As filed with the Securities and Exchange Commission on April
17 , 1996 Registration No. 33-69648
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
FORM S-3
Registration Statement
Under
The Securities Act of 1933
KANSAS CITY SOUTHERN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 44-0663509
(State of Incorporation) (I.R.S. Employer Identification
No.)
114 West Eleventh Street
Kansas City, Missouri 64105
(816) 556-0303
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JOSEPH D. MONELLO
Vice President and Chief Financial Officer
Kansas City Southern Industries, Inc.
114 West Eleventh Street
Kansas City, Missouri 64105
(816) 556-0213
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
JOHN F. MARVIN, ESQ. RICHARD P. BRUENING, ESQ.
DIANE M. BONO, ESQ. Kansas City Southern Industries,
Inc.
Watson & Marshall L.C. 114 West Eleventh Street
1010 Grand Avenue Kansas City, Missouri 64105
Kansas City, Missouri 64106-2271
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 Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act 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
PRELIMINARY PROSPECTUS DATED April 17, 1996
INFORMATION HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED
PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION
OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
KANSAS CITY SOUTHERN INDUSTRIES, INC.
$500,000,000
SECURITIES
Kansas City Southern Industries, Inc. (the "Company") may
offer from time to time, together or separately, (i) shares of
its Common Stock, par value $.01 per share (the "Common Stock"),
(ii) shares of its New Series Preferred Stock, par value $1 per
share (the "Series Preferred Stock" and, together with the Common
Stock, the "Equity Securities"), (iii) its convertible debt
securities (the "Convertible Debt Securities"), which may be
either senior debt securities ("Convertible Senior Debt
Securities") or subordinated debt securities ("Convertible
Subordinated Debt Securities"), consisting of debentures, notes
or other evidence of indebtedness representing unsecured
obligations of the Company convertible into Common Stock, and
(iv) its debt securities (the "Debt Securities") (collectively
the "Securities"), in amounts, at prices and on terms to be
determined at the time of offering. The Securities offered
pursuant to this Prospectus may be issued in one or more
issuances or series and will be limited to $500,000,000 aggregate
public offering price. Certain specific terms of the particular
Securities in respect of which this Prospectus is being delivered
(the "Offered Securities") are set forth in the accompanying
Prospectus Supplement (the "Prospectus Supplement"), including,
where applicable, in the case of Series Preferred Stock, the
specific title, and any dividend, liquidation, redemption, voting
and other rights, any terms for conversion into Common Stock, the
initial public offering price and other special terms, and in the
case of Convertible Debt Securities and Debt Securities, the
specific designation, aggregate principal amount, the
denomination, maturity, premium, if any, the interest rate (which
may be fixed or variable), time and method of calculating payment
of interest, if any, the place or places where principal of,
premium, if any, and interest, if any, will be payable, any terms
of redemption at the option of the Company or of the holder, any
sinking fund provisions, the initial public offering price and
other special terms, and in the case of Convertible Debt
Securities only, terms for conversion into Common Stock. If so
specified in the applicable Prospectus Supplement, Convertible
Debt Securities and Debt Securities of any series may be issued
in whole or in part in the form of one or more temporary or
permanent global securities.
The Convertible Senior Debt Securities and Debt Securities
will be unsecured general obligations of the Company and will
rank PARI PASSU with all other senior (that is, unsubordinated)
indebtedness of the Company. The Convertible Subordinated Debt
Securities will be subordinated in right of payment to all Senior
Debt (as hereinafter defined) of the Company. Because the
Company is a holding company, however, the Convertible Debt
Securities and the Debt Securities will be effectively
subordinated to the claims of creditors of the Company's
subsidiaries. At December 31, 1995 , the Company's
subsidiaries had an aggregate of $147.6 million of
indebtedness outstanding. See "Description of Convertible Debt
Securities and Debt Securities."
______________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Company may sell the Securities to or through underwriters,
through dealers or agents or directly to purchasers. See "Plan
of Distribution." The accompanying Prospectus Supplement sets
forth the names of any underwriters, dealers or agents involved
in the sale of the Securities in respect of which this Prospectus
is being delivered, and any applicable fee, commission or
discount arrangements with them.
This Prospectus may not be used to consummate sales of
Securities unless accompanied by a Prospectus Supplement.
________________________________
The date of this Prospectus is ________________, 1996 .
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT LEVELS ABOVE
THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
AVAILABLE INFORMATION
This Prospectus constitutes a part of a registration
statement on Form S-3 (together with all amendments and exhibits,
the "Registration Statement") filed by the Company with the
Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus does not contain all of the information included in
the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission.
Reference is made to the Registration Statement and to the
exhibits relating thereto for further information with respect to
the Company and the Securities offered hereby.
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, files reports, proxy state-
ments and other information with the Commission. Such reports,
proxy statements and other information can be inspected and
copies obtained at the public reference facilities maintained by
the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of
the Commission: New York Regional Office, Seven World Trade
Center, 13th Floor, New York City, New York 10048 and Chicago
Regional Office, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The Registration Statement can be inspected at,
and copies thereof , as well as copies of such reports, proxy
statements and other information, can be obtained at
prescribed prices from, the Public Reference Section of the
Commission, Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. In addition, such reports, proxy
statements and other information concerning the Company can
be inspected at the offices of the New York Stock Exchange, Inc.,
20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with
the Commission (File No. 1-4717) pursuant to the Exchange Act and
are incorporated by reference and made a part of this Prospectus:
1) The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 ; and
2) The Company's Annual Report Amendment No. 1 on Form
10-K/A dated March 19, 1996.
All documents filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act after the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof from
the date of filing of such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also
is or is deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, in-
cluding any beneficial owner, to whom this Prospectus is
delivered, upon written or oral request of such person, a copy of
any and all of the information that has been incorporated
herein by reference, other than exhibits to such
information not specifically incorporated therein
by reference. Requests for such copies should be directed to
Kansas City Southern Industries, Inc., 114 West Eleventh Street,
Kansas City, Missouri 64105, Attention: Corporate Secretary,
telephone number (816) 556-0370.
THE COMPANY
Kansas City Southern Industries, Inc. is a diversified
holding company with principal operations in rail transportation,
through its subsidiary The Kansas City Southern Railway Company
("KCSR"), and financial asset management businesses. The
Company's principal business activities involve operating a Class
I Common Carrier Railroad system through KCSR, a wholly-owned
subsidiary, and managing investments for mutual funds and private
accounts through Janus Capital Corporation ("Janus"), an 83%
owned subsidiary, and Berger Associates, Inc. ("Berger"), an 80%
owned subsidiary. The Company was incorporated in the State
of Delaware in 1962. The principal executive offices of the
Company are located at 114 West 11th Street, Kansas City,
Missouri 64105, and the Company's telephone number is (816) 556-
0303.
RECENT DEVELOPMENTS
On October 31, 1995, DST Systems, Inc. ("DST"), at that time
a wholly-owned subsidiary of the Company, and the Company
effected a public offering of DST common stock. As a result of
the offerings and associated transactions, the Company's
ownership interest in DST was reduced to approximately 41%.
On November 10, 1995, the Company purchased a 49% interest
in the common stock of Mexrail, Inc. ("Mexrail"), including
Mexrail's wholly-owned subsidiary, The Texas Mexican Railway
Company ("Tex-Mex"), from Transportacion Maritima Mexicana, S.A.
de C.V. The Tex-Mex operates a 157 mile rail line extending from
Corpus Christi to Laredo, Texas. The purchase price of $23
million, which is subject to certain conditions, was financed
through the Company's existing credit lines.
On December 18, 1995, the Company issued $100 million of 7%
Debentures due 2025. The Debentures are redeemable at the option
of the Company at any time, in whole or in part, at a redemption
price equal to the greater of (a) 100% of the principal amount of
such Debentures and (b) the sum of the present values of the
remaining scheduled payments of principal and interest thereon
discounted to the date of redemption on a semiannual basis at the
Treasury Rate (as defined in the Debentures agreement) plus 20
basis points, plus in each case accrued interest thereon to the
date of redemption. The net proceeds of this transaction were
used to repay indebtedness on the Company's existing credit lines
and for acquisition of the Company's common stock.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus
Supplement, net proceeds from the sale of the Securities are
expected to be added to the general funds of the Company and used
principally for general corporate purposes, including working
capital, capital expenditures and acquisitions of or investments
in businesses and assets.
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to
fixed charges for the Company for the periods indicated.
Earnings represent income available for fixed charges, less
equity in undistributed earnings of less than 50% owned
affiliates, plus undistributed equity in 50% owned affiliates,
minority interest in consolidated subsidiaries, amortization of
debt premium and costs, together with interest and one-third of
rents under long-term operating leases deemed to be
representative of an interest factor. Fixed charges represent
interest expense together with interest capitalized, one-third of
rents under long-term operating leases deemed to be
representative of an interest factor, and amortization of debt
premium and costs.
Years Ended December 31,
1995 1994 1993 1992 1991
6.14(1) 3.28 3.68 3.40 2.88
(1) Financial information from which the ratio of earnings to
fixed charges is computed for the year ended December 31,
1995 reflects DST as a majority owned unconsolidated
subsidiary through October 31, 1995, and as an
unconsolidated 41% owned affiliate thereafter, in accordance
with applicable Securities and Exchange Commission rules and
regulations. If the ratio was computed to exclude the one
time pretax gain of $296.3 million associated with the
public offering and associated transactions, the 1995 ratio
of earnings to fixed charges would have been 3.04.
DESCRIPTION OF CAPITAL STOCK
The following descriptions do not purport to be complete and
are subject to, and qualified in their entirety by reference to,
the more complete descriptions of the Company's stock set forth
in the Company's Certificate of Incorporation, as amended (the
"Certificate of Incorporation") and its Bylaws.
The authorized capital stock of the Company consists of (i)
400,000,000 shares of Common Stock, par value $.01 per share
("Common Stock"), (ii) 2,000,000 shares of New Series Preferred
Stock, par value $1 per share ("Series Preferred Stock"),
(iii) 840,000 shares of Preferred Stock, par value $25 per share
("Preferred Stock"), (iv) 1,000,000 shares of Series B
Preferred Stock, par value $1 per share, and (v) 150,000 shares
of Series A Preferred Stock par value $1 per share.
As of December 31, 1995 , there were outstanding (i)
39,062,999 shares of Common Stock, (ii) employee stock
options to purchase an aggregate of 3,675,372 shares of
Common Stock (of which options to purchase 2,146,372
shares of Common Stock were currently exercisable), (iii)
242,170 shares of Preferred Stock, and (iv) 1,000,000
shares of Series Preferred Stock designated as Series B
Convertible Preferred Stock ("Series B Preferred Stock"). In
addition, 150,000 shares of Series Preferred Stock designated as
Series Preferred Stock, Series A ("Series A Preferred Stock"),
were authorized for issuance if certain events relating to a
change in control of the Company should occur. As of such date,
no shares of Series A Preferred Stock were outstanding.
UMB Bank, N.A., and the Company serve as the Transfer Agents
for the Company's Securities. The Company's Common Stock and
Preferred Stock are listed on the New York Stock Exchange.
NO SHARES OF PREFERRED STOCK, SERIES A PREFERRED STOCK OR
SERIES B PREFERRED STOCK ARE BEING OFFERED HEREBY.
<PAGE>
COMMON STOCK
Holders of Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors out of funds
legally available therefor, provided that, if any shares of
Series Preferred Stock or Preferred Stock are outstanding, no
dividends or other distributions may be made with respect to the
Common Stock unless full required dividends on the shares of
Series Preferred Stock and Preferred Stock have been paid,
including accumulated dividends in the case of any series of
Series Preferred Stock designated to receive cumulative
dividends.
Holders of Common Stock are entitled to one vote per share
multiplied by the number of directors to be elected in an
election of directors, which may be cast cumulatively, and to one
vote per share on any other matter, voting as a single class. In
certain instances, holders of Series Preferred Stock or Preferred
Stock may have special class voting rights. See "Series
Preferred Stock" and "Preferred Stock."
In the event of the voluntary or involuntary dissolution,
liquidation or winding up of the Company, holders of Common Stock
are entitled to receive pro rata, after satisfaction in full of
the prior rights of creditors (including holders of the Company's
indebtedness) and holders of Series Preferred Stock and Preferred
Stock, all the remaining assets of the Company available for
distribution.
The issuance of additional shares of Series Preferred Stock
or Preferred Stock may result in a dilution of the voting power
and relative equity interests of the holders of Common Stock and
would subject the Common Stock to the prior dividend and
liquidation rights of the Series Preferred Stock and Preferred
Stock issued. The Common Stock is not redeemable and has no
preemptive rights.
