holders of Preferred Securities generally will have limited voting rights,
relating only to the modification of the Preferred Securities and, under
certain circumstances, to the exercise of a Trust's rights as holder of the
Junior Subordinated Debt Securities and the Preferred Securities Guarantee. The
holders of the Preferred Securities will not be able to appoint, remove or
replace, or to increase or decrease the number of, Trustees, which rights are
vested exclusively in the holders of the Common Securities.
The Property Trustee
The Property Trustee, for the benefit of the holders of the Trust Securities
of a Trust, is authorized under each Declaration to exercise all rights under
the Indenture with respect to the Junior Subordinated Debt Securities deposited
in such Trust as trust assets, including its rights as the holder of such
Junior Subordinated Debt Securities to enforce the Company's obligations under
such Junior Subordinated Debt Securities upon the occurrence of an Indenture
Event of Default (as defined herein under "Description of the Junior
Subordinated Debt Securities--Indenture Events of Default"). The Property
Trustee will also be authorized to enforce the rights of holders of the
Preferred Securities of a Trust under the related Preferred Securities
Guarantee. If any Trust's failure to make distributions on the Preferred
Securities of such Trust is a consequence of the Company's exercise of any
right under the terms of the Junior Subordinated Debt Securities deposited in
such
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Trust as trust assets to extend the interest payment period for such Junior
Subordinated Debt Securities, the Property Trustee will have no right to
enforce the payment of distributions on such Preferred Securities until a
Declaration Event of Default shall have occurred. If a Declaration Event of
Default has occurred and is continuing, then the holders of at least a majority
in liquidation amount of the Preferred Securities of a Trust will have the
right to direct the Property Trustee for such Trust with respect to certain
matters under the related Declaration and the related Preferred Securities
Guarantee. If the Property Trustee fails to enforce its rights under the
applicable series of Junior Subordinated Debt Securities, any holder of
Preferred Securities, to the extent permitted by applicable law, may, after a
period of 30 days has elapsed from such Holder's written request to the
Property Trustee to enforce such rights, institute a legal proceeding directly
against the Company to enforce such rights without first instituting any legal
proceeding against the Property Trustee or any other person. Notwithstanding
the foregoing, if a Declaration Event of Default under the applicable
Declaration has occurred and is continuing and such event is attributable to
the failure of the Company to pay interest or principal, or premium, if any, on
the applicable series of Junior Subordinated Debt Securities on the date such
interest, principal or premium is otherwise payable (or in the case of
redemption, on the redemption date), then a holder of Preferred Securities of
such Trust may directly institute a proceeding for enforcement of payment to
such holder of the principal of, or premium, if any, or interest on the
applicable series of Junior Subordinated Debt Securities having a principal
amount equal to the aggregate liquidation amount of the Preferred Securities of
such holder (a "Holder Direct Action") on or after the respective due date
specified in the applicable series of Junior Subordinated Debt Securities. In
connection with such Holder Direct Action, the Company will be subrogated to
the rights of such holder of Preferred Securities under the applicable
Declaration to the extent of any payment made by the Company to such holder of
Preferred Securities in such Holder Direct Action. Except as expressly provided
in the preceding sentences or in the applicable prospectus supplement, the
holders of Preferred Securities of such Trust will not be able to exercise
directly any other remedy available to the holders of the applicable series of
Junior Subordinated Debt Securities.
Distributions
Pursuant to each Declaration, distributions on the Preferred Securities of a
Trust must be paid on the dates payable to the extent that the Property Trustee
for such Trust has cash on hand in the applicable Property Account to permit
such payment. The funds available for distribution to the holders of the
Preferred Securities of a Trust will be limited to payments received by the
Property Trustee in respect of the Junior Subordinated Debt Securities that are
deposited in such Trust as trust assets. If the Company does not make interest
payments on the Junior Subordinated Debt Securities deposited in a Trust as
trust assets, the Property Trustee will not make distributions on the Preferred
Securities of such Trust. Under each Declaration, if and to the extent the
Company does make interest payments on the Junior Subordinated Debt Securities
deposited in a Trust as trust assets, the Property Trustee is obligated to make
distributions on the Trust Securities of such Trust on a Pro Rata Basis (as
defined below). The payment of distributions on the Preferred Securities of a
Trust is guaranteed by the Company as and to the extent set forth under
"Description of the Preferred Securities Guarantees." A Preferred Securities
Guarantee is a guarantee from the time of issuance of the Preferred Securities,
but the Preferred Securities Guarantee covers distributions and other payments
on the applicable Preferred Securities only if and to the extent that the
Company has made a payment to the Property Trustee of interest or principal, or
premium, if any, on the Junior Subordinated Debt Securities deposited in a
Trust as trust assets. As used in this prospectus, the term "Pro Rata Basis"
shall mean pro rata to each holder of Trust Securities of a Trust according to
the aggregate liquidation amount of the Trust Securities of such Trust held by
the relevant holder in relation to the aggregate liquidation amount of all
Trust Securities of such Trust outstanding unless, in relation to a payment, a
Declaration Event of Default under the related Declaration has occurred and is
continuing, in which case any funds available to make such payment shall be
paid first to each holder of the Preferred Securities of such Trust pro rata
according to the aggregate liquidation amount of the Preferred Securities held
by the relevant holder in relation to the aggregate liquidation amount of all
the Preferred Securities of such Trust outstanding, and only after satisfaction
of all amounts owed to the holders of such Preferred Securities, to each holder
of Common Securities of such Trust pro rata according to the aggregate
liquidation amount of such Common Securities held by the relevant holder in
relation to the aggregate liquidation amount of all Common Securities of such
Trust outstanding.
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Events of Default
If an Indenture Event of Default occurs and is continuing with respect to
the Junior Subordinated Debt Securities deposited in a Trust as trust assets,
an Event of Default under the Declaration (a "Declaration Event of Default") of
such Trust will occur and be continuing, with respect to any outstanding Trust
Securities of such Trust. In such event, each Declaration provides that the
holders of Common Securities of such Trust will be deemed to have waived any
such Declaration Event of Default with respect to the Common Securities until
all Declaration Events of Default with respect to the Preferred Securities of
such Trust have been cured or waived or otherwise eliminated. Until all such
Declaration Events of Default with respect to the Preferred Securities of such
Trust have been so cured, waived or otherwise eliminated, the Property Trustee
will be deemed to be acting solely on behalf of the holders of the Preferred
Securities of such Trust and only the holders of such Preferred Securities will
have the right to direct the Property Trustee with respect to certain matters
under such Declaration and consequently under the Indenture. In the event that
any Declaration Event of Default with respect to the Preferred Securities of
such Trust is waived by the holders of the Preferred Securities of such Trust
as provided in the Declaration, the holders of Common Securities of such Trust
pursuant to such Declaration have agreed that such waiver also constitutes a
waiver of such Declaration Event of Default with respect to such Common
Securities for all purposes under the Declaration without any further act, vote
or consent of the holders of such Common Securities. The Property Trustee shall
notify each holder of Preferred Securities of a Trust of any notice of default
with respect to the related Junior Subordinated Debt Securities, unless such
default has been cured before the giving of such notice or the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers (as that term is defined in the applicable Declaration) of
the Property Trustee in good faith determines that the withholding of such
notice is in the interests of the holders of the Trust Securities of such
Trust.
Record Holders
Each Declaration provides that the Trustees of such Trust may treat the
person in whose name a certificate representing its Preferred Securities is
registered on the books and records of such Trust as the sole holder thereof
and of the Preferred Securities represented thereby for purposes of receiving
distributions and for all other purposes and, accordingly, will not be bound to
recognize any equitable or other claim to or interest in such certificate or in
the Preferred Securities represented thereby on the part of any person, whether
or not the Trustees of such Trust shall have actual or other notice thereof.