Any shares of Common Stock sold hereunder shall be fully
paid and nonassessable and will be listed on the New York Stock
Exchange.
SERIES PREFERRED STOCK
Under the Company's Certificate of Incorporation, the Board
of Directors of the Company is authorized, without further
stockholder action, to issue up to 2,000,000 shares of Series
Preferred Stock in one or more series, with such designations,
powers, preferences, rights, qualifications, limitations or
restrictions, as shall be set forth in a Certificate of
Designation filed pursuant to the General Corporation Law of the
State of Delaware, subject to the powers, preferences and rights
of the Preferred Stock.
If any series of Series Preferred Stock entitles the holders
thereof to dividends, such dividends may be paid following the
payment or setting apart for payment of dividends on the
Preferred Stock and prior to the payment or setting apart for
payment of dividends on the Common Stock. If specified,
dividends may be cumulative. In the event of a liquidation,
dissolution or winding up of the Company, holders of each series
of Series Preferred Stock are subordinate to the holders of
Preferred Stock, but have preference and priority over the
holders of Common Stock, for payments of amounts as set forth in
a Certificate of Designations. The Series Preferred Stock has no
preemptive rights.
Any shares of Series Preferred Stock sold hereunder shall be
fully paid and nonassessable and the Company will apply to list
such shares on the New York Stock Exchange.
SERIES A PREFERRED STOCK
The Board of Directors of the Company established the Series
A Preferred Stock, consisting of 150,000 shares, for issuance
pursuant to the Company's Stockholder Rights Plan (the "Rights
Plan"). No shares of Series A Preferred Stock have been issued.
To implement the Rights Plan, the Company's Board of
Directors declared and made a dividend distribution of one Series
A Preferred Stock purchase right ("Right") for each outstanding
share of Common Stock of the Company . Each Right entitled
the registered holder to purchase from the Company one one-
thousandth of a share of Series A Preferred Stock or in
some circumstances, Common Stock, other securities, cash or other
assets as the case may be, at a price of $210 per share, subject
to adjustment. Distribution of the Rights under the Rights Plan
have no dilutive effect, do not affect reported earnings per
share, are not taxable to the Company or stockholders and do not
change the manner in which the Company's shares of Common Stock
are presently traded. The Rights will not be exercisable and
will be inseparable from and trade automatically with the
Company's Common Stock until certain events occur (as defined in
the Rights Plan) which would trigger provisions of the Rights.
The Rights expire on October 12, 2005, unless earlier redeemed by
the Company. The company may redeem the Rights in whole, but not
in part, upon the occurrence of certain events, at a price of
$0.005 per Right. The Company's previous stockholder rights plan
was terminated in 1994.
SERIES B PREFERRED STOCK
The Board of Directors of the Company in 1993 authorized the
establishment of Series B Preferred Stock, consisting initially
of 1,000,000 shares, for issuance to the trustee of a grantor
trust formed by the Company entitled "Employee Plan Funding
Trust" (the "Trust"). On October 1, 1993, the Company sold
1,000,000 shares of Series B Preferred Stock to the Trust. The
Series B Preferred Stock can be held only by the trustee of the
Trust or on behalf of any employee plan designated as a
beneficiary of the Trust. Transfer of the Series B Preferred
Stock to any other person will cause the stock to be converted
automatically into Common Stock.
Holders of the Series B Preferred Stock are entitled to have
declared, paid or set aside for payment, cumulative dividends,
when, as and if declared by the Board of Directors out of funds
legally available therefor, in an amount of $10 per share per
year before the declaration, payment or setting aside for payment
of any dividends on the Common Stock or any other stock ranking
as to dividends junior to, or on a parity with, the Series B
Preferred Stock, but only after dividends on the Preferred Stock
have been paid or set aside for payment, with certain limited
exceptions.
Holders of Series B Preferred Stock have no voting rights
not required by law except with respect to actions which would
adversely alter or change the powers, preferences or special
rights of that security.
In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, Series B Preferred
Holders shall be entitled to receive the amount of $200 per share
plus any declared and unpaid dividends, prior to any distribution
of assets to the holders of the Common Stock or any other class
ranking with respect to such distribution junior to the Series B
Preferred Stock, subject to the rights of holders of the
Preferred Stock and any other security ranking superior to or on
a parity with the Series B Preferred Stock.
Series B Preferred Stock is convertible into Common Stock at
an initial ratio of 4 shares of Common Stock for each share of
Series B Preferred Stock, subject to certain adjustments, with a
limitation on the maximum number of shares of Common Stock which
can be issued of 4,000,000 shares.
Series B Preferred Stock is redeemable by the Company at any
time (i) after April 1, 1995, (ii) under certain circumstances,
whenever the market price of the Common Stock equals or exceeds
150% of the conversion price of the Series B Preferred, with
certain adjustments, (iii) in the event of certain changes in
federal tax law, and (iv) in the event that the Trust or any
employee plan designated as a beneficiary of the Trust is
terminated in accordance with its terms, in accordance with a
redemption price schedule and the terms specified in the
Certificate of Designations.
Anti-dilution protections and special provisions with
respect to the effect on the Series B Preferred Stock of mergers
or consolidations are also set forth in the Certificate of
Designations.
As a grantor trust, assets of the Trust, including the
Series B Preferred Stock, are expected to remain subject to the
claims of the general creditors of the Company until such assets
are distributed to the beneficiaries. The Series B Preferred
Stock was purchased by the Trust for $200,000,000 with funds
borrowed from the Company, secured by a pledge of such
securities. Shares held in the Trust will be released for
distribution to beneficiary plans in proportion to the reduction
of this indebtedness. Other provisions of the Trust (i) require
that the trustee vote any voting securities held in the Trust in
accordance with the voting of shares held in the Company's ESOP
and (ii) provide for termination of the Trust upon the occurrence
of defined events involving a change in control of the Company.
PREFERRED STOCK
Holders of shares of Preferred Stock are entitled to
receive, in the discretion of the Board of Directors,
noncumulative dividends declared by the Board of Directors of up
to $1 per share per year, and no more, before dividends may be
declared or paid with respect to Common Stock or any series of
Series Preferred Stock.
Holders of Preferred Stock are entitled to one vote per
share multiplied by the number of directors to be elected in an
election of directors, which may be cast cumulatively, and to one
vote per share on other matters. Holders of Preferred Stock vote
as a single class with the holders of Common Stock and any series
of Series Preferred Stock having voting rights; however, whenever
dividends are in arrears on the Preferred Stock for six quarters,
the holders of Preferred Stock have the right to vote as a class
to elect two directors at the next annual stockholders' meeting
at which directors are elected and have such right until
dividends have been paid on the Preferred Stock for four
consecutive quarters. The vote of the holders of two-thirds of
Preferred Stock voting together as a class is required for any
amendment to the Company's Certificate of Incorporation which
would materially and adversely alter or change the powers,
preferences or special rights of such stock.
In the event of the voluntary or involuntary dissolution,
liquidation or winding up of the Company, holders of Preferred
Stock are entitled to receive payment in the amount of the par
value thereof, and any declared and unpaid dividends, but no
more, before any payment is made upon the Series Preferred Stock
or the Common Stock. The Preferred Stock is not redeemable by
the Company and has no preemptive rights.
CLASSIFIED BOARD OF DIRECTORS
The Company's Certificate of Incorporation provides that the
board of directors shall be divided into three classes as nearly
equal in number as possible. Each class of directors serves for
a term of three years and such terms commence in three
consecutive years so that one class of directors is elected at
the annual stockholders' meeting each year. The Company's
Certificate of Incorporation also provides that the vote of 70%
of the shares entitled to vote in the election of directors is
required to amend the Certificate of Incorporation to increase
the number of directors to more than eighteen, abolish cumulative
voting for directors and abolish the classification of the board.
The same vote requirement is imposed by the Certificate of
Incorporation on certain transactions involving mergers,
consolidations, sales or leases of assets having a fair market
value of $2,000,000 or more, with or to certain owners of more
than 5% of the stock of the Company entitled to vote in the
election of directors, unless the board of directors has approved
a memorandum of understanding with any such owner prior to its
becoming such a 5% holder. These provisions could have the
effect of delaying, deferring or preventing a change in control
of the Company.
DESCRIPTION OF CONVERTIBLE SENIOR DEBT SECURITIES
AND DEBT SECURITIES
The Convertible Senior Debt Securities and the Debt
Securities are to be issued under an indenture dated as of July
1, 1992 (the "Indenture") between the Company and The Chase
Manhattan Bank, N.A., as trustee (the "Trustee"), as shall be set
forth in the Prospectus Supplement relating to the Convertible
Senior Debt Securities or Debt Securities being offered thereby.
The statements made under this heading relating to the
Convertible Senior Debt Securities and the Debt Securities and
the Indenture are summaries of the provisions thereof and do not
purport to be complete, and, where reference is made to
particular provisions of the Indenture, such provisions are
incorporated by reference as a part of such summaries, which are
qualified in their entirety by such references. Parenthetical
references below are to the Indenture or to sections of the Trust
Indenture Act of 1939, as amended (the "TIA"), certain provisions
of which govern the terms of the Indenture, and, whenever any
particular provision of the Indenture or the TIA or any defined
term used therein is referred to, such provision or defined term
is incorporated by reference as a part of the statement in
connection with which such reference is made, and the statement
in connection with which such reference is made is qualified in
its entirety by such reference. Capitalized terms used herein
but not otherwise defined shall have the meaning assigned to them
in the Indenture.
GENERAL
The Convertible Senior Debt Securities and Debt Securities
will be direct, unsecured obligations of the Company and will
rank equally with all other unsecured and unsubordinated
indebtedness of the Company. At December 31, 1995 , the
Company had no secured indebtedness outstanding. The Company's
assets consist of the stock of its subsidiaries and interests in
unconsolidated affiliates. Accordingly, certain creditors of the
Company's subsidiaries will have a claim on the assets of such
subsidiaries prior to the Holders of the Convertible Senior Debt
Securities or Debt Securities. At December 31, 1995 , the
Company's subsidiaries had an aggregate of $ 147.6 million
of indebtedness outstanding, of which $ 117.1 million was
secured. In addition, the ability of the Company to pay
principal of, premium, if any, and interest on the Convertible
Senior Debt Securities and Debt Securities will depend on the
Company's receipt of funds from its subsidiaries and
unconsolidated affiliates. Kansas City Southern Railway Company
("KCSR"), a wholly-owned subsidiary of the Company, Janus
Capital Corporation ("Janus"), 83% owned by the Company, and
Berger Associates, Inc. ("Berger"), over 80% owned by the
Company, are not subject to any restrictions on the payment of
dividends. DST, now an approximately 40% owned equity
investment, intends on retaining its earnings for use in its
business and, therefore, does not anticipate paying any cash
dividends in the foreseeable future.
Convertible Senior Debt Securities and Debt Securities will
be issued in separate series. The Convertible Senior Debt
Securities and Debt Securities may be issued in one or more
series. The particular terms of each series of Convertible
Senior Debt Securities and Debt Securities, as well as any
modifications of or additions to the general terms of the
Convertible Senior Debt Securities and Debt Securities as
described herein that may be applicable in the case of a
particular series of Convertible Senior Debt Securities or Debt
Securities, will be described in the Prospectus Supplement
relating to such series of Convertible Senior Debt Securities and
Debt Securities. Accordingly, for a description of the terms of
a particular series of Convertible Senior Debt Securities and
Debt Securities, reference must be made to both the Prospectus
Supplement relating thereto and the description of Convertible
Senior Debt Securities and Debt Securities set forth in this
Prospectus.