Preferred Securities will be issued in fully registered form. Unless otherwise
specified in a prospectus supplement, Preferred Securities will be represented
by one or more global certificates registered on the books and records of such
Trust in the name of a depositary (the "Depositary") named in an accompanying
prospectus supplement or its nominee. Under each Declaration:
(i) such Trust and the Trustees thereof will be entitled to deal with
the Depositary (or any successor depositary) for all purposes, including
the payment of distributions and receiving approvals, votes or consents
under the related Declaration, and except as set forth in the related
Declaration with respect to the issuance of definitive certificates
representing the Preferred Securities, will have no obligation to persons
owning a beneficial interest in Preferred Securities ("Preferred Security
Beneficial Owners") registered in the name of and held by the Depositary or
its nominee; and
(ii) the rights of Preferred Security Beneficial Owners will be
exercised only through the Depositary (or any successor depositary) and
will be limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Depositary and/or its
participants. With respect to Preferred Securities registered in the name
of and held by the Depositary or its nominee, all notices and other
communications required under each Declaration will be given to, and all
distributions on such Preferred Securities will be given or made to, the
Depositary (or its successor).
The specific terms of the depositary arrangement with respect to the
Preferred Securities of a Trust will be disclosed in the applicable prospectus
supplement.
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Debts and Obligations
In each Declaration, the Company has agreed to pay all debts and obligations
(other than with respect to the related Trust Securities) and all costs and
expenses of the applicable Trust, including the fees and expenses of its
Trustees and any taxes and all costs and expenses with respect thereto, to
which such Trust may become subject, except for United States withholding
taxes. The foregoing obligations of the Company under each Declaration are for
the benefit of, and will be enforceable by, any person to whom any such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice thereof. Any such Creditor may enforce such
obligations of the Company directly against the Company, and the Company has
irrevocably waived any right or remedy to require that any such Creditor take
any action against any Trust or any other person before proceeding against the
Company. The Company will be subrogated to all rights of a Trust in respect of
any amounts paid to any Creditor by the Company. The Company has agreed in each
Declaration to execute such additional agreements as may be necessary or
desirable in order to give full effect to the foregoing.
DESCRIPTION OF THE PREFERRED SECURITIES
Each Trust may issue, from time to time, only one series of Preferred
Securities having terms described in the prospectus supplement relating
thereto. The Declaration of each Trust authorizes the Regular Trustees of such
Trust to issue on behalf of such Trust one series of Preferred Securities. Each
Declaration will be qualified as an indenture under the Trust Indenture Act.
The Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as set forth in the related
Declaration or made part of such Declaration by the Trust Indenture Act.
Reference is made to the prospectus supplement relating to the Preferred
Securities of a Trust for specific terms, including (i) the specific
designation of such Preferred Securities, (ii) the number of Preferred
Securities issued by such Trust, (iii) the annual distribution rate (or method
of calculation thereof) for Preferred Securities issued by such Trust, the date
or dates upon which such distributions will be payable and the record date or
dates for the payment of such distributions, (iv) whether distributions on the
Preferred Securities issued by such Trust will be cumulative, and, in the case
of Preferred Securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates from which distributions on
Preferred Securities issued by such Trust will be cumulative, (v) the amount or
amounts which will be paid out of the assets of such Trust to the holders of
Preferred Securities of such Trust upon voluntary or involuntary dissolution,
winding-up or termination of such Trust, (vi) the obligation or right, if any,
of such Trust to purchase or redeem Preferred Securities issued by such Trust
and the price or prices at which, the period or periods within which and the
terms and conditions upon which Preferred Securities issued by such Trust will
or may be purchased or redeemed, in whole or in part, pursuant to such
obligation or right, (vii) the voting rights, if any, of Preferred Securities
issued by such Trust in addition to those required by law, including the number
of votes per Preferred Security and any requirement for the approval by the
holders of Preferred Securities, as a condition to specified actions or
amendments to the Declaration of such Trust, (viii) terms for any conversion or
exchange into other securities (ix) the rights, if any, to defer distributions
on the Preferred Securities by extending the interest payment period on the
Junior Subordinated Debt Securities and (x) any other relevant, terms, rights,
preferences, privileges, limitations or restrictions of Preferred Securities
issued by such Trust consistent with the Declaration of such Trust or with
applicable law. All Preferred Securities offered hereby will be guaranteed by
the Company as and to the extent set forth below under "Description of the
Preferred Securities Guarantees." Certain United States federal income tax
considerations applicable to any offering of Preferred Securities will be
described in the prospectus supplement relating thereto.
In connection with the issuance of the Preferred Securities, each Trust will
issue one series of Common Securities. The Declaration of each Trust authorizes
the Regular Trustees of such Trust to issue on behalf of such Trust one series
of Common Securities having such terms including distributions, redemption,
voting, liquidation rights or such restrictions as set forth therein. The terms
of the Common Securities issued by a Trust
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will be substantially identical to the terms of the Preferred Securities issued
by such Trust and the Common Securities will rank pari passu, and payments will
be made thereon on a Pro Rata Basis with the Preferred Securities except that
if a Declaration Event of Default occurs and is continuing, the rights of the
holders of such Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and maturity will be subordinated to the
rights of the holders of such Preferred Securities. The Common Securities
issued by a Trust will also carry the right to vote and to appoint, remove or
replace any of the Trustees of such Trust. All of the Common Securities issued
by a Trust will be directly or indirectly owned by the Company.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
The payment of periodic cash distributions with respect to the Preferred
Securities of each Trust out of moneys held by the Property Trustee of each
Trust, and payments on liquidation of each Trust and redemption of Preferred
Securities of each Trust, will be fully and unconditionally guaranteed by the
Company as described herein (each such guarantee, a "Preferred Securities
Guarantee"). Set forth below is a summary of the Preferred Securities
Guarantees that will be executed and delivered by the Company for the benefit
of the holders from time to time of Preferred Securities. Each Preferred
Securities Guarantee will be separately qualified under the Trust Indenture Act
and will be held by The Bank of New York, acting in its capacity as indenture
trustee with respect thereto (the "Guarantee Trustee"), for the benefit of
holders of the Preferred Securities of the applicable Trust. The terms of each
Preferred Securities Guarantee will be those set forth in such Preferred
Securities Guarantee and those made part of such Guarantee by the Trust
Indenture Act. This description summarizes the material terms of the Preferred
Securities Guarantees and is qualified in its entirety by reference to the form
of Preferred Securities Guarantee, which is filed as an exhibit to the
registration statement of which this prospectus forms a part, and the Trust
Indenture Act.
General
Pursuant to each Preferred Securities Guarantee, the Company will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full, to the holders of the Preferred Securities issued by a Trust, the
Guarantee Payments (as defined herein) (without duplication of amounts
theretofore paid by such Trust), as and when due, regardless of any defense,
right of set-off or counterclaim that such Trust may have or assert. The
following payments or distributions with respect to Preferred Securities issued
by a Trust to the extent not paid or made by or on behalf of such Trust will be
subject to such Preferred Securities Guarantee (without duplication): (i) any
accumulated and unpaid distributions on such Preferred Securities, and the
redemption price, including all accumulated and unpaid distributions to, but
excluding, the date of redemption, with respect to such Preferred Securities
called for redemption by such Trust but if and only to the extent that in each
case the Company has made a payment to the related Property Trustee of interest
or principal, or premium, if any, on the Junior Subordinated Debt Securities
deposited in such Trust as trust assets and (ii) upon a voluntary or
involuntary dissolution, winding-up or termination of such Trust (other than in
connection with the distribution of Junior Subordinated Debt Securities to the
holders of such Preferred Securities in exchange for Preferred Securities or
the redemption of all of such Preferred Securities upon the maturity or
redemption of the Junior Subordinated Debt Securities), the lesser of (a) the
aggregate of the liquidation amount and all accumulated and unpaid
distributions on such Preferred Securities to the date of payment, to the
extent such Trust has funds on hand legally available therefor, and (b) the
amount of assets of such Trust remaining available for distribution to holders
of such Preferred Securities in liquidation of such Trust as required by
applicable law (the "Guarantee Payments"). The Company's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Company to the holders of such Preferred Securities or by causing the
applicable Trust to pay such amounts to such holders.