Reference is made to the Prospectus Supplement for the
following terms of the Convertible Senior Debt Securities or Debt
Securities being offered thereby: (1) the title of such
Convertible Senior Debt Securities or Debt Securities; (2) any
limit on the aggregate principal amount of such Convertible
Senior Debt Securities or Debt Securities; (3) the percentage of
the principal amount at which such Convertible Senior Debt
Securities or Debt Securities will be issued and, if other than
the principal amount thereof, the portion of the principal amount
thereof payable upon declaration of acceleration of the maturity
thereof or the method by which such portion shall be determined;
(4) the date or dates, or the method by which such date or dates
will be determined or extended, on which the principal of such
Convertible Senior Debt Securities or Debt Securities will be
payable; (5) the rate or rates at which such Convertible Senior
Debt Securities or Debt Securities will bear interest, if any, or
the method by which such rate or rates shall be determined; (6)
the date or dates from which interest, if any, on such
Convertible Senior Debt Securities or Debt Securities shall
accrue or the method by which such date or dates shall be
determined, the dates on which such interest, if any, will be
payable and the Regular Record Date, if any, for the interest
payable on any Registered Security of the series on any Interest
Payment Date, or the method by which any such date shall be
determined, and the basis on which interest shall be calculated
if other than on the basis of a 360-day year of twelve 30-day
months; (7) the period or periods within which, the price or
prices at which, the Currency in which and the other terms and
conditions upon which such Convertible Senior Debt Securities or
Debt Securities may be redeemed in whole or in part, at the
option of the Company; (8) the obligation, if any, of the Company
to redeem, repay or purchase such Convertible Senior Debt
Securities or Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof and the
period or periods within which or the date or dates on which, the
price or prices at which, the Currency in which and the other
terms and conditions upon which such Convertible Senior Debt
Securities or Debt Securities shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation (9)
whether such Convertible Senior Debt Securities or Debt
Securities are to be issuable as Registered Securities or Bearer
Securities or both, and whether such Convertible Senior Debt
Securities or Debt Securities are to be issuable as Registered
Securities or Bearer Securities or both, and whether such
Convertible Senior Debt Securities or Debt Securities are to be
issuable, either temporarily or permanently, in global form and,
if so, whether beneficial owners of interests in any such
permanent global security may exchange such interests for
Convertible Senior Debt Securities and Debt Securities of such
series and of like tenor of any authorized form and denomination
and the circumstances under which any such exchanges may occur,
if other than in the manner provided in the Indenture, and, if
Registered Securities of the series are to be issuable as a
global security, the identity of the depository for such series;
(10) if other than U.S. dollars, the Currency in which such
Convertible Senior Debt Securities or Debt Securities will be
denominated and in which the principal of (and premium, if any)
and any interest on such Convertible Senior Debt Securities or
Debt Securities will be payable; (11) whether the amount of
payments of principal of (and premium, if any) or interest, if
any, on such Convertible Senior Debt Securities or Debt
Securities may be determined with reference to an index, formula
or other method (which index, formula or method may be based on
one or more Currencies, commodities, equity indices or other
indices) and the manner in which such amounts shall be
determined; (12) whether the Company or Holder may elect payment
of the principal of (and premium, if any) or interest, if any, on
such Convertible Senior Debt Securities or Debt Securities in one
or more Currencies other than that in which such Convertible
Senior Debt Securities or Debt Securities are denominated or
stated to be payable, the period or periods within which, and the
terms and conditions upon which, such election may be made, and
the time and manner of determining the exchange rate between the
Currency in which such Convertible Senior Debt Securities or Debt
Securities are denominated or stated to be payable and the
Currency in which such Convertible Senior Debt Securities or Debt
Securities are to be so payable; (13) the place or places, if
any, other than or in addition to New York City, New York, where
the principal of (and premium, if any) and any interest on such
Convertible Senior Debt Securities or Debt Securities shall be
payable, any Registered Securities of the series may be
surrendered for registration of transfer, such Convertible Senior
Debt Securities or Debt Securities may be surrendered for
exchange and notice or demands to or upon the Company in respect
of such Convertible Senior Debt Securities or Debt Securities and
the Indenture may be served; (14) if other than denominations of
$1,000 and any integral multiple thereof, the denominations in
which any Registered Securities of the series shall be issuable
and, if other than the denomination of $5,000, the denomination
or denominations in which any Bearer Securities of the series
shall be issuable; (15) the identity of the Trustee for such
Convertible Senior Debt Securities or Debt Securities and, if
other than the Trustee, the Security Registrar and the Paying
Agent; (16) the inapplicability to such Convertible Senior Debt
Securities or Debt Securities of the provisions of Article
Fourteen of the Indenture described herein under "Defeasance and
Covenant Defeasance" and any provisions in modification of, in
addition to or in lieu of any of the provisions of such Article;
(17) the Person to whom any interest on any Registered Security
of the series shall be payable, if other than the Person in whose
name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date
for such interest, the manner in which, or the Person to whom,
any interest on any Bearer Security of the series shall be
payable, if otherwise than upon presentation and surrender of the
coupons appertaining thereto as they severally mature, and the
extent to which, or the manner in which, any interest payable on
a temporary global security on an Interest Payment Date will be
paid if other than in the manner provided in the Indenture; (18)
whether and under what circumstances the Company will pay
Additional Amounts as contemplated by Section 1005 of the
Indenture on such Convertible Senior Debt Securities or Debt
Securities to any Holder who is not a United States person
(including any modification to the definition of such terms as
contained in the Indenture as originally executed) in respect of
any tax, assessment or governmental charge and, if so, whether
the Company will have the option to redeem such Convertible
Senior Debt Securities or Debt Securities rather than pay such
Additional Amounts (and the terms of any such option); (19) any
deletions from, modifications of or additions to the Events of
Default or covenants of the Company with respect to such
Convertible Senior Debt Securities or Debt Securities, whether or
not such Events of Default or covenants are consistent with the
Events of Default or covenants set forth herein; (20) the date as
of which any Bearer Securities of the series and any temporary
global security shall be dated if other than the date of original
issuance of the first of such Convertible Senior Debt Securities
or Debt Securities; (21) if such Convertible Senior Debt
Securities or Debt Securities are to be issuable in definitive
form (whether upon original issue or upon exchange of a temporary
security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other
conditions, then the form or terms of such certificates,
documents or conditions; (22) the designation of the initial
Exchange Rate Agent, if any; (23) any other terms of such
Convertible Senior Debt Securities or Debt Securities; and (24)
in the case of Convertible Senior Debt Securities, the terms and
conditions upon which conversion will be effected, including the
conversion price, the conversion period and other conversion
provisions in addition to or in lieu of those described below.
The Indenture does not contain any provisions that may
afford the Holders of Convertible Senior Debt Securities or Debt
Securities of any series protection in the event of a highly
leveraged transaction or other transaction that may occur in
connection with a change of control of the Company. Payment of
any indebtedness outstanding under the Company's revolving credit
agreement would become accelerated at the time of any
change in control of the Company, as defined in that
agreement . In May 1995, the Company established a new
credit agreement which replaced the then existing Company credit
agreements. The Company also has various other lines of credit.
At December 31, 1995, the Company had no indebtedness outstanding
under any of these facilities. The Company is a party to
agreements with certain minority owners of Janus,
which may impose financial and other obligations upon the
Company in the event of a change in control of the
Company, as defined in such agreements. The Company also has a
commitment to fund, through so-called "rabbi trusts", the payment
of certain compensation and benefit continuations and severance
payments of management employees in the event of defined changes
in control. The aggregate amount of the Company's financial
obligations under the agreements governing the rabbi trusts and
the Company's investment in Janus cannot be determined in
advance of any change-in-control event, but is expected to be
material. DST has a Stockholders' Rights Agreement. Under
certain circumstances following a "change of control" of the
Company, as defined in DST's Stockholders' Rights Agreement,
substantial dilution of the Company's interest in DST could
result.
The Indenture provides that the Convertible Senior Debt
Securities and Debt Securities may be issued in one or more
series thereunder, in each case as authorized from time to time
by the Board of Directors of the Company. (Section 301) The
Indenture also provides that there may be more than one Trustee
under the Indenture, each with respect to one or more different
series of Convertible Senior Debt Securities and Debt Securities.
See "Resignation of Trustee" herein. At a time when two or more
Trustees are acting, each with respect to only certain series,
the terms "Convertible Senior Debt Securities" and "Debt
Securities" as used herein shall mean the one or more series with
respect to which each respective Trustee is acting. In the event
there is more than one Trustee under the Indenture, the powers
and trust obligations of each Trustee as described herein shall
extend only to the one or more series of Convertible Senior Debt
Securities and Debt Securities for which it is Trustee. If more
than one Trustee is acting under the Indenture, then the
Convertible Senior Debt Securities and Debt Securities (whether
of one or more than one series) for which each Trustee is acting
shall in effect be treated as if issued under separate
indentures.
Some of the Convertible Senior Debt Securities or Debt
Securities may be issued as original issue discount Securities
(bearing no interest or interest at a rate which at the time of
issuance is below market rates) ("Original Issue Discount
Securities"), to be sold at a substantial discount below their
stated principal amount. If any Convertible Senior Debt Security
or Debt Security is not to be denominated in United States
dollars, certain provisions with respect thereto will be set
forth in a Foreign Currency Prospectus Supplement, which will
specify the Currency or Currencies, including composite
Currencies such as the European Currency Unit, in which the
principal, premium, if any, and any interest with respect to such
Convertible Senior Debt Security or Debt Security are to be paid,
along with any other terms relating to the non-United States
dollar denomination. Federal income tax, accounting and other
special considerations applicable to any such Original Issue
Discount Securities or non-United States dollar denominated
Convertible Senior Debt Securities or Debt Securities will be
described in a Prospectus Supplement relating thereto.
The Indenture does not contain any provisions that would
limit the ability of the Company to incur indebtedness.
Reference is made to the Prospectus Supplement related to the
series of Convertible Senior Debt Securities or Debt Securities
offered thereby for information with respect to any deletions
from, modifications of or additions to the Events of Default or
covenants of the Company applicable to such Convertible Senior
Debt Securities or Debt Securities that are described herein.
Under the Indenture, the Company will have the ability, in
addition to the ability to issue Convertible Senior Debt
Securities or Debt Securities with terms different from those of
Convertible Senior Debt Securities or Debt Securities previously
issued, without the consent of the Holders, to reopen a previous
issue of a series of Convertible Senior Debt Securities or Debt
Securities and issue additional Convertible Senior Debt
Securities or Debt Securities of such series, in an aggregate
principal amount determined by the Company. (Section 301)
DENOMINATIONS, REGISTRATION AND TRANSFER
Convertible Senior Debt Securities or Debt Securities of a
series may be issuable solely as Registered Securities, solely as
Bearer Securities or as both Registered Securities and Bearer
Securities. Registered Securities will be issuable in
denominations of $1,000 and integral multiples of $1,000 and
Bearer Securities will be issuable in the denomination of $5,000
or, in each case, in such other denominations as may be in the
terms of the Convertible Senior Debt Securities or Debt
Securities of any particular series. The Indenture also provides
that Convertible Senior Debt Securities or Debt Securities of a
series may be issuable in global form. Unless otherwise
indicated in the Prospectus Supplement, Bearer Securities will
have interest coupons attached. (Section 201)
Registered Securities of any series will be exchangeable for
other Registered Securities of the same series and of a like
aggregate principal amount and tenor of different authorized
denominations. If (but only if) provided in the Prospectus
Supplement, Bearer Securities (with all unmatured coupons, except
as provided below, and all matured coupons in default) of any
series may be exchanged for Registered Securities of the same
series of any authorized denominations and of a like aggregate
principal amount and tenor. In such event, Bearer Securities
surrendered in a permitted exchange for Registered Securities
between a Regular Record Date or a Special Record Date and the
relevant date for payment of interest shall be surrendered
without the coupon relating to such date for payment of interest,
and interest will not be payable on such date for payment of
interest in respect of the Registered Security issued in exchange
for such Bearer Security, but will be payable only to the Holder
of such coupon when due in accordance with the terms of the
Indenture. Unless otherwise specified in the Prospectus
Supplement, Bearer Securities will not be issued in exchange for
Registered Securities. (Section 305)
The Convertible Senior Debt Securities or Debt Securities
may be presented for exchange as described above, and Registered
Securities may be presented for registration of transfer (duly
endorsed or accompanied by a written instrument of transfer), at
the corporate trust office of the Trustee in New York City, New
York, or at the office of any transfer agent designated by the
Company for such purpose with respect to any series of
Convertible Senior Debt Securities or Debt Securities and
referred to in the Prospectus Supplement. No service charge will
be made for any transfer or exchange of Convertible Senior Debt
Securities or Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. (Section
305) If a Prospectus Supplement refers to any transfer agent (in
addition to the Trustee) initially designated by the Company with
respect to any series of Convertible Senior Debt Securities or
Debt Securities, then the Company may at any time rescind the
designation of any such transfer agent or approve a change in the
location through which any such transfer agent acts, except that,
if Convertible Senior Debt Securities or Debt Securities of a
series are issuable solely as Registered Securities, then the
Company will be required to maintain a transfer agent in each
Place of Payment for such series and, if Convertible Senior Debt
Securities or Debt Securities of a series may be issuable both as
Registered Securities and as Bearer Securities, then the Company
will be required to maintain (in addition to the Trustee) a
transfer agent in a Place of Payment for such series located
outside the United States. The Company may at any time designate
additional transfer agents with respect to any series of
Convertible Senior Debt Securities or Debt Securities. (Section
1002)
The Company shall not be required to i) issue, register the
transfer of or exchange Convertible Senior Debt Securities or
Debt Securities of any series during a period beginning at the
opening of business 15 days before any selection of Convertible
Senior Debt Securities or Debt Securities of that series to be
redeemed and ending at the close of business on (A) if the
Convertible Senior Debt Securities or Debt Securities of the
series are issuable only as Registered Securities, then the day
of mailing of the relevant notice of redemption and (B) if
Convertible Senior Debt Securities or Debt Securities of the
series are issuable as Bearer Securities, then the day of the
first publication of the relevant notice of redemption or, if
Convertible Senior Debt Securities or Debt Securities of the
series are also issuable as Registered Securities and there is no
publication, then the mailing of the relevant notice of
redemption; (ii) register the transfer of or exchange any
Registered Security or portion thereof called for redemption,
except the unredeemed portion of any Registered Security being
redeemed in part; (iii) exchange any Bearer Security selected for
redemption, except to exchange such Bearer Security for a
Registered Security of that series and of like tenor that is
simultaneously surrendered for redemption; or (iv) issue,
register the transfer of or exchange any Convertible Senior Debt
Securities or Debt Security that has been surrendered for
repayment at the option of the Holder, except the portion, if
any, thereof not to be so repaid. (Section 305)
CONVERSION RIGHTS
The circumstances under which Convertible Senior Debt
Securities of any series are convertible into Common Stock and
the terms of such conversion will be set forth in the Prospectus
Supplement relating thereto. Such terms shall include provisions
as to whether conversion is mandatory, at the option of the
Holder, or at the option of the Company, and may include
provisions in which the number of shares of Common Stock to be
received by the Holder of Convertible Senior Debt Securities
would be calculated according to the market price of Common Stock
as of a time stated in the Prospectus Supplement.
GLOBAL SECURITIES
The Convertible Senior Debt Securities or Debt Securities of
a series may be issued in whole or in part in the form of one or
more global securities (each a "Global Security") that will be
deposited with, or on behalf of, the "Depository" identified in
the Prospectus Supplement relating to such series. Unless and
until it is exchanged in whole or in part for the individual
Convertible Senior Debt Securities or Debt Securities represented
thereby, a Global Security may not be transferred except as a
whole by the Depository for such Global Security to a nominee of
such Depository or by a nominee of such Depository to such
Depository or another nominee of such Depository or by the
Depository or any nominee to a successor Depository or any
nominee of such successor.
The Depository has advised as follows: it is a limited-
purpose trust company created to hold securities for its
participating organizations and to facilitate the clearance and
settlement of securities transactions in such securities between
such participants through electronic book-entry changes in
accounts of its participants. Participants include securities
brokers and dealers, banks and trust companies, clearing
corporations and certain other organizations. Access to the
Depository's system is also available to others such as banks,
brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either
directly or indirectly. Persons who are not participants may
beneficially own securities held by the Depository only through
participants or indirect participants.
The specific terms of the depository arrangement with
respect to a series of Convertible Senior Debt Securities or Debt
Securities and certain limitations and restrictions relating to a
series of Bearer Securities in the form of one or more Global
Securities will be described in the Prospectus Supplement
relating to such series. Unless otherwise indicated in the
applicable Prospectus Supplement, the following provisions will
apply to all depository arrangements.
Upon the issuance of a Global Security, the Depository for
such Global Security or its nominee will credit, on its book-
entry registration and transfer system, the respective principal
amounts of the individual Convertible Senior Debt Securities or
Debt Securities represented by such Global Security to the
accounts of persons that have accounts with such Depository.
Such accounts will be designated by the underwriters or agents
with respect to such Convertible Senior Debt Securities or Debt
Securities or by the Company if such Convertible Senior Debt
Securities or Debt Securities are offered and sold directly by
the Company. Ownership of beneficial interests in such Global
Security will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the
applicable Depository or its nominee (with respect to interests
of participants) and the records of participants (with respect to
interests of persons other than participants). The laws of some
states may require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such
limit and such laws may impair the ability to transfer beneficial
interests in a Global Security.
So long as the Depository for a Global Security, or its
nominee, is the registered owner of such Global Security, such
Depository or such nominee, as the case may be, will be
considered the sole owner or holder of the Convertible Senior
Debt Securities or Debt Securities represented by such Global
Security for all purposes under the Indenture. Except as
provided below, owners of beneficial interests in a Global
Security will not be entitled to have any of the individual
Convertible Senior Debt Securities or Debt Securities of the
series represented by such Global Security registered in their
names, will not receive or be entitled to receive physical
delivery of such Convertible Senior Debt Securities or Debt
Securities of such series in definitive form and will not be
considered the owners or Holders thereof under the Indenture.
Payments of principal of, premium, if any, and interest, if
any, on individual Convertible Senior Debt Securities or Debt
Securities represented by a Global Security registered in the
name of a Depository or its nominee will be made to the
Depository or its nominee, as the case may be, as the registered
owner of the Global Security representing such Convertible Senior
Debt Securities or Debt Securities. Neither the Company, the
Trustee, any Paying Agent, nor the Security Registrar for such
Convertible Senior Debt Securities or Debt Securities will have
any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership
interests of the Global Security for such Convertible Senior Debt
Securities or Debt Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership
interests.
Subject to certain restrictions relating to Bearer
Securities, the Company expects that the Depository for a series
of Convertible Senior Debt Securities or Debt Securities or its
nominee, upon receipt of any payment of principal, premium or
interest in respect of a permanent Global Security representing
any of such Convertible Senior Debt Securities or Debt
Securities, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Security for
such Convertible Senior Debt Securities or Debt Securities as
shown on the records of such Depository or its nominee. The
Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such
participants will be governed by standing instructions and
customary practices, as is now the case with securities held for
the accounts of customers in bearer form or registered in "street
name." Such payments will be the responsibility of such
participants. With respect to owners of beneficial interests in
a temporary Global Security representing Bearer Securities,
receipt by such beneficial owners of payments of principal,
premium or interest in respect thereof will be subject to
additional restrictions.
SAME-DAY SETTLEMENT AND PAYMENT
If provided in the Prospectus Supplement for a series of
Convertible Senior Debt Securities or Debt Securities, then
settlement for such Convertible Senior Debt Securities or Debt
Securities will be made by the agents or underwriters in
immediately available funds, and all payments of principal and
interest will be made by the Company in immediately available
funds.
Secondary trading in long-term notes and debentures of
corporate issuers is generally settled in clearinghouse or next-
day funds. In contrast, if provided in the Prospectus Supplement
for a series of Convertible Senior Debt Securities or Debt
Securities, such series of Convertible Senior Debt Securities or
Debt Securities will trade in the Depository's Same-Day Funds
Settlement System until maturity, and secondary market trading
activity in such series of Convertible Senior Debt Securities or
Debt Securities will therefore be required by the Depository to
settle in immediately available funds. No assurance can be given
as to the effect, if any, of settlement in immediately available
funds on trading of the Convertible Senior Debt Securities or
Debt Securities.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms
used in the covenants contained in the Indenture. Reference is
made to the Indenture for the full definition of all such terms
as well as any other capitalized terms used herein for which no
definition is provided.
"Subsidiary" means a corporation, partnership, joint
venture, association or other entity a majority of the
outstanding voting stock or other equity interest entitled
ordinarily to vote in the election of the directors or other
governing body (however designated) of which is owned or
controlled, directly or indirectly, by the Company or by one or
more other Subsidiaries of the Company. For the purposes of this
definition, "voting stock" means stock having voting power for
the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of
any contingency.
"Significant Subsidiary" means (i) any Subsidiary (other
than Southern Credit Corporation or any of its Subsidiaries)
which at the time of determination had total assets which, as of
the date of the Company's most recent quarterly consolidated
balance sheet, constituted at least 10% of the Company's total
assets on a consolidated basis as of such date or (ii) any
Subsidiary which at the time of determination had revenues for
the three-month period ending on the date of the Company's most
recent quarterly consolidated statement of income which
constituted at least 10% of the Company's total revenues on a
consolidated basis for such period.
LIMITATION ON LIENS
In the Indenture, the Company covenants that it will not nor
will it permit any Significant Subsidiary to create, assume,
incur or suffer to exist any Lien upon any stock or indebtedness,
whether owned on the date of the Indenture or thereafter
acquired, of any Significant Subsidiary (other than a Significant
Subsidiary, the stock or indebtedness of which at the date of the
Indenture was subject to a Lien or required to be subject to a
Lien) to secure any Obligation (other than the Convertible Senior
Debt Securities or Debt Securities) of the Company, any
Subsidiary or any other Person without in any such case making
effective provision whereby all of the Outstanding Convertible
Senior Debt Securities or Debt Securities shall be directly
secured equally and ratably with such Obligation, excluding,
however, from the operation of the foregoing provisions any Lien
upon stock or indebtedness of any corporation existing at the
time such corporation becomes a Significant Subsidiary or
existing or created upon stock or indebtedness of a Significant
Subsidiary at the time of acquisition of such stock or
indebtedness and any extension, renewal or replacement (or
successive extensions, renewals or replacements) in whole or in
part of any such Lien; provided, however, that the principal
amount of the Obligation secured thereby shall not exceed the
principal amount of the Obligation so secured at the time of such
extension, renewal or replacement; and provided, further, that
such Lien shall be limited to all or such part of the stock or
indebtedness which secured the Lien so extended, renewed or
replaced. (Section 1006)
EVENTS OF DEFAULT
The Indenture provides, with respect to any series of
Convertible Senior Debt Securities or Debt Securities Outstanding
thereunder, that the following shall constitute Events of
Default: (i) default in the payment of any interest upon or any
Additional Amounts payable in respect of any Convertible Senior
Debt Security or Debt Security of that series or of any coupon
appertaining thereto when the same becomes due and payable,
continued for 30 days; (ii) default in the payment of the
principal of or any premium on any Convertible Senior Debt
Security or Debt Security of that series at its Maturity; (iii)
default in the deposit of any sinking fund payment when due by
the terms of any Convertible Senior Debt Security or Debt
Security of that series; (iv) default in the performance or
breach of any covenant or warranty of the Company in the
Indenture with respect to any Convertible Senior Debt Security or
Debt Security of that series, continued for 60 days after written
notice to the Company; (v) certain events in bankruptcy,
insolvency or reorganization; and (vi) any other Event of Default
provided with respect to Convertible Senior Debt Securities or
Debt Securities of that series. (Section 501) The Company is
required to file with the Trustee, annually, an Officer's
Certificate as to the Company's compliance with all conditions
and covenants under the Indenture. (Section 1004) The Indenture
provides that the Trustee may withhold notice to the Holders of
Convertible Senior Debt Securities or Debt Securities of any
default (except payment defaults on the Convertible Senior Debt
Securities or Debt Securities) in the event the Trustee considers
it in the interest of the Holders of Convertible Senior Debt
Securities or Debt Securities to do so. (Section 601)
If an Event of Default with respect to Convertible Senior
Debt Securities or Debt Securities of a particular series shall
occur and be continuing, the Trustee or the Holders of not less
than 25% in principal amount of Outstanding Convertible Senior
Debt Securities or Debt Securities of that series may declare the
Outstanding Convertible Senior Debt Securities or Debt Securities
of that series due and payable immediately. (Section 502)
Subject to the provisions relating to the duties of the
Trustee, in case an Event of Default with respect to Convertible
Senior Debt Securities or Debt Securities of a particular series
shall occur and be continuing, the Trustee shall be under no
obligation to exercise any of its rights or powers under the
Indenture at the request, order or direction of any of the
Holders of Convertible Senior Debt Securities or Debt Securities
of such series, unless such Holders shall have offered to the
Trustee reasonable indemnity and security against the costs,
expenses and liabilities that might be incurred by it in
compliance with such request. (Section 507 and TIA Section 315)
Subject to such provisions for the indemnification of the
Trustee, the Holders of a majority in principal amount of the
Outstanding Convertible Senior Debt Securities or Debt Securities
of such series shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available
to the Trustee under the Indenture or exercising any trust or
power conferred on the Trustee with respect to the Convertible
Senior Debt Securities or Debt Securities of that series.