The Preferred Securities Guarantee is a guarantee from the time of issuance
of the applicable Preferred Securities, but the Preferred Securities Guarantee
covers distributions and other payments on such Preferred Securities only if
and to the extent that the Company has made a payment to the Property Trustee
of interest or
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principal, or premium, if any, on the Junior Subordinated Debt Securities
deposited in the applicable Trust as trust assets. If the Company does not make
interest, principal or premium, if any, payments on the Junior Subordinated
Debt Securities deposited in the applicable Trust as trust assets, the Property
Trustee will not make distributions on the Preferred Securities of such Trust
and the Trust will not have funds available therefor.
The Company's obligations under the Declaration for each Trust, the
Preferred Securities Guarantee issued with respect to Preferred Securities
issued by such Trust, the Junior Subordinated Debt Securities purchased by such
Trust and the Indenture, in the aggregate, will provide a full and
unconditional guarantee on a subordinated basis by the Company of payments due
on the Preferred Securities issued by such Trust.
Certain Covenants of the Company
In each Preferred Securities Guarantee, the Company will covenant that, so
long as any Preferred Securities issued by the applicable Trust remain
outstanding, the Company will not (i) declare or pay any dividends on, or
redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its capital stock (other than (a) dividends or distributions
in shares of, or options, warrants, rights to subscribe for or purchase shares
of, common stock of the Company, (b) any declaration of a dividend in
connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) as a result of a
reclassification of the Company's capital stock or the exchange or the
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock, (d) the payment of accrued
dividends and the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, or (e) purchases of the
Company's common stock related to the issuance of the Company's common stock or
rights under any of the Company's benefit plans for its directors, officers or
employees, any of the Company's dividend reinvestment plans or stock purchase
plans, or any of the benefit plans of any of the Company's affiliates for such
affiliates' directors, officers or employees), (ii) make any payment of
principal or of interest or premium, if any, on or repay, repurchase or redeem
any debt security of the Company that ranks pari passu with or junior in
interest to the Junior Subordinated Debt Securities deposited in such Trust or
(iii) make any guarantee payments with respect to any guarantee by the Company
of the debt securities of any subsidiary of the Company (other than pursuant to
a Preferred Securities Guarantee) if such guarantee ranks pari passu with or
junior in interest to the Junior Subordinated Debt Securities deposited in such
Trust, if at such time (x) the Company shall be in default with respect to its
Guarantee Payments or other payment obligations under the related Preferred
Securities Guarantee, (y) there shall have occurred any Declaration Event of
Default under the applicable Declaration or (z) the Company shall have given
notice of its election to defer payments of interest on the Junior Subordinated
Debt Securities by extending the interest payment period as provided in the
terms of the Junior Subordinated Debt Securities deposited in such Trust as
trust assets and such period, or any extension thereof, is continuing. In
addition, so long as any Preferred Securities of a Trust remain outstanding,
the Company has agreed (i) to remain the sole direct or indirect owner of all
of the outstanding Common Securities of such Trust and not to cause or permit
such Common Securities to be transferred except to the extent permitted by the
applicable Declaration; provided that any permitted successor of the Company
under the Indenture may succeed to the Company's ownership of such Common
Securities and (ii) to use reasonable efforts to cause such Trust to continue
to be treated as a grantor trust for United States federal income tax purposes
except in connection with a distribution of Junior Subordinated Debt Securities
to the holders of such Preferred Securities as provided in the applicable
Declaration.
Amendments and Assignment
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities in any material respect (in which case no
consent will be required), each Preferred Securities Guarantee may be amended
only with the prior approval of the Company and the holders of not less than a
majority in liquidation amount of the outstanding Preferred Securities issued
by the applicable Trust. The manner of obtaining any
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such approval of holders of such Preferred Securities will be set forth in an
accompanying prospectus supplement. All guarantees and agreements contained in
a Preferred Securities Guarantee shall bind the successors, assignees,
receivers, trustees and representatives of the Company and shall inure to the
benefit of the holders of the Preferred Securities of the applicable Trust then
outstanding. Except in connection with a consolidation, merger or sale
involving the Company that is permitted under the Indenture, the Company may
not assign its obligations under any Preferred Securities Guarantee.
Termination of the Preferred Securities Guarantee
Each Preferred Securities Guarantee will terminate and be of no further
force and effect as to the Preferred Securities issued by the applicable Trust
(i) upon full payment of the redemption price of all Preferred Securities of
such Trust, (ii) upon distribution of the Junior Subordinated Debt Securities
to the holders of the Trust Securities of such Trust in exchange for all of the
Trust Securities issued by such Trust or (iii) upon full payment of the amounts
payable in accordance with the applicable Declaration upon liquidation of such
Trust. Notwithstanding the foregoing, each Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of Preferred Securities issued by the applicable Trust must
restore payment of any sums paid with respect to such Preferred Securities or
under such Preferred Securities Guarantee.
Status of the Preferred Securities Guarantee
The Company's obligation under each Preferred Securities Guarantee to make
the Guarantee Payments will constitute an unsecured obligation of the Company
and will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, including the Junior Subordinated Debt Securities,
except those made pari passu or subordinate by their terms, and (ii) senior to
all capital stock (other than the most senior preferred stock issued, from time
to time, if any, by the Company, which preferred stock will rank pari passu
with each Preferred Securities Guarantee) now or hereafter issued by the
Company and to any guarantee now or hereafter entered into by the Company in
respect of any of its capital stock (other than the most senior preferred stock
issued, from time to time, if any, by the Company). The Company's obligations
under each Preferred Securities Guarantee will rank pari passu with respect to
obligations under other guarantee agreements which it may enter into from time
to time to the extent that (i) such agreements shall be entered into in
substantially the form of the Preferred Securities Guarantee and provide for
comparable guarantees by the Company of payment on preferred securities issued
by other trusts, partnerships or other entities affiliated with the Company
that are financing vehicles of the Company and (ii) the debentures or other
evidences of indebtedness of the Company relating to such preferred securities
are junior subordinated, unsecured indebtedness of the Company. The Company's
obligations under each Preferred Securities Guarantee are effectively
subordinated to all existing and future liabilities, including trade payables,
of the Company's subsidiaries, except to the extent that the Company is a
creditor of the subsidiaries and is recognized as such. Each Declaration
provides that each holder of Preferred Securities by acceptance thereof agrees
to the subordination provisions and other terms of the related Preferred
Securities Guarantee.
Each Preferred Securities Guarantee will constitute a guarantee of payment
and not merely of collection (that is, 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). Each Preferred Securities Guarantee will be deposited with the
Guarantee Trustee, as indenture trustee, to be held for the benefit of the
holders of the Preferred Securities issued by the applicable Trust. The
Guarantee Trustee will have the right to enforce the Preferred Securities
Guarantee on behalf of the holders of the Preferred Securities issued by the
applicable Trust. The holders of not less than a majority in aggregate
liquidation amount of the Preferred Securities issued by the applicable Trust
will 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
related Preferred Securities Guarantee or exercising any trust or other power
conferred upon the Guarantee Trustee under such Preferred Securities Guarantee.
If the Guarantee Trustee fails to enforce such Preferred Securities Guarantee
as above provided, any holder of Preferred Securities issued by the applicable
Trust may institute a legal
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proceeding directly against the Company to enforce its rights under such
Preferred Securities Guarantee without first instituting a legal proceeding
against the applicable Trust, the Guarantee Trustee or any other person or
entity. Notwithstanding the foregoing, if the Company has failed to make a
Guarantee Payment, a holder of Preferred Securities may directly institute a
proceeding against the Company for enforcement of the applicable Preferred
Securities Guarantee for such payment without first instituting a legal
proceeding against the applicable Trust, the Guarantee Trustee or any other
person or entity.
Miscellaneous
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 each Preferred Securities Guarantee and as to any default in such
performance. The Company is required to file annually with the Guarantee
Trustee an officers' certificate as to the Company's compliance with all
conditions under each Preferred Securities Guarantee.
The Guarantee Trustee, prior to the occurrence of an event of default under
a Preferred Securities Guarantee and after the curing or waiving of all events
of default that may have occurred, will undertake to perform only such duties
as are specifically set forth in the applicable Preferred Securities Guarantee,
and no implied covenants will be read into such Preferred Securities Guarantee.
After a default with respect to a Preferred Securities Guarantee has occurred,
the Guarantee Trustee shall exercise such of the rights and powers vested in it
by such Preferred Securities Guarantee, and use the same degree of care and
skill in its exercise thereof as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs. Subject to such
provision, the Guarantee Trustee is under no obligation to exercise any of the
rights or powers vested in it by a Preferred Securities Guarantee at the
request or direction of any holder of the applicable Preferred Securities
unless it is offered security and indemnity satisfactory to it against the
costs, expenses and liabilities that might be incurred thereby.
Governing Law
Each Preferred Securities Guarantee will be governed by, and construed in
accordance with, the laws of the State of New York.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
The Company may issue from time to time one or more series of Junior
Subordinated Debt Securities ("Junior Subordinated Debt Securities") under a
Junior Subordinated Indenture (the "Indenture") between the Company and The
Bank of New York, as trustee (the "Indenture Trustee"). The Indenture will be
qualified under the Trust Indenture Act. The form of the Indenture has been
filed as an exhibit to the registration statement of which this prospectus
forms a part. The following description summarizes the material terms of the
Indenture, and is qualified in its entirety by reference to the Indenture and
the Trust Indenture Act. Whenever particular provisions or defined terms in the
Indenture are referred to herein, such provisions or defined terms are
incorporated by reference herein. Section and article references used herein
are references to provisions of the Indenture.
General
The Junior Subordinated Debt Securities will be unsecured junior
subordinated obligations of the Company. The Indenture does not limit the
amount of additional indebtedness the Company or any of its subsidiaries may
incur. The Company's rights and the rights of its creditors, including the
holders of Junior Subordinated Debt Securities, to participate in the assets of
any subsidiary of the Company upon the latter's liquidation or recapitalization
will be subject to the prior claims of the subsidiary's creditors, except to
the extent that the Company may itself be a creditor with recognized claims
against the subsidiary.
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The Indenture does not limit the aggregate principal amount of indebtedness
that may be issued thereunder and provides that Junior Subordinated Debt
Securities may be issued thereunder from time to time in one or more series.
The Junior Subordinated Debt Securities are issuable in one or more series
pursuant to an indenture supplemental to the Indenture.
In the event Junior Subordinated Debt Securities are issued to a Trust in
connection with the issuance of Trust Securities by such Trust, such Junior
Subordinated Debt Securities subsequently may be distributed pro rata to the
holders of such Trust Securities in connection with the dissolution of such
Trust at the election of the Company or upon the occurrence of certain events
described in the prospectus supplement relating to such Trust Securities. Only
one series of Junior Subordinated Debt Securities will be issued to each Trust
in connection with the issuance of the Trust Securities by such Trust.
Reference is made to the prospectus supplement which will accompany this
prospectus for the following terms of the series of Junior Subordinated Debt
Securities being offered thereby (to the extent such terms are applicable to
the Junior Subordinated Debt Securities of such series): (i) the specific
designation of such Junior Subordinated Debt Securities, aggregate principal
amount, purchase price and premium, if any; (ii) any limit on the aggregate
principal amount of such Junior Subordinated Debt Securities; (iii) the date or
dates on which the principal of such Junior Subordinated Debt Securities is
payable and the right to shorten, extend or defer such date or dates; (iv) the
rate or rates at which such Junior Subordinated Debt Securities will bear
interest or the method of calculating such rate or rates, if any; (v) the date
or dates from which such interest shall accrue, the interest payment dates on
which such interest will be payable or the manner of determination of such
interest payment dates and the record dates for the determination of holders to
whom interest is payable on any such interest payment dates; (vi) the right, if
any, to extend or defer the interest payment periods and the duration of such
extension; (vii) the period or periods within which, the price or prices at
which, and the terms and conditions upon which, such Junior Subordinated Debt
Securities may be redeemed, in whole or in part, at the option of the Company;
(viii) the obligation, if any, of the Company to redeem or purchase such Junior
Subordinated Debt Securities pursuant to any sinking fund or analogous
provisions (including payments made in cash in anticipation of future sinking
fund obligations) or at the option of the holder thereof and the period or
periods for which, the price or prices at which, the currency or currencies
(including currency unit or units) in which and the terms and conditions upon
which, such Junior Subordinated Debt Securities will be redeemed or purchased,
in whole or part, pursuant to such obligation; (ix) any exchangeability,
conversion or prepayment provisions of the Junior Subordinated Debt Securities;
(x) any applicable United States federal income tax consequences, including
whether and under what circumstances the Company will pay additional amounts on
the Junior Subordinated Debt Securities held by a person who is not a U.S.
person in respect of any tax, assessment or governmental charge withheld or
deducted and, if so, whether the Company will have the option to redeem such
Junior Subordinated Debt Securities rather than pay such additional amounts;
(xi) the form of such Junior Subordinated Debt Securities; (xii) if other than
denominations of $25 or any integral multiple thereof, the denominations in
which such Junior Subordinated Debt Securities will be issuable; (xiii) any and
all other terms with respect to such series, including any modification of or
additions to the events of default or covenants provided for with respect to
such series, and any terms which may be required by or advisable under
applicable laws or regulations not inconsistent with the Indenture; and (xiv)
whether such Junior Subordinated Debt Securities are issuable as a global
security, and in such case, the identity of the depositary. (Section 2.01)
Unless otherwise indicated in the prospectus supplement relating thereto,
the Junior Subordinated Debt Securities will be issued in United States dollars
in fully registered form without coupons in denominations of $25 or integral
multiples thereof. Junior Subordinated Debt Securities may be presented for
exchange and Junior Subordinated Debt Securities in registered form may be
presented for transfer in the manner, at the places and subject to the
restrictions set forth in the Junior Subordinated Debt Securities and the
prospectus supplement. Such services will be provided without charge, other
than any tax or other governmental charge payable in connection therewith, but
subject to the limitations provided in the Junior Subordinated Debt Securities.
Junior Subordinated Debt Securities may bear interest at a fixed rate or a
floating rate. Junior Subordinated Debt Securities bearing no interest or
interest at a rate that at the time of issuance is below the prevailing
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market rate will be sold at a discount below their stated principal amount.
Special United States federal income tax considerations applicable to any such
discounted Junior Subordinated Debt Securities or to certain Junior
Subordinated Debt Securities issued at par which are treated as having been
issued at a discount for United States federal income tax purposes will be
described in the relevant prospectus supplement.