(Section 512)
The Holders of not less than a majority in principal amount
of the Outstanding Convertible Senior Debt Securities or Debt
Securities of any series may on behalf of the Holders of all the
Convertible Senior Debt Securities or Debt Securities of such
series and any related coupons waive any past default under the
Indenture with respect to such series and its consequences,
except a default (i) in the payment of the principal of (or
premium, if any) or interest on or Additional Amounts payable in
respect of any Convertible Senior Debt Security or Debt Security
of such series or (ii) in respect of a covenant or provision that
cannot be modified or amended without the consent of the Holder
of each Outstanding Convertible Senior Debt Security of such
series affected thereby. (Section 513)
MERGER OR CONSOLIDATION
The Indenture provides that the Company may not consolidate
with or merge into any other corporation or convey or transfer
its properties and assets substantially as an entirety to any
Person unless either the Company is the continuing corporation or
such corporation or Person assumes by supplemental indenture all
the obligations of the Company under the Indenture and the
Convertible Senior Debt Securities or Debt Securities and
immediately after the transaction no default shall exist.
(Section 801)
MODIFICATION OR WAIVER
Modification and amendment of the Indenture as it applies to
any series of Convertible Senior Debt Securities or Debt
Securities may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal
amount of all Outstanding Convertible Senior Debt Securities or
Debt Securities of such series; provided, that no such
modification or amendment may, without the consent of the Holder
of each Outstanding Convertible Senior Debt Security or Debt
Security of such series affected thereby, among other things:
(i) change the Stated Maturity of the principal of (or premium,
if any, on) or any installment of principal of or interest on any
Convertible Senior Debt Security or Debt Security, (ii) reduce
the principal amount or the rate of interest on or any Additional
Amounts payable in respect of or any premium payable upon the
redemption of any Convertible Senior Debt Security or Debt
Security; (iii) change any obligation of the Company to pay
Additional Amounts in respect of any Convertible Senior Debt
Security or Debt Security; (iv) reduce the amount of the
principal of an original issue discount Convertible Senior Debt
Security or Debt Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof; (v)
adversely affect any right of repayment at the option of the
Holder of any Convertible Senior Debt Security or Debt Security;
(vi) change the place or currency of payment of principal of or
any premium or interest on any Convertible Senior Debt Security
or Debt Security; (vii) impair the right to institute suit for
the enforcement of any such payment on or after the Stated
Maturity thereof or any Redemption Date or Repayment Date
therefor; (viii) reduce the percentage in principal amount of the
Outstanding Convertible Senior Debt Securities or Debt Securities
necessary to modify or amend the Indenture or to consent to any
waiver thereunder or reduce the requirements for voting or
quorum; or (ix) modify the foregoing requirements or reduce the
percentage in principal amount of the Outstanding Convertible
Senior Debt Securities or Debt Securities necessary to waive any
past default. (Section 902)
Modification and amendment of the Indenture may be made by
the Company and Trustee without the consent of any Holder for any
of the following purposes: (i) to evidence the succession of
another Person to the Company as obligor under the Indenture;
(ii) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Convertible Senior Debt
Securities or Debt Securities; (iii) to add Events of Default for
the benefit of the Holders of all or any series of Convertible
Senior Debt Securities or Debt Securities; (iv) to add or change
any provisions of the Indenture to facilitate the issuance of
Bearer Securities; (v) to change or eliminate any provisions of
the Indenture, provided, that any such change or elimination
shall become effective only when there are no Convertible Senior
Debt Securities or Debt Securities Outstanding of any series
created prior thereto that is entitled to the benefit of such
provision; (vi) to establish the form or terms of Convertible
Senior Debt Securities or Debt Securities of any series and any
related coupons; (vii) to provide for the acceptance of
appointment by a successor Trustee or facilitate the
administration of the trusts under the Indenture by more than one
Trustee; (viii) to close the Indenture with respect to the
authentication and delivery of additional series of Convertible
Senior Debt Securities or Debt Securities, to cure any ambiguity,
defect or inconsistency in the Indenture, provided, that such
action does not adversely affect the interests of Holders of
Convertible Senior Debt Securities or Debt Securities of any
series in any material respect; or (ix) to supplement any of the
provisions of the Indenture to the extent necessary to permit or
facilitate defeasance and discharge of any series of Convertible
Senior Debt Securities or Debt Securities, provided, that such
action shall not adversely affect the interests of the Holders of
any Convertible Senior Debt Securities or Debt Securities in any
material respect. (Section 901)
The Indenture contains provisions for convening meetings of
the Holders of Convertible Senior Debt Securities or Debt
Securities of a series of Convertible Senior Debt Securities or
Debt Securities if that series are issuable as Bearer Securities.
(Section 1501) A meeting may be called at any time by the
Trustee and, also, upon request, by the Company or the Holders of
at least 10% in principal amount of the Outstanding Convertible
Senior Debt Securities or Debt Securities of such series, in any
such case upon notice given as provided in the Indenture.
(Section 1502) Except for any consent that must be given by the
Holder of each Convertible Senior Debt Security or Debt Security
affected thereby, as described above, any resolution presented at
a meeting or adjourned meeting at which a quorum is present may
be adopted by the affirmative vote of the Holders of a majority
in principal amount of the Outstanding Convertible Senior Debt
Securities or Debt Securities of that series; provided, that any
resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that may be
made, given or taken by the Holders of a specified percentage,
which is less than a majority, in principal amount of the
Outstanding Convertible Senior Debt Securities or Debt Securities
of that series may be adopted at a meeting or adjourned meeting
duly reconvened at which a quorum is present by the affirmative
vote of the Holders of such specified percentage in principal
amount of the Outstanding Convertible Senior Debt Securities or
Debt Securities of that series. Any resolution passed or
decision taken at any meeting of Holders of Convertible Senior
Debt Securities or Debt Securities of any series duly held in
accordance with the Indenture will be binding on all Holders of
Convertible Senior Debt Securities or Debt Securities of that
series and the related coupons. The quorum at any meeting called
to adopt a resolution and at any reconvened meeting will be the
persons entitled to vote a majority in principal amount of the
Outstanding Convertible Senior Debt Securities or Debt Securities
of that series; provided, that if any action is to be taken at
such meeting with respect to a consent or waiver which may be
given by the Holders of not less than a specified percentage in
principal amount of the Outstanding Convertible Senior Debt
Securities or Debt Securities of a series, then the Persons
entitled to vote such specified percentage in principal amount of
the Outstanding Convertible Senior Debt Securities or Debt
Securities of such series will constitute a quorum.
Notwithstanding the foregoing provisions, if any action is to be
taken at a meeting of Holders of Convertible Senior Debt
Securities or Debt Securities of any series with respect to any
request, demand, authorization, direction, notice, consent,
waiver or other action that the Indenture expressly provides may
be made, given or taken by the Holders of a specified percentage
in principal amount of all Outstanding Convertible Senior Debt
Securities or Debt Securities affected thereby, or of the Holders
of such series and one or more additional series, then (i) there
shall be no minimum quorum requirement for such meeting and (ii)
the principal amount of the Outstanding Convertible Senior Debt
Securities or Debt Securities of such series that are voted in
favor of such request, demand, authorization, direction, notice,
consent, waiver or other action shall determine whether such
request, demand, authorization, direction, notice, consent,
waiver or other action has been made, given or taken under the
Indenture. (Section 1504)
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that, unless the provisions of
Article Fourteen are made inapplicable to the Convertible Senior
Debt Securities or Debt Securities of or within any series and
any related coupons pursuant to Section 301 of the Indenture,
then the Company may elect either (i) to defease and be
discharged from any and all obligations with respect to such
Convertible Senior Debt Securities or Debt Securities and any
related coupons (except for the obligation to pay Additional
Amounts, if any, upon the occurrence of certain events of tax,
assessment or governmental charge with respect to payments on
such Convertible Senior Debt Securities or Debt Securities and
the obligations to register the transfer or exchange of such
Convertible Senior Debt Securities or Debt Securities and any
related coupons, to replace temporary or mutilated, destroyed,
lost or stolen Convertible Senior Debt Securities or Debt
Securities and any related coupons, to maintain an office or
agency in respect of such Convertible Senior Debt Securities or
Debt Securities and any related coupons and to hold moneys for
payment in trust) ("defeasance") (Section 1402) or (ii) to be
released from its obligations with respect to such Convertible
Senior Debt Securities or Debt Securities and any related coupons
under Section 1006 (being the restriction described under
"Limitation on Liens") or, if provided pursuant to Section 301 of
the Indenture, then its obligations with respect to any other
covenant, and any omission to comply with such obligations shall
not constitute a default or an Event of Default with respect to
such Convertible Senior Debt Securities or Debt Securities and
any related coupons ("covenant defeasance") (Section 1403), in
either case upon the irrevocable deposit by the Company with the
Trustee (or other qualifying trustee), in trust, of an amount, in
such Currency in which such Convertible Senior Debt Securities or
Debt Securities and any related coupons are then specified as
payable at Stated Maturity, or Government Obligations (as defined
below), or both, applicable to such Convertible Senior Debt
Securities or Debt Securities and any related coupons (with such
applicability being determined on the basis of the Currency in
which such Convertible Senior Debt Securities or Debt Securities
are then specified as payable at Stated Maturity) that through
the scheduled payment of principal and interest in accordance
with their terms will provide money in an amount sufficient to
pay the principal of (and premium, if any) and interest, if any,
on such Convertible Senior Debt Securities or Debt Securities and
any related coupons, and any mandatory sinking fund or analogous
payments thereon, on the scheduled due dates therefor.
Such a trust may only be established if, among other things,
the Company has delivered to the Trustee an Opinion of Counsel
(as specified in the Indenture) to the effect that the Holders of
such Convertible Senior Debt Securities or Debt Securities and
any related coupons will not recognize income, gain or loss for
United States federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to United
States federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, and such
Opinion of Counsel, in the case of defeasance under clause
(i) above, must refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable United States
federal income tax law occurring after the date of the Indenture.
(Section 1404)
"Government Obligations" means securities that are (i)
direct obligations of the United States of America or the
government that issued the Foreign Currency in which the
Convertible Senior Debt Securities or Debt Securities of a
particular series are payable for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person
controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such
government that issued the Foreign Currency in which the
Convertible Senior Debt Securities or Debt Securities of such
series are payable, the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United
States of America or such other government, which, in either
case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a
bank or trust company as custodian with respect to any such
Government Obligation or a specific payment of interest on or
principal of any such Government Obligation held by such
custodian for the account of the holder of a depository receipt,
provided, that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific
payment of interest on or principal of the Government Obligation
evidenced by such depository receipt. (Section 101)
Unless otherwise provided in the Prospectus Supplement, if,
after the Company has deposited funds or Government Obligations
to effect defeasance or covenant defeasance with respect to
Convertible Senior Debt Securities or Debt Securities of any
series, (i) the Holder of a Convertible Senior Debt Security or
Debt Security of such series is entitled to, and does, elect
pursuant to the terms of such Convertible Senior Debt Security or
Debt Security to receive payment in a Currency other than that in
which such deposit has been made in respect of such Convertible
Senior Debt Security or Debt Security or (ii) the Currency in
which such deposit has been made in respect of any Convertible
Senior Debt Security or Debt Security of such series ceases to be
used by its government of issuance, then the indebtedness
represented by such Convertible Senior Debt Security or Debt
Security shall be deemed to have been, and will be, fully
discharged and satisfied through the payment of the principal of
(and premium, if any) and interest, if any, on such Convertible
Senior Debt Security or Debt Security as they become due out of
the proceeds yielded by converting the amount so deposited in
respect of such Convertible Senior Debt Security or Debt Security
into the Currency in which such Convertible Senior Debt Security
or Debt Security becomes payable as a result of such election or
such cessation of usage based on the applicable Market Exchange
Rate. (Section 1405) Unless otherwise provided in the
Prospectus Supplement, all payments of principal of (and premium,
if any) and interest, if any, and Additional Amounts, if any, on
any Convertible Senior Debt Security or Debt Security that is
payable in a Foreign Currency that ceases to be used by its
government of issuance shall be made in U.S. dollars. (Section
312)
In the event the Company effects covenant defeasance with
respect to any Convertible Senior Debt Securities or Debt
Securities and any related coupons and such Convertible Senior
Debt Securities or Debt Securities and any related coupons are
declared due and payable because of the occurrence of any Event
of Default other than the Event of Default described in clause
(iv) or (vi) under "Events of Default" with respect to any
covenant with respect to which there has been defeasance, the
Currency and Government Obligations on deposit with the Trustee
will be sufficient to pay amounts due on such Convertible Senior
Debt Securities or Debt Securities and any related coupons at the
time of their Stated Maturity but may not be sufficient to pay
amounts due on such Convertible Senior Debt Securities or Debt
Securities and any related coupons at the time of the
acceleration resulting from such Event of Default. However, the
Company would remain liable to make payment of such amounts due
at the time of acceleration.
The Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant
defeasance, including any modifications to the provisions
described above, with respect to the Convertible Senior Debt
Securities or Debt Securities of or within a particular series
and any related coupons.
RESIGNATION OF TRUSTEE
The Trustee may resign or be removed with respect to one or
more series of Convertible Senior Debt Securities or Debt
Securities and a successor Trustee may be appointed to act with
respect to such series. (Section 608) In the event that two or
more persons are acting as Trustee with respect to different
series of Convertible Senior Debt Securities or Debt Securities,
each such Trustee shall be a Trustee of a trust under the
Indenture separate and apart from the trust administered by any
other such Trustee (Section 609), and any action described herein
to be taken by the "Trustee" may then be taken by each such
Trustee with respect to, and only with respect to, the one or
more series of Indenture Securities for which it is Trustee.
THE TRUSTEE
The Company may from time to time maintain bank accounts and
have other customary banking relationships with and obtain credit
facilities and lines of credit from the Trustee in the ordinary
course of business. The Trustee may also serve as trustee under
other indentures covering other debt securities of the Company.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus
Supplement, payment of principal of and any premium, interest or
Additional Amounts on Registered Securities issued in
certificated form will be made at any office or agency to be
maintained by the Company in New York City, New York, except
that, at the option of the Company, payment of any interest
(including Additional Amounts, if any) may be made (i) by check
mailed to the address of the person entitled thereto as such
address shall appear in the applicable Security Register or
(ii) by wire transfer to an account maintained by the payee
located inside the United States. (Sections 307, 1001 and 1002)
In the case of Global Securities, such payment will be made to
the Depository or its nominee in accordance with the then-
existing arrangements between the Paying Agent and the
Depository. See "Description of Convertible Senior Debt
Securities and Debt Securities--Global Securities" above. Unless
otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on Registered Securities
will be made to the person in whose name such Registered Security
is registered at the close of business on the Regular Record Date
for such payment. (Section 307)
Unless otherwise indicated in an applicable Prospectus
Supplement, payment of principal of and any premium, interest or
Additional Amounts on Bearer Securities will be payable, subject
to any applicable laws and regulations, at the offices of such
Paying Agents outside the United States as the Company may
designate from time to time. (Section 1002) Unless otherwise
indicated in an applicable Prospectus Supplement, payment of
interest and certain Additional Amounts on Bearer Securities on
any Interest Payment Date will be made only against surrender of
the coupon relating to the applicable Interest Payment Date.
(Section 1001) Unless otherwise provided in an applicable
Prospectus Supplement, no payment with respect to any Bearer
Security will be made at any office or agency of the Company in
the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank
located in the United States. Notwithstanding the foregoing,
payments of principal, premium, if any, and interest, if any, and
Additional Amounts, if any, in respect of Bearer Securities
payable in U.S. dollars will be made at the office of the
Company's Paying Agent in New York City, New York, if (but only
if) payment of the full amount thereof in U.S. dollars at all
offices or agencies located outside the United States is illegal
or effectively precluded by exchange controls or other similar
restrictions. (Section 1002)
Any Paying Agents located outside the United States and any
other Paying Agents in the United States initially designated by
the Company for the Convertible Senior Debt Securities or Debt
Securities will be named in the Prospectus Supplement. The
Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change
in the office through which any Paying Agent acts, except that,
if Convertible Senior Debt Securities or Debt Securities of a
series are issuable only as Registered Securities, then the
Company will be required to maintain a Paying Agent in each Place
of Payment for such series and, if Convertible Senior Debt
Securities or Debt Securities of a series are also issuable as
Bearer Securities, then the Company will be required to maintain
(i) a Paying Agent in New York City, New York, for payments with
respect to any Registered Securities of the series (and for
payments with respect to Bearer Securities of the series in the
circumstances described above, but not otherwise) and (ii) a
Paying Agent in a Place of Payment located outside the United
States where Convertible Senior Debt Securities or Debt
Securities of such series and any coupons appertaining thereto
may be presented and surrendered for payment; provided, that if
the Convertible Senior Debt Securities or Debt Securities of such
series are listed on any stock exchange located outside the
United States and such stock exchange shall so require, then the
Company will maintain a Paying Agent in any other required city
located outside the United States, as the case may be, for the
Convertible Senior Debt Securities or Debt Securities of such
series. (Section 1002).
DESCRIPTION OF CONVERTIBLE SUBORDINATED DEBT SECURITIES
The Convertible Subordinated Debt Securities are to be
issued under an indenture (the " Subordinated Indenture")
between the Company and a trustee (the "Subordinated Trustee"),
as shall be set forth in the Prospectus Supplement relating to
the Convertible Subordinated Debt Securities being offered
thereby. The statements made under this heading relating to the
Convertible Subordinated Debt Securities and the
Subordinated Indenture are summaries of the provisions
thereof and do not purport to be complete, and, where reference
is made to particular provisions of the Subordinated
Indenture, such provisions are incorporated by reference as a
part of such summaries, which are qualified in their entirety by
such references. Parenthetical references below are to the
Subordinated Indenture or to sections of the TIA, certain
provisions of which govern the terms of the Subordinated
Indenture, and, whenever any particular provision of the
Subordinated Indenture or the TIA or any defined term used
therein is referred to, such provision or defined term is
incorporated by reference as a part of the statement in
connection with which such reference is made, and the statement
in connection with which such reference is made is qualified in
its entirety by such reference. Capitalized terms used herein
but not otherwise defined shall have the meaning assigned to them
in the Subordinated Indenture.
GENERAL
The Convertible Subordinated Debt Securities will be direct,
unsecured obligations of the Company. At December 31,
1995 , the Company had no secured indebtedness outstanding.
The Company's assets consist of the stock of its subsidiaries and
interests in unconsolidated affiliates. Accordingly, certain
creditors of the Company's subsidiaries will have a claim on the
assets of such subsidiaries prior to the Holders of the
Convertible Subordinated Debt Securities. At December 31,
1995 , the Company's subsidiaries had an aggregate of
$ 147.6 million of indebtedness outstanding, of which
$ 117.1 million was secured. In addition, the ability of
the Company to pay principal of, premium, if any, and interest on
the Convertible Subordinated Debt Securities will depend on the
Company's receipt of funds from its subsidiaries and
unconsolidated affiliates. KCSR, Janus and Berger are not
subject to any restrictions on the payment of dividends. DST,
now an approximately 40% owned equity investment intends on
retaining its earnings for use in its business and, therefore,
does not anticipate paying any cash dividends in the foreseeable
future.
The Convertible Subordinated Debt Securities may be issued
in one or more series. The particular terms of each series of
Convertible Subordinated Debt Securities, as well as any
modifications of or additions to the general terms of the
Convertible Subordinated Debt Securities as described herein that
may be applicable in the case of a particular series of
Convertible Subordinated Debt Securities, will be described in
the Prospectus Supplement relating to such series of Convertible
Subordinated Debt Securities. Accordingly, for a description of
the terms of a particular series of Convertible Subordinated Debt
Securities, reference must be made to both the Prospectus
Supplement relating thereto and the description of Convertible
Subordinated Debt Securities set forth in this Prospectus.
Reference is made to the Prospectus Supplement for the
following terms of the Convertible Subordinated Debt Securities
being offered thereby: (1) the title of such Convertible
Subordinated Debt Securities; (2) any limit on the aggregate
principal amount of such Convertible Subordinated Debt
Securities; (3) the percentage of the principal amount at which
such Convertible Subordinated Debt Securities will be issued and,
if other than the principal amount thereof, the portion of the
principal amount thereof payable upon declaration of acceleration
of the maturity thereof or the method by which such portion shall
be determined; (4) the date or dates, or the method by which such
date or dates will be determined or extended, on which the
principal of such Convertible Subordinated Debt Securities will
be payable; (5) the rate or rates at which such Convertible
Subordinated Debt Securities will bear interest, if any, or the
method by which such rate or rates shall be determined; (6) the
date or dates from which interest, if any, on such Convertible
Subordinated Debt Securities shall accrue or the method by which
such date or dates shall be determined, the dates on which such
interest, if any, will be payable and the Regular Record Date, if
any, for the interest payable on any Registered Security of the
series on any Interest Payment Date, or the method by which any
such date shall be determined, and the basis on which interest
shall be calculated if other than on the basis of a 360-day year
of twelve 30-day months; (7) the period or periods within which,
the price or prices at which, the Currency in which and the other
terms and conditions upon which such Convertible Subordinated
Debt Securities may be redeemed in whole or in part, at the
option of the Company; (8) the obligation, if any, of the Company
to redeem, repay or purchase such Convertible Subordinated Debt
Securities pursuant to any sinking fund or analogous provision
or at the option of a Holder thereof and the period or periods
within which or the date or dates on which, the price or prices
at which, the Currency in which and the other terms and
conditions upon which such Convertible Subordinated Debt
Securities shall be redeemed, repaid or purchased, in whole or
in part, pursuant to such obligation; (9) whether such
Convertible Subordinated Debt Securities are to be issuable as
Registered Securities or Bearer Securities or both, and whether
such Convertible Subordinated Debt Securities are to be issuable,
either temporarily or permanently, in global form and, if so,
whether beneficial owners of interests in any such permanent
global security may exchange such interests for Convertible
Subordinated Debt Securities of such series and of like tenor of
any authorized form and denomination and the circumstances under
which any such exchanges may occur, if other than in the manner
provided in the Subordinated Indenture, and, if Registered
Securities of the series are to be issuable as a global security,
the identity of the depository for such series; (10) if other
than U.S. dollars, the Currency in which such Convertible
Subordinated Debt Securities will be denominated and in which
the principal of (and premium, if any) and any interest on such
Convertible Subordinated Debt Securities will be payable; (11)
whether the amount of payments of principal of (and premium, if
any) or interest, if any, on such Convertible Subordinated Debt
Securities may be determined with reference to an index, formula
or other method (which index, formula or method may be based on
one or more Currencies, commodities, equity indices or other
indices) and the manner in which such amounts shall be
determined; (12) whether the Company or Holder may elect payment
of the principal of (and premium, if any) or interest, if any, on
such Convertible Subordinated Debt Securities in one or more
Currencies other than that in which such Convertible Subordinated
Debt Securities are denominated or stated to be payable, the
period or periods within which, and the terms and conditions upon
which, such election may be made, and the time and manner of
determining the exchange rate between the Currency in which such
Convertible Subordinated Debt Securities are denominated or
stated to be payable and the Currency in which such Convertible
Subordinated Debt Securities are to be so payable; (13) the
place or places, if any, other than or in addition to New York
City, New York, where the principal of (and premium, if any) and
any interest on such Convertible Subordinated Debt Securities
shall be payable, any Registered Securities of the series may be
surrendered for registration of transfer, such Convertible
Subordinated Debt Securities may be surrendered for exchange and
notice or demands to or upon the Company in respect of such
Convertible Subordinated Debt Securities and the
Subordinated Indenture may be served; (14) if other than
denominations of $1,000 and any integral multiple thereof, the
denominations in which any Registered Securities of the series
shall be issuable and, if other than the denomination of $5,000,
the denomination or denominations in which any Bearer Securities
of the series shall be issuable; (15) the identity of the
Subordinated Trustee for such Convertible Subordinated Debt
Securities and, if other than the Subordinated Trustee, the
Security Registrar and the Paying Agent; (16) the inapplicability
to such Convertible Subordinated Debt Securities of the
provisions of Article Fourteen of the Subordinated
Indenture described herein under "Defeasance and Covenant
Defeasance" and any provisions in modification of, in addition to
or in lieu of any of the provisions of such Article; (17) the
Person to whom any interest on any Registered Security of the
series shall be payable, if other than the Person in whose name
that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date
for such interest, the manner in which, or the Person to whom,
any interest on any Bearer Security of the series shall be
payable, if otherwise than upon presentation and surrender of the
coupons appertaining thereto as they severally mature, and the
extent to which, or the manner in which, any interest payable on
a temporary global security on an Interest Payment Date will be
paid if other than in the manner provided in the
Subordinated Indenture; (18) whether and under what
circumstances the Company will pay Additional Amounts as
contemplated by Section 1005 of the Subordinated Indenture
on such Convertible Subordinated Debt Securities to any Holder
who is not a United States person (including any modification to
the definition of such terms as contained in the
Subordinated Indenture as originally executed) in respect
of any tax, assessment or governmental charge and, if so, whether
the Company will have the option to redeem such Convertible
Subordinated Debt Securities rather than pay such Additional
Amounts (and the terms of any such option); (19) any deletions
from, modifications of or additions to the Events of Default or
covenants of the Company with respect to such Convertible
Subordinated Debt Securities, whether or not such Events of
Default or covenants are consistent with the Events of Default or
covenants set forth herein; (20) the date as of which any Bearer
Securities of the series and any temporary global security shall
be dated if other than the date of original issuance of the first
of such Convertible Subordinated Debt Securities; (21) if such
Convertible Subordinated Debt Securities are to be issuable in
definitive form (whether upon original issue or upon exchange of
a temporary security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other
conditions, then the form or terms of such certificates,
documents or conditions; (22) the designation of the initial
Exchange Rate Agent, if any; (23) any other terms of such
Convertible Subordinated Debt Securities; and (24) in the case of
Convertible Subordinated Debt Securities, the terms and
conditions upon which conversion will be effected, including the
conversion price, the conversion period and other conversion
provisions in addition to or in lieu of those described below.