Certain Covenants of the Company Applicable to the Junior Subordinated Debt
Securities
If Junior Subordinated Debt Securities are issued to a Trust in connection
with the issuance of Trust Securities by such Trust, the Company will covenant
in the Indenture that, so long as the Preferred Securities issued by the
applicable Trust remain outstanding, the Company will not (i) declare or pay
any dividends on, or redeem, purchase, acquire or make a distribution or
liquidation payment with respect to, any of its capital stock (other than (a)
dividends or distributions in shares of, or options, warrants, rights to
subscribe for or purchase shares of, common stock of the Company, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) as a result of a reclassification of the Company's capital stock or the
exchange or the conversion of one class or series of the Company's capital
stock for another class or series of the Company's capital stock, (d) the
payment of accrued dividends and the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
or (e) purchases of the Company's common stock related to the issuance of the
Company's common stock or rights under any of the Company's benefit plans for
its directors, officers, employees, any of the Company's dividend reinvestment
plans or stock purchase plans, or any of the benefit plans of any of the
Company's affiliates for such affiliates' directors, officers or employees),
(ii) make any payment of principal or of interest or premium, if any, on or
repay, repurchase or redeem any debt security of the Company that, ranks pari
passu with or junior in interest to the Junior Subordinated Debt Securities
deposited in such Trust or (iii) make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company (other than pursuant to a Preferred Securities Guarantee) if such
guarantee ranks pari passu with or junior in interest to the Junior
Subordinated Debt Securities deposited in such Trust, if at such time (x) the
Company shall be in default with respect to its Guarantee Payments or other
payment obligations under the related Preferred Securities Guarantee, (y) there
shall have occurred any Indenture Event of Default with respect to the Junior
Subordinated Debt Securities deposited in such Trust as Trust assets or (z) the
Company shall have given notice of its election to defer payments of interest
on the Junior Subordinated Debt Securities by extending the interest payment
period as provided in the terms of the Junior Subordinated Debt Securities
deposited in such Trust as Trust assets and such period, or any extension
thereof, is continuing. In addition, if Junior Subordinated Debt Securities are
issued to a Trust in connection with the issuance of Trust Securities by such
Trust, for so long as any Preferred Securities issued by the applicable Trust
remain outstanding, the Company has agreed (i) to remain the sole direct or
indirect owner of all of the outstanding Common Securities issued by the
applicable Trust and not to cause or permit such Common Securities to be
transferred except to the extent permitted by the applicable Declaration;
provided that any permitted successor of the Company under the Indenture may
succeed to the Company's ownership of the Common Securities issued by the
applicable Trust, (ii) to comply fully with all of its obligations and
agreements contained in the related Declaration and (iii) to use reasonable
efforts to cause the applicable Trust to continue to be treated as a grantor
trust for United States federal income tax purposes except in connection with a
distribution of Junior Subordinated Debt Securities to holders of Preferred
Securities issued by the applicable Trust as provided in the related
Declaration.
Subordination
The payment of principal of, premium, if any, and interest on the Junior
Subordinated Debt Securities will, to the extent and in the manner set forth in
the Indenture, be subordinated and junior in right of payment to the prior
payment in full, in cash or cash equivalents, of all Senior Debt of the Company
whether outstanding on the date of this prospectus or thereafter incurred.
Upon any payment by the Company or distribution of assets of the Company to
creditors upon any liquidation, dissolution, winding up, receivership,
reorganization, assignment for the benefit of creditors,
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<PAGE>
marshaling of assets and liabilities or any bankruptcy, insolvency or similar
proceedings of the Company, the holders of all Senior Debt will first be
entitled to receive payment in full of all amounts due or to become due thereon
before the holders of the Junior Subordinated Debt Securities will be entitled
to receive any payment in respect of the principal of, premium, if any, or
interest on the Junior Subordinated Debt Securities.
In the event and during the continuation of any default by the Company in
the payment of principal, premium, interest or any other payment due on any
Senior Debt, or in the event that the maturity of any Senior Debt has been
accelerated because of a default, then, in either case, no payment shall be
made by the Company with respect to the principal (including redemption
payments) of or premium, if any, or interest on the Junior Subordinated Debt
Securities until such default shall have been cured or waived in writing or
shall have ceased to exist or such Senior Debt shall have been discharged or
paid in full.
In the event of the acceleration of the maturity of the Junior Subordinated
Debt Securities, then no payments shall be made by the Company with respect to
the principal (including redemption payments) of or premium, if any, or
interest on the Junior Subordinated Debt Securities until the holders of all
Senior Debt outstanding at the time of such acceleration shall receive payment
in full of such Senior Debt (including any amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any payment shall be
received by the Indenture Trustee or any holder of Junior Subordinated Debt
Securities when such payment is prohibited by the preceding paragraphs, such
payment shall be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Debt or their respective representatives,
or to the trustee or trustees under any indenture pursuant to which any of such
Senior Debt may have been issued, as their respective interests may appear.
By reason of such subordination, in the event of insolvency of the Company,
funds that would otherwise be payable to holders of Junior Subordinated Debt
Securities will be paid to the holders of Senior Debt of the Company to the
extent necessary to pay such Senior Debt in full, and the Company may be unable
to meet fully its obligations with respect to the Junior Subordinated Debt
Securities.
"Debt" is defined to mean, with respect to any person at any date of
determination (without duplication), (i) all indebtedness of such person for
borrowed money, (ii) all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses, (iii) all
obligations of such person in respect of letters of credit or bankers'
acceptances or other similar instruments (or reimbursement obligations with
respect thereto) issued on the account of such person, (iv) all obligations of
such person to pay the deferred purchase price of property or services, except
certain trade payables, (v) all obligations of such person as lessee under
capitalized leases, (vi) all Debt of others secured by a lien on any asset of
such person, whether or not such Debt is assumed by such person; provided that,
for purposes of determining the amount of any Debt of the type described in
this clause, if recourse with respect to such Debt is limited to such asset,
the amount of such Debt shall be limited to the lesser of the fair market value
of such asset or the amount of such Debt, (vii) all Debt of others guaranteed
by such person to the extent such Debt is guaranteed by such person and (viii)
to the extent not otherwise included in this definition, all obligations of
such person for claims in respect of derivative products, including interest
rate, foreign exchange rate and commodity prices, forward contracts, options,
swaps, collars and similar arrangements.
"Senior Debt" is defined to mean the principal of (and premium, if any) and
interest on all Debt of the Company whether created, incurred or assumed
before, on or after the date of the Indenture; provided that such Senior Debt
shall not include (i) Debt of the Company that, when incurred and without
respect to any election under Section 1111(b) of Title 11, U.S. Code, was
without recourse and (ii) any other Debt of the Company which by the terms of
the instrument creating or evidencing the same is specifically designated as
being subordinated to or pari passu with the Junior Subordinated Debt
Securities, and in particular the Junior Subordinated Debt Securities shall
rank pari passu with all other debt securities and guarantees issued to any
trust, partnership or other entity affiliated with the Company which is a
financing vehicle of the Company in connection with an issuance of preferred
securities by such financing entity.
17
<PAGE>
Indenture Events of Default
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Indenture Event
of Default" with respect to each series of Junior Subordinated Debt Securities:
(a) failure for 30 days to pay interest on the Junior Subordinated Debt
Securities of such series when due; provided that a valid extension of the
interest payment period by the Company shall not constitute a default in
the payment of interest for this purpose;
(b) failure to pay principal of or premium, if any, on the Junior
Subordinated Debt Securities of such series when due whether at maturity,
upon redemption, by declaration or otherwise;
(c) failure for 30 days to pay any sinking fund or analogous fund
payment with respect to the Junior Subordinated Debt Securities of such
series;
(d) failure to duly observe or perform, in any material respect, any
other covenant or agreement contained in the Indenture with respect to such
series for 90 days after written notice to the Company from the Indenture
Trustee or the holders of at least 25% in principal amount of the
outstanding Junior Subordinated Debt Securities of such series;
(e) certain events in bankruptcy, insolvency or reorganization of the
Company; or
(f) any other Indenture Event of Default applicable to the Junior
Subordinated Debt Securities of such series. (Section 6.01)
In each and every such case, unless the principal of all the Junior
Subordinated Debt Securities of that series shall have already become due and
payable, either the Indenture Trustee or the holders of not less than 25% in
aggregate principal amount of the Junior Subordinated Debt Securities of that
series then outstanding, by notice in writing to the Company (and to the
Indenture Trustee if given by such holders), may declare the principal of all
the Junior Subordinated Debt Securities of that series to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable. (Section 6.01)
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debt Securities of that series have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee or exercising any trust or power conferred on the
Indenture Trustee with respect to such series. (Section 6.06) The Indenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the Junior Subordinated Debt Securities of that series may declare
the principal due and payable immediately upon an Indenture Event of Default
with respect to such series, but the holders of a majority in aggregate
outstanding principal amount of Junior Subordinated Debt Securities of such
series may rescind and annul such declaration and waive the default if the
default has been cured and a sum sufficient to pay all matured installments of
interest and principal otherwise than by acceleration and any premium has been
deposited with the Indenture Trustee. (Sections 6.01 and 6.06)
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debt Securities of that series may, on behalf of the
holders of all the Junior Subordinated Debt Securities of that series, waive
any past default, except a default in the payment of principal, premium, if
any, or interest (unless such default has been cured and a sum sufficient to
pay all matured installments of interest and principal otherwise than by
acceleration and any premium has been deposited with the Indenture Trustee) or
a call for redemption of the Junior Subordinated Debt Securities of that
series. (Section 6.06) The Company is required to file annually with the
Indenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants under the Indenture. (Section
5.03)
If Junior Subordinated Debt Securities are issued to a Trust in connection
with the issuance of Trust Securities of such Trust, then under the applicable
Declaration an Indenture Event of Default with respect to such series of Junior
Subordinated Debt Securities will constitute a Declaration Event of Default. If
a Declaration Event of Default under the applicable Declaration has occurred
and is continuing and such event is
18
<PAGE>
attributable to the failure of the Company to pay interest or principal, or
premium, if any, on the applicable series of Junior Subordinated Debt
Securities on the date such interest, principal or premium is otherwise payable
(or in the case of redemption, on the redemption date), then a holder of
Preferred Securities of such Trust may directly institute a Holder Direct
Action on or after the respective due date specified in the applicable series
of Junior Subordinated Debt Securities (see "The Trusts--The Property
Trustee"). In connection with such Holder Direct Action, the Company will be
subrogated to the rights of such holder of Preferred Securities under the
applicable Declaration to the extent of any payment made by the Company to such
holder of Preferred Securities in such Holder Direct Action. Except as
expressly provided in the preceding sentences or in the applicable prospectus
supplement, the holders of Preferred Securities of such Trust will not be able
to exercise directly any other remedy available to the holders of the
applicable series of Junior Subordinated Debt Securities.
Modification of the Indenture
From time to time the Company and the Indenture Trustee may, without the
consent of the holders of Junior Subordinated Debt Securities, amend the
Indenture or indentures supplemental thereto for one or more of the following
purposes: (a) to evidence the succession of another corporation or other entity
to the Company under the Indenture and the Junior Subordinated Debt Securities
and the assumption by such successor corporation or other entity of the
obligations of the Company thereunder; (b) to add further covenants,
restrictions, conditions or provisions for the protection of the holders of
Junior Subordinated Debt Securities; (c) to cure any ambiguity or to correct or
supplement any provision which may be defective or inconsistent with any other
provision; (d) to add to, change or eliminate any of the provisions of the
Indenture, provided that any such addition, change or elimination shall become
effective only after there are no such Junior Subordinated Debt Securities of
any series entitled to the benefit of such provision outstanding; (e) to
provide for the issuance of Junior Subordinated Debt Securities in coupon form;
(f) to evidence and provide for the acceptance of a successor trustee; (g) to
qualify or maintain the qualification of the Indenture under the Trust
Indenture Act; (h) to establish the form or terms of a series of Junior
Subordinated Debt Securities; and (i) to make any addition, change or
elimination of any provision of the Indenture that does not adversely affect
the rights of any holder of Junior Subordinated Debt Securities in any material
respect. (Section 9.01)
The Indenture contains provisions permitting the Company and the Indenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the outstanding Junior Subordinated Debt Securities of each
series affected by such modification, to modify the Indenture or any
supplemental indenture affecting the rights of the holders of such Junior
Subordinated Debt Securities; provided that no such modification may, without
the consent of the holder of each outstanding Subordinated Debt Security
affected thereby, (i) extend the fixed maturity of the Junior Subordinated Debt
Securities of any series, reduce the principal amount thereof, reduce the rate
or extend the time of payment of interest thereon, reduce any premium payable
upon the redemption thereof or (ii) reduce the percentage of Junior
Subordinated Debt Securities, the holders of which are required to consent to
any such modification. (Section 9.02)
Book-Entry and Settlement
If any Junior Subordinated Debt Securities of a series are represented by
one or more global securities (each, a "Global Security"), the applicable
prospectus supplement will describe the circumstances, if any, under which
beneficial owners of interests in any such Global Security may exchange such
interests for Junior Subordinated Debt Securities of such series and of like
tenor and principal amount in any authorized form and denomination. Principal
of and any premium and interest on a Global Security will be payable in the
manner described in the applicable prospectus supplement.
The specific terms of the depositary arrangement with respect to any portion
of a series of Junior Subordinated Debt Securities to be represented by a
Global Security will be described in the applicable prospectus supplement.
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<PAGE>
Consolidation, Merger and Sale
The Indenture will provide that the Company may not consolidate with or
merge into any other person or convey, transfer or lease its properties and
assets substantially as an entirety to any person and may not permit any person
to merge into or consolidate with the Company unless (i) either the Company
will be the resulting or surviving entity or any successor or purchaser is a
corporation, limited liability company, partnership or trust organized under
the laws of the United States of America, any State or the District of
Columbia, and any such successor or purchaser expressly assumes the Company's
obligations under the Junior Subordinated Debt Securities and the Indenture and
(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. (Section 10.01)
Defeasance and Discharge
Under the terms of the Indenture, the Company will be discharged from any
and all obligations in respect of a series of the Junior Subordinated Debt
Securities (except in each case for certain obligations to register the
transfer or exchange of such Junior Subordinated Debt Securities, replace
stolen, lost or mutilated Junior Subordinated Debt Securities of such series,
maintain paying agencies and hold moneys for payment in trust) if (i) the
Company irrevocably deposits with the Indenture Trustee cash or U.S. Government
Obligations or a combination thereof, as trust funds in an amount certified to
be sufficient to pay at maturity (or upon redemption) the principal of,
premium, if any, and interest on all outstanding Junior Subordinated Debt
Securities of such series; (ii) such deposit will not result in a breach or
violation of, or constitute a default under, any agreement or instrument to
which the Company is a party or by which it is bound; (iii) the Company
delivers to the Indenture Trustee an opinion of counsel to the effect that the
holders of the Junior Subordinated Debt Securities of such series will not
recognize income, gain or loss for United States federal income tax purposes as
a result of such defeasance and discharge and that such defeasance and
discharge will not otherwise alter holders' United States federal income tax
treatment of principal, premium and interest payments on such Junior
Subordinated Debt Securities of such series (such opinion must be based on a
ruling of the Internal Revenue Service or a change in United States federal
income tax law occurring after the date of the Indenture, since such a result
would not occur under current tax law); (iv) the Company has delivered to the
Indenture Trustee an officers' certificate and an opinion of counsel, each
stating that all conditions precedent provided for relating to the defeasance
and discharge contemplated by such provision have been complied with; and (v)
no event or condition shall exist that pursuant to the applicable subordination
provisions, would prevent the Company from making payments of principal of,
premium, if any, and interest on the Junior Subordinated Debt Securities at the
date of the irrevocable deposit referred to above. (Section 11.01)
Governing Law
The Indenture and the Junior Subordinated Debt Securities will be governed
by the laws of the State of New York. (Section 13.05)
Information Concerning the Indenture Trustee
The Indenture Trustee, prior to the occurrence of an Indenture Event of
Default and after the curing of all Indenture Events of Default undertakes to
perform only such duties as are specifically set forth in the Indenture and,
after an Indenture Event of Default has occurred (which has not been cured or
waived), shall exercise such of the rights and powers vested in it by the
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs. (Section 7.01) Subject to such provision, the Indenture
Trustee is under no obligation to exercise any of the powers vested in it by
the Indenture at the request of any holder of Junior Subordinated Debt
Securities, unless offered security or indemnity satisfactory to it by such
holder against the costs, expenses and liabilities that might be incurred
thereby. (Section 7.02) The Indenture Trustee is not required to expend or risk
its own funds or otherwise incur personal financial liability in the
performance of its duties or in the exercise of any of its
20
<PAGE>
rights or powers if there is reasonable ground for believing that the repayment
of such funds or liability is not reasonably assured to it under the terms of
the Indenture or adequate indemnity against such risk is not reasonably assured
to it. (Section 7.01)
The Company and its subsidiaries maintain commercial banking and trust
relationships with the Indenture Trustee and its affiliates.