The Subordinated Indenture does not contain any
provisions that may afford the Holders of Convertible
Subordinated Debt Securities of any series protection in the
event of a highly leveraged transaction or other transaction that
may occur in connection with a change of control of the Company.
Payment of any indebtedness outstanding under the Company's
revolving credit agreement would become accelerated at the
time of any change in control of the Company, as defined in
that agreement. In May 1995, the Company established a new
credit agreement which replaced the then existing Company credit
agreements. The Company also has various other lines of credit.
At December 31, 1995, the Company had no indebtedness outstanding
under any of these facilities. The Company is a party to
agreements with certain minority owners of Janus, which may
impose financial and other obligations upon the Company in
the event of a change in control of the Company, as defined in
such agreements. The Company also has a commitment to fund,
through so-called "rabbi trusts", the payment of certain
compensation and benefit continuations and severance payments of
management employees in the event of defined changes in control.
The aggregate amount of the Company's financial obligations under
the agreements governing the rabbi trusts and the Company's
investment in Janus cannot be determined in advance of any
change-in-control event, but is expected to be material. DST
has a Stockholders' Rights Agreement. Under certain
circumstances following a "change of control" of the Company, as
defined in DST's Stockholders' Rights Agreement, substantial
dilution of the Company's interest in DST could result.
The Subordinated Indenture provides that the
Convertible Subordinated Debt Securities may be issued in one or
more series thereunder, in each case as authorized from time to
time by the Board of Directors of the Company. (Section 301) The
Subordinated Indenture also provides that there may be
more than one Subordinated Trustee under the Subordinated
Indenture, each with respect to one or more different series of
Convertible Subordinated Debt Securities. See "Resignation of
Subordinated Trustee" herein. At a time when two or more
Subordinated Trustees are acting, each with respect to only
certain series, the term "Convertible Subordinated Debt
Securities" as used herein shall mean the one or more series with
respect to which each respective Subordinated Trustee is acting.
In the event there is more than one Subordinated Trustee under
the Subordinated Indenture, the powers and trust
obligations of each Subordinated Trustee as described herein
shall extend only to the one or more series of Convertible
Subordinated Debt Securities for which it is Subordinated
Trustee. If more than one Subordinated Trustee is acting under
the Subordinated Indenture, then the Convertible
Subordinated Debt Securities (whether of one or more than one
series) for which each Subordinated Trustee is acting shall in
effect be treated as if issued under separate indentures.
Some of the Convertible Subordinated Debt Securities may be
issued as original issue discount Securities (bearing no interest
or interest at a rate which at the time of issuance is below
market rates) ("Original Issue Discount Securities"), to be sold
at a substantial discount below their stated principal amount.
If any Convertible Subordinated Debt Security is not to be
denominated in United States dollars, certain provisions with
respect thereto will be set forth in a Foreign Currency
Prospectus Supplement, which will specify the Currency or
Currencies, including composite Currencies such as the European
Currency Unit, in which the principal, premium, if any, and any
interest with respect to such Convertible Subordinated Debt
Security are to be paid, along with any other terms relating to
the non-United States dollar denomination. Federal income tax,
accounting and other special considerations applicable to any
such Original Issue Discount Securities or non-United States
dollar denominated Convertible Subordinated Debt Securities will
be described in a Prospectus Supplement relating thereto.
The Subordinated Indenture does not contain any
provisions that would limit the ability of the Company to incur
indebtedness. Reference is made to the Prospectus Supplement
related to the series of Convertible Subordinated Debt Securities
offered thereby for information with respect to any deletions
from, modifications of or additions to the Events of Default or
covenants of the Company applicable to such Convertible
Subordinated Debt Securities that are described herein.
Under the Subordinated Indenture, the Company will
have the ability, in addition to the ability to issue Convertible
Subordinated Debt Securities with terms different from those of
Convertible Subordinated Debt Securities previously issued,
without the consent of the Holders, to reopen a previous issue of
a series of Convertible Subordinated Debt Securities and issue
additional Convertible Subordinated Debt Securities of such
series, in an aggregate principal amount determined by the
Company. (Section 301)
DENOMINATIONS, REGISTRATION AND TRANSFER
Convertible Subordinated Debt Securities of a series may be
issuable solely as Registered Securities, solely as Bearer
Securities or as both Registered Securities and Bearer
Securities. Registered Securities will be issuable in
denominations of $1,000 and integral multiples of $1,000 and
Bearer Securities will be issuable in the denomination of $5,000
or, in each case, in such other denominations as may be in the
terms of the Convertible Subordinated Debt Securities of any
particular series. The Subordinated Indenture also
provides that Convertible Subordinated Debt Securities of a
series may be issuable in global form. Unless otherwise
indicated in the Prospectus Supplement, Bearer Securities will
have interest coupons attached. (Section 201)
Registered Securities of any series will be exchangeable for
other Registered Securities of the same series and of a like
aggregate principal amount and tenor of different authorized
denominations. If (but only if) provided in the Prospectus
Supplement, Bearer Securities (with all unmatured coupons, except
as provided below, and all matured coupons in default) of any
series may be exchanged for Registered Securities of the same
series of any authorized denominations and of a like aggregate
principal amount and tenor. In such event, Bearer Securities
surrendered in a permitted exchange for Registered Securities
between a Regular Record Date or a Special Record Date and the
relevant date for payment of interest shall be surrendered
without the coupon relating to such date for payment of interest,
and interest will not be payable on such date for payment of
interest in respect of the Registered Security issued in exchange
for such Bearer Security, but will be payable only to the Holder
of such coupon when due in accordance with the terms of the
Subordinated Indenture. Unless otherwise specified in the
Prospectus Supplement, Bearer Securities will not be issued in
exchange for Registered Securities. (Section 305)
The Convertible Subordinated Debt Securities may be
presented for exchange as described above, and Registered
Securities may be presented for registration of transfer (duly
endorsed or accompanied by a written instrument of transfer), at
the corporate trust office of the Subordinated Trustee in New
York City, New York, or at the office of any transfer agent
designated by the Company for such purpose with respect to any
series of Convertible Subordinated Debt Securities and referred
to in the Prospectus Supplement. No service charge will be made
for any transfer or exchange of Convertible Subordinated Debt
Securities , but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable
in connection therewith. (Section 305) If a Prospectus
Supplement refers to any transfer agent (in addition to the
Subordinated Trustee) initially designated by the Company with
respect to any series of Convertible Subordinated Debt
Securities, then the Company may at any time rescind the
designation of any such transfer agent or approve a change in the
location through which any such transfer agent acts, except that,
if Convertible Subordinated Debt Securities of a series are
issuable solely as Registered Securities, then the Company will
be required to maintain a transfer agent in each Place of Payment
for such series and, if Convertible Subordinated Debt Securities
of a series may be issuable both as Registered Securities and as
Bearer Securities, then the Company will be required to maintain
(in addition to the Subordinated Trustee) a transfer agent in a
Place of Payment for such series located outside the United
States. The Company may at any time designate additional
transfer agents with respect to any series of Convertible
Subordinated Debt Securities. (Section 1002)
The Company shall not be required to (i) issue, register the
transfer of or exchange Convertible Subordinated Debt Securities
of any series during a period beginning at the opening of
business 15 days before any selection of Convertible Subordinated
Debt Securities of that series to be redeemed and ending at the
close of business on (A) if Convertible Subordinated Debt
Securities of the series are issuable only as Registered
Securities, then the day of mailing of the relevant notice of
redemption and (B) if Convertible Subordinated Debt Securities
of the series are issuable as Bearer Securities, then the day of
the first publication of the relevant notice of redemption or, if
Convertible Subordinated Debt Securities of the series are also
issuable as Registered Securities and there is no publication,
then the mailing of the relevant notice of redemption; (ii)
register the transfer of or exchange any Registered Security or
portion thereof called for redemption, except the unredeemed
portion of any Registered Security being redeemed in part; (iii)
exchange any Bearer Security selected for redemption, except to
exchange such Bearer Security for a Registered Security of that
series and of like tenor that is simultaneously surrendered for
redemption; or (iv) issue, register the transfer of or exchange
any Convertible Subordinated Debt Security that has been
surrendered for repayment at the option of the Holder, except the
portion, if any, thereof not to be so repaid. (Section 305)
CONVERSION RIGHTS
The circumstances under which Convertible Subordinated Debt
Securities of any series are convertible into Common Stock and
the terms of such conversion will be set forth in the Prospectus
Supplement relating thereto. Such terms shall include provisions
as to whether conversion is mandatory, at the option of the
holder, or at the option of the Company, and may include
provisions in which the number of shares of Common Stock to be
received by the holder of Convertible Subordinated Debt
Securities would be calculated according to the market price of
Common Stock as of a time stated in the Prospectus Supplement.
SUBORDINATION OF CONVERTIBLE SUBORDINATED DEBT SECURITIES
The obligation of the Company to make payment on account of
the principal of, and premium, if any, and interest on the
Convertible Subordinated Debt Securities will be subordinated and
junior in right of payment, as set forth in the
Subordinated Indenture, to the prior payment in full of
all Senior Debt.
"Senior Debt" means the principal of (and premium, if any)
and interest on any indebtedness, whether outstanding at the date
hereof or hereafter created or incurred which is for (a) money
borrowed by the Company (including without limitation obligations
of the Company in respect of overdrafts, foreign exchange
contracts, letters of credit, bankers' acceptances, or any loan
or advance from a bank, whether or not evidenced by debentures,
notes or similar instruments), (b) obligations which would be
classified as liabilities on the balance sheet of the Company, in
accordance with generally accepted accounting principles,
evidencing the purchase price for the acquisition of assets of
any kind by the Company or a subsidiary except in the ordinary
course of business, (c) money borrowed by others and assumed or
guaranteed by the Company, (d) obligations of the Company under
any agreement or lease of any real or personal property which are
capitalized on the books of the Company in accordance with
generally accepted accounting principles, (e) obligations under
performance guarantees, supporting agreements and other
agreements relating to the obligations of any subsidiary of the
Company and (f) renewals, extensions, refundings, amendments and
modifications of any indebtedness of the kind described in the
foregoing clauses (a), (b), (c), (d) and (e) or of the
instruments creating or evidencing such indebtedness, unless, in
each case, by the terms of the instrument creating or evidencing
such indebtedness or such renewal, extension, refunding,
amendment and modification, it is provided that such
indebtedness, or such indebtedness as so modified or amended, or
such renewals, extensions or refundings are not senior in right
to payment to the Convertible Subordinated Debt Securities.
Upon any distribution of the assets of the Company upon any
dissolution, total or partial liquidation or reorganization of or
similarly proceeding relating to the Company, the Holders of
Senior Debt will be entitled to receive payment in full before
the Holders of the Convertible Subordinated Debt Securities are
entitled to receive any payment. Upon the Event of Default (as
described below) with respect to the Convertible Subordinated
Debt Securities, the Subordinated Trustee or Holders of the
Convertible Subordinated Debt Securities must give notice of such
Event of Default and the intention to accelerate to the Company
and any Holders of Senior Debt which have theretofore requested
such notice, and such acceleration shall not become effective
unless and until such Event of Default is continuing on the
sixtieth day after the date of delivery of such notice of
intention to accelerate; PROVIDED, HOWEVER, that the Convertible
Subordinated Debt Securities shall become immediately due and
payable upon notice in the event of a bankruptcy or insolvency of
the Company. By reason of such subordination, in the event of
insolvency, creditors of the Company who are holders of Senior
Debt or of other unsubordinated Debt of the Company may recover
more, ratably, than the Holders of the Convertible Subordinated
Debt Securities.