Miscellaneous
The Company will have the right at all times to assign any of its rights or
obligations under the Indenture to an affiliate; provided that, in the event of
any such assignment, the Company will remain jointly and severally liable for
all such obligations. Subject to the foregoing, the Indenture will be binding
upon and inure to the benefit of the parties thereto and their respective
successors and assigns. The Indenture provides that it may not otherwise be
assigned by the parties thereto other than by the Company to a successor or
purchaser pursuant to a consolidation, merger, sale or conveyance permitted by
the Indenture. (Section 13.11)
PLAN OF DISTRIBUTION
The Company may sell any series of Junior Subordinated Debt Securities and
each Trust may sell its Preferred Securities (the Junior Subordinated Debt
Securities and the Preferred Securities are collectively referred to herein as
the "Offered Securities") being offered hereby in any of three ways (or in any
combination thereof): (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 any Offered Securities will set forth
the terms of the offering of such Offered Securities, including the name or
names of any underwriters, dealers or agents and the respective amounts of such
Offered Securities underwritten or purchased by each of them, the initial
public offering price of such Offered Securities and the proceeds to the
Company or the applicable Trust, as the case may be, from such sale, any
discounts, commissions or other items constituting compensation from the
Company or the applicable Trust, as the case may be, and any discounts,
commissions or concessions allowed or reallowed or paid to dealers and any
securities exchanges on which such Offered Securities may be listed. Any 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 of any Offered Securities, such 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 sale. Such Offered Securities may be either offered to the
public through underwriting syndicates represented by managing underwriters, or
directly by underwriters. Unless otherwise set forth in the prospectus
supplement, the obligations of the underwriters to purchase such Offered
Securities will be subject to certain conditions precedent and the underwriters
will be obligated to purchase all of such Offered Securities if any are
purchased.
Offered Securities may be sold directly by the Company or a Trust, as the
case may be, or through agents designated by the Company or such Trust, as the
case may be, from time to time. Any agent involved in the offer or sale of
Offered Securities in respect of which this prospectus is delivered will be
named, and any commissions payable by the Company or the applicable Trust, as
the case may be, to such agent will be set forth, in the prospectus supplement.
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 or the applicable
Trust, as the case may be, will authorize underwriters, dealers or agents to
solicit offers by certain purchasers to purchase Offered Securities from the
Company or the applicable Trust, as the case may be, 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 only to those conditions set forth in the
prospectus
21
<PAGE>
supplement, and the prospectus supplement will set forth the commission payable
for solicitation of such contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company and the applicable Trust to indemnification by the Company and the
applicable Trust against certain civil liabilities, including liabilities under
the Securities Act, or to contribution with respect to payments which the
agents or underwriters may be required to make in respect thereof. Agents and
underwriters may be customers of, engage in transactions with, or perform
services for the Company, the applicable Trust and/or any of their affiliates
in the ordinary course of business.
Certain persons participating in the offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Offered
Securities. In connection with the offering, the underwriters or agents, as the
case may be, may purchase and sell the Offered Securities in the open market.
These transactions may include overallotment and stabilizing transactions and
purchases to cover syndicate short positions created in connection with the
offering. Stabilizing transactions consist of certain bids or purchases for the
purpose of preventing or retarding a decline in the market price of the Offered
Securities; and syndicate short positions involve the sale by the underwriters
or agents, as the case may be, of a greater number of Offered Securities than
they are required to purchase from the Company or the applicable Trust, as the
case may be, in the offering. The underwriters may also impose a penalty bid,
whereby selling concessions allowed to syndicate members or other broker-
dealers for the Offered Securities sold for their account may be reclaimed by
the syndicate if such Offered Securities are repurchased by the syndicate in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the Offered Securities, which may be
higher than the price that might otherwise prevail in the open market, and, if
commenced, may be discontinued at any time. These transactions may be effected
on the New York Stock Exchange, in the over-the-counter market or otherwise.
For a description of these activities, see "Plan of Distribution" or
"Underwriting" in the relevant prospectus supplement.
Unless otherwise indicated in the prospectus supplement, the Company does
not intend to list any of the Offered Securities on a national securities
exchange. No assurances can be given that there will be a market for the
Offered Securities.
LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplement, certain
matters of Delaware law relating to the validity of the Preferred Securities,
the enforceability of the applicable Declaration and the formation of the
Trusts will be passed upon by Richards, Layton & Finger, P.A., Wilmington,
Delaware, special Delaware counsel to the Trusts and the Company. The validity
of the applicable Preferred Securities Guarantee and the Junior Subordinated
Debt Securities offered hereby will be passed upon for the Company by Baker &
Botts, L.L.P., Houston, Texas and for the Underwriters by Dewey Ballantine LLP,
New York, New York. Certain legal matters may also be passed upon by Hugh Rice
Kelly, Esq., Executive Vice President, General Counsel and Corporate Secretary
of the Company or by Rufus S. Scott, Vice President, Deputy General Counsel and
Assistant Corporate Secretary of the Company. James A. Baker, III, a senior
partner in the law firm of Baker & Botts, L.L.P., is currently a director of
the Company and beneficial owner of 2,500 shares of the Company's common stock.
EXPERTS
The consolidated financial statements of the Company incorporated in this
prospectus by reference from the Company's Annual Report on Form 10-K for the
year ended December 31, 1997 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
22
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The Company estimates that expenses in connection with the offering
described in this Registration Statement will be as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee................... $139,000
Blue Sky expenses............................................... 5,000
Attorney's fees and expenses.................................... 140,000
Independent Auditor's fees and expenses......................... 15,000
Printing and engraving expenses................................. 200,000
Rating Agency fees.............................................. 128,000
Trustee's fees and expenses..................................... 8,000
Miscellaneous expenses.......................................... 5,000
--------
Total......................................................... $640,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers.
Article 2.02.A.(16) and Article 2.02-1 of the Texas Business Corporation Act
and Article V of the Company's Amended and Restated Bylaws provide the Company
with broad powers and authority to indemnify its directors and officers and to
purchase and maintain insurance for such purposes. Pursuant to such statutory
and Bylaw provisions, the Company has purchased insurance against certain costs
of indemnification that may be incurred by it and by its officers and
directors.
Additionally, Article IX of the Company's Restated Articles of Incorporation
provides that a director of the Company is not liable to the Company for
monetary damages for any act or omission in the director's capacity as
director, except that Article IX does not eliminate or limit the liability of a
director for (i) breaches of such director's duty of loyalty to the Company and
its shareholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, (iii) transactions from
which a director receives an improper benefit, irrespective of whether the
benefit resulted from an action taken within the scope of the director's
office, (iv) acts or omissions for which liability is specifically provided by
statute and (v) acts relating to unlawful stock repurchases or payments of
dividends.
Article IX also provides that any subsequent amendments to Texas statutes
that further limit the liability of directors will inure to the benefit of the
directors, without any further action by shareholders. Any repeal or
modification of Article IX shall not adversely affect any right of protection
of a director of the Company existing at the time of the repeal or
modification.
The Underwriting Agreement to be entered into in connection with the
offering of the Securities described in this Registration Statement, will
provide that the Underwriters shall indemnify the Company, its directors and
certain officers of the Company against liabilities resulting from information
furnished by or on behalf of the Underwriters specifically for use in the
Registration Statement.
See "Item 17. Undertakings" for a description of the Commission's position
regarding such indemnification provisions.
Item 16. Exhibits.
See Index to Exhibits at page II-7.
II-1
<PAGE>
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section
do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-2
<PAGE>
(d) The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement or Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, the State of Texas, on February 1,
1999.
HOUSTON INDUSTRIES INCORPORATED
/s/ Don D. Jordan
By:__________________________________
Don D. Jordan, Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
</TABLE>
Signatures Title Date
/s/ Don D. Jordan Chairman and Chief February 1, 1999
- ----------------------------------- Executive Officer
Don D. Jordan and Director
(Principal
Executive Officer
and Director)
/s/ Stephen W. Naeve Executive Vice February 1, 1999
- ----------------------------------- President and Chief
Stephen W. Naeve Financial Officer
(Principal
Financial Officer)
/s/ Mary P. Ricciardello Vice President and February 1, 1999
- ----------------------------------- Comptroller
Mary P. Ricciardello (Principal Accounting
Officer)
/s/ Richard E. Balzhiser Director February 1, 1999
- -----------------------------------
Richard E. Balzhiser
/s/ Milton Carroll Director February 1, 1999
- -----------------------------------
Milton Carroll
/s/ John T. Cater Director February 1, 1999
- -----------------------------------
John T. Cater
/s/ O. Holcombe Crosswell Director February 1, 1999
- -----------------------------------
O. Holcombe Crosswell
/s/ Robert J. Cruikshank Director February 1, 1999
- -----------------------------------
Robert J. Cruikshank
/s/ Linnet F. Deily Director February 1, 1999
- -----------------------------------
Linnet F. Deily
/s/ Joseph M. Grant Director February 1, 1999
- -----------------------------------
Joseph M. Grant
II-4
<PAGE>
<TABLE>
<S> <C> <C>
Signatures Title Date
/s/ Robert C. Hanna Director February 1, 1999
- -----------------------------------
Robert C. Hanna
/s/ Lee W. Hogan Director February 1, 1999
- -----------------------------------
Lee W. Hogan
/s/ T. Milton Honea Director February 1, 1999
- -----------------------------------
T. Milton Honea
/s/ R. Steve Letbetter Director February 1, 1999
- -----------------------------------
R. Steve Letbetter
/s/ Alexander F. Schilt Director February 1, 1999
- -----------------------------------
Alexander F. Schilt
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, HI Trust I
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 Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Houston, State of Texas, on February 1, 1999.
HI Trust I
By: Houston Industries Incorporated,
as Sponsor
By: /s/ Linda Geiger
-----------------------------------
Name: Linda Geiger
Title: Assistant Treasurer
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, HI Trust II
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 Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Houston, State of Texas, on February 1, 1999.
HI Trust II
By: Houston Industries Incorporated,
as Sponsor
By: /s/ Linda Geiger
-----------------------------------
Name: Linda Geiger
Title: Assistant Treasurer
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Report or SEC File or
Exhibit Registration Registration Exhibit
Number Document Description Statement Number Reference
------- ------------------------ ------------------- ------------ ---------
<C> <S> <C> <C> <C>
1.1* Form of Underwriting
Agreement
4.1*** Form of Junior
Subordinated Indenture
(the "Junior
Subordinated Indenture")
between the Company and
The Bank of New York, as
Trustee
4.2.1*** Declaration of Trust of
HI Trust I
4.2.2*** Declaration of Trust of
HI Trust II
4.3*** Form of Amended and
Restated Declaration of
Trust
4.4.1*** Certificate of Trust of
HI Trust I
4.4.2*** Certificate of Trust of
HI Trust II
4.5*** Form of Preferred
Security (included in
Exhibit 4.3)
4.6* Form of Supplemental
Indenture to the Junior
Subordinated Indenture
4.7* Form of Junior
Subordinated Debt
Security (included in
Exhibit 4.6)
4.8*** Form of Preferred
Securities Guarantee
4.9** Restated Articles of Form 10-K for the 1-3187 3(a)
Incorporation of the year ended December
Company (restated as of 31, 1997
September 1997)
4.10** Amended and Restated Form 10-Q for the 1-3187 3
Bylaws of the Company quarterly period
(adopted on September 2, ended September 30,
1998) 1998
5.1*** Opinion of Baker &
Botts, L.L.P.
5.2.1*** Opinion of Richards,
Layton & Finger, P.A.
relating to HI Trust I
5.2.2*** Opinion of Richards,
Layton & Finger, P.A.
relating to HI Trust II
8* Opinion of Counsel to
the Company as to
certain tax matters
12.1** Statement re: Form 10-Q for the 1-3187 12
Computation of Ratios quarterly period
ended September 30,
1998
23.1 Consent of Deloitte &
Touche LLP
23.2*** Consent of Baker &
Botts, L.L.P. (included
in Exhibit 5.1)
23.3*** Consent of Richards,
Layton & Finger, P.A.
(included in Exhibits
5.2.1 and 5.2.2)
25.1*** Statement of Eligibility
under the Trust
Indenture Act of 1939,
as amended (the "Trust
Indenture Act"), of The
Bank of New York, as the
Trustee under the Junior
Subordinated Indenture
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
Report or SEC File or
Exhibit Registration Registration Exhibit
Number Document Description Statement Number Reference
------- ------------------------- ------------------- ------------ ---------
<C> <S> <C> <C> <C>
25.2*** Statement of Eligibility
under the Trust Indenture
Act of The Bank of New
York, as Property
Trustee, relating to HI
Trust I
25.3*** Statement of Eligibility
under the Trust Indenture
Act of The Bank of New
York, as Property
Trustee, relating to HI
Trust II
25.4*** Statement of Eligibility
under the Trust Indenture
Act of The Bank of New
York, as Guarantee
Trustee, relating to HI
Trust I
25.5*** Statement of Eligibility
under the Trust Indenture
Act of The Bank of New
York, as Guarantee
Trustee, relating to HI
Trust II
</TABLE>
- --------
*To be filed by amendment or by a report on Form 8-K pursuant to Regulation
S-K, Item 601(b).
**Incorporated herein by reference as indicated.
***Previously filed.
II-9
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-70665 of Houston Industries Incorporated (the
"Company") on Form S-3 of our report dated February 20, 1998 appearing in the
Annual Report on Form 10-K of the Company for the year ended December 31, 1997
and to the reference to us under the heading "Experts" in the Prospectus, which
is a part of such Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
February 1, 1999