GLOBAL SECURITIES
The Convertible Subordinated Debt Securities of a series
may be issued in whole or in part in the form of one or more
global securities (each a "Global Security") that will be
deposited with, or on behalf of, the "Depository" identified in
the Prospectus Supplement relating to such series. Unless and
until it is exchanged in whole or in part for the individual
Convertible Subordinated Debt Securities represented thereby, a
Global Security may not be transferred except as a whole by the
Depository for such Global Security to a nominee of such
Depository or by a nominee of such Depository to such Depository
or another nominee of such Depository or by the Depository or any
nominee to a successor Depository or any nominee of such
successor.
The Depository has advised as follows: it is a limited-
purpose trust company created to hold securities for its
participating organizations and to facilitate the clearance and
settlement of securities transactions in such securities between
such participants through electronic book-entry changes in
accounts of its participants. Participants include securities
brokers and dealers, banks and trust companies, clearing
corporations and certain other organizations. Access to the
Depository's system is also available to others such as banks,
brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either
directly or indirectly. Persons who are not participants may
beneficially own securities held by the Depository only through
participants or indirect participants.
The specific terms of the depository arrangement with
respect to a series of Convertible Subordinated Debt Securities
and certain limitations and restrictions relating to a series of
Bearer Securities in the form of one or more Global Securities
will be described in the Prospectus Supplement relating to such
series. Unless otherwise indicated in the applicable Prospectus
Supplement, the following provisions will apply to all depository
arrangements.
Upon the issuance of a Global Security, the Depository for
such Global Security or its nominee will credit, on its book-
entry registration and transfer system, the respective principal
amounts of the individual Convertible Subordinated Debt
Securities represented by such Global Security to the accounts
of persons that have accounts with such Depository. Such
accounts will be designated by the underwriters or agents with
respect to such Convertible Subordinated Debt Securities or by
the Company if such Convertible Subordinated Debt Securities are
offered and sold directly by the Company. Ownership of
beneficial interests in such Global Security will be shown on,
and the transfer of that ownership will be effected only through,
records maintained by the applicable Depository or its nominee
(with respect to interests of participants) and the records of
participants (with respect to interests of persons other than
participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such
securities in definitive form. Such limit and such laws may
impair the ability to transfer beneficial interests in a Global
Security.
So long as the Depository for a Global Security, or its
nominee, is the registered owner of such Global Security, such
Depository or such nominee, as the case may be, will be
considered the sole owner or Holder of the Convertible
Subordinated Debt Securities represented by such Global Security
for all purposes under the Subordinated Indenture. Except
as provided below, owners of beneficial interests in a Global
Security will not be entitled to have any of the individual
Convertible Subordinated Debt Securities of the series
represented by such Global Security registered in their names,
will not receive or be entitled to receive physical delivery of
such Convertible Subordinated Debt Securities of such series in
definitive form and will not be considered the owners or Holders
thereof under the Subordinated Indenture.
Payments of principal of, premium, if any, and interest, if
any, on individual Convertible Subordinated Debt Securities
represented by a Global Security registered in the name of a
Depository or its nominee will be made to the Depository or its
nominee, as the case may be, as the registered owner of the
Global Security representing such Convertible Subordinated Debt
Securities. Neither the Company, the Subordinated Trustee, any
Paying Agent, nor the Security Registrar for such Convertible
Subordinated Debt Securities will have any responsibility or
liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests of the Global
Security for such Convertible Subordinated Debt Securities or for
maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Subject to certain restrictions relating to Bearer
Securities, the Company expects that the Depository for a series
of Convertible Subordinated Debt Securities or its nominee, upon
receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such
Convertible Subordinated Debt Securities, will immediately credit
participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of
such Global Security for such Convertible Subordinated Debt
Securities as shown on the records of such Depository or its
nominee. The Company also expects that payments by participants
to owners of beneficial interests in such Global Security held
through such participants will be governed by standing
instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or
registered in "street name." Such payments will be the
responsibility of such participants. With respect to owners of
beneficial interests in a temporary Global Security representing
Bearer Securities, receipt by such beneficial owners of payments
of principal, premium or interest in respect thereof will be
subject to additional restrictions.
SAME-DAY SETTLEMENT AND PAYMENT
If provided in the Prospectus Supplement for a series of
Convertible Subordinated Debt Securities, then settlement for
such Convertible Subordinated Debt Securities will be made by
the agents or underwriters in immediately available funds, and
all payments of principal and interest will be made by the
Company in immediately available funds.
Secondary trading in long-term notes and debentures of
corporate issuers is generally settled in clearinghouse or next-
day funds. In contrast, if provided in the Prospectus Supplement
for a series of Convertible Subordinated Debt Securities, such
series of Convertible Subordinated Debt Securities will trade in
the Depository's Same-Day Funds Settlement System until maturity,
and secondary market trading activity in such series of
Convertible Subordinated Debt Securities will therefore be
required by the Depository to settle in immediately available
funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on trading of the
Convertible Subordinated Debt Securities.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms
used in the covenants contained in the Subordinated
Indenture. Reference is made to the Subordinated
Indenture for the full definition of all such terms as well as
any other capitalized terms used herein for which no definition
is provided.
"Subsidiary" means a corporation, partnership, joint
venture, association or other entity a majority of the
outstanding voting stock or other equity interest entitled
ordinarily to vote in the election of the directors or other
governing body (however designated) of which is owned or
controlled, directly or indirectly, by the Company or by one or
more other Subsidiaries of the Company. For the purposes of this
definition, "voting stock" means stock having voting power for
the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of
any contingency.
"Significant Subsidiary" means (i) any Subsidiary (other
than Southern Credit Corporation or any of its Subsidiaries)
which at the time of determination had total assets which, as of
the date of the Company's most recent quarterly consolidated
balance sheet, constituted at least 10% of the Company's total
assets on a consolidated basis as of such date or (ii) any
Subsidiary which at the time of determination had revenues for
the three-month period ending on the date of the Company's most
recent quarterly consolidated statement of income which
constituted at least 10% of the Company's total revenues on a
consolidated basis for such period.
LIMITATION ON LIENS
In the Subordinated Indenture, the Company covenants
that it will not nor will it permit any Significant Subsidiary to
create, assume, incur or suffer to exist any Lien upon any stock
or indebtedness, whether owned on the date of the
Subordinated Indenture or thereafter acquired, of any
Significant Subsidiary (other than a Significant Subsidiary, the
stock or indebtedness of which at the date of the
Subordinated Indenture was subject to a Lien or required
to be subject to a Lien) to secure any Obligation (other than the
Convertible Subordinated Debt Securities ) of the Company, any
Subsidiary or any other Person without in any such case making
effective provision whereby all of the Outstanding Convertible
Subordinated Debt Securities shall be directly secured equally
and ratably with such Obligation, excluding, however, from the
operation of the foregoing provisions any Lien upon stock or
indebtedness of any corporation existing at the time such
corporation becomes a Significant Subsidiary or existing or
created upon stock or indebtedness of a Significant Subsidiary at
the time of acquisition of such stock or indebtedness and any
extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any such Lien;
provided, however, that the principal amount of the Obligation
secured thereby shall not exceed the principal amount of the
Obligation so secured at the time of such extension, renewal or
replacement; and provided, further, that such Lien shall be
limited to all or such part of the stock or indebtedness which
secured the Lien so extended, renewed or replaced. (Section 1006)
EVENTS OF DEFAULT
The Subordinated Indenture provides, with respect to
any series of Convertible Subordinated Debt Securities
Outstanding thereunder, that the following shall constitute
Events of Default: (i) default in the payment of any interest
upon or any Additional Amounts payable in respect of any
Convertible Subordinated Debt Security of that series or of any
coupon appertaining thereto when the same becomes due and
payable, continued for 30 days; (ii) default in the payment of
the principal of or any premium on any Convertible Subordinated
Debt Security of that series at its Maturity; (iii) default in
the deposit of any sinking fund payment when due by the terms of
any Convertible Subordinated Debt Security of that series; (iv)
default in the performance or breach of any covenant or warranty
of the Company in the Subordinated Indenture with respect
to any Convertible Subordinated Debt Security of that series,
continued for 60 days after written notice to the Company; (v)
certain events in bankruptcy, insolvency or reorganization; and
(vi) any other Event of Default provided with respect to
Convertible Subordinated Debt Securities of that series.
(Section 501) The Company is required to file with the
Subordinated Trustee, annually, an Officer's Certificate as to
the Company's compliance with all conditions and covenants under
the Subordinated Indenture. (Section 1004) The
Subordinated Indenture provides that the Subordinated
Trustee may withhold notice to the Holders of Convertible
Subordinated Debt Securities of any default (except payment
defaults on the Convertible Subordinated Debt Securities ) in the
event the Subordinated Trustee considers it in the interest of
the Holders of Convertible Subordinated Debt Securities to do so.
(Section 601)
If an Event of Default with respect to Convertible
Subordinated Debt Securities of a particular series shall occur
and be continuing, the Subordinated Trustee or the Holders of not
less than 25% in principal amount of Outstanding Convertible
Subordinated Debt Securities of that series may declare the
Outstanding Convertible Subordinated Debt Securities of that
series due and payable immediately. (Section 502)
Subject to the provisions relating to the duties of the
Subordinated Trustee, in case an Event of Default with respect to
Convertible Subordinated Debt Securities of a particular series
shall occur and be continuing, the Subordinated Trustee shall be
under no obligation to exercise any of its rights or powers under
the Subordinated Indenture at the request, order or
direction of any of the Holders of Convertible Subordinated Debt
Securities of such series, unless such Holders shall have
offered to the Subordinated Trustee reasonable indemnity and
security against the costs, expenses and liabilities that might
be incurred by it in compliance with such request. (Section 507
and TIA Section 315) Subject to such provisions for the
indemnification of the Subordinated Trustee, the Holders of a
majority in principal amount of the Outstanding Convertible
Subordinated Debt Securities of such series shall have the right
to direct the time, method and place of conducting any proceeding
for any remedy available to the Subordinated Trustee under the
Subordinated Indenture or exercising any trust or power
conferred on the Subordinated Trustee with respect to the
Convertible Subordinated Debt Securities of that series.
(Section 512)
The Holders of not less than a majority in principal amount
of the Outstanding Convertible Subordinated Debt Securities of
any series may on behalf of the Holders of all the Convertible
Subordinated Debt Securities of such series and any related
coupons waive any past default under the Subordinated
Indenture with respect to such series and its consequences,
except a default (i) in the payment of the principal of (or
premium, if any) or interest on or Additional Amounts payable in
respect of any Convertible Subordinated Debt Security of such
series or (ii) in respect of a covenant or provision that cannot
be modified or amended without the consent of the Holder of each
Outstanding Convertible Subordinated Debt Security of such series
affected thereby. (Section 513)
MERGER OR CONSOLIDATION
The Subordinated Indenture provides that the Company
may not consolidate with or merge into any other corporation or
convey or transfer its properties and assets substantially as an
entirety to any Person unless either the Company is the
continuing corporation or such corporation or Person assumes by
supplemental indenture all the obligations of the Company under
the Subordinated Indenture and the Convertible
Subordinated Debt Securities and immediately after the
transaction no default shall exist. (Section 801)
MODIFICATION OR WAIVER
Modification and amendment of the Subordinated
Indenture as it applies to any series of Convertible Subordinated
Debt Securities may be made by the Company and the Subordinated
Trustee with the consent of the Holders of not less than a
majority in principal amount of all Outstanding Convertible
Subordinated Debt Securities of such series; provided, that no
such modification or amendment may, without the consent of the
Holder of each Outstanding Convertible Subordinated Convertible
Debt Security of such series affected thereby, among other
things: (i) change the Stated Maturity of the principal of (or
premium, if any, on) or any installment of principal of or
interest on any Convertible Debt Security, (ii) reduce the
principal amount or the rate of interest on or any Additional
Amounts payable in respect of or any premium payable upon the
redemption of any Convertible Subordinated Debt Security; (iii)
change any obligation of the Company to pay Additional Amounts in
respect of any Convertible Subordinated Debt Security; (iv)
reduce the amount of the principal of an original issue discount
Convertible Subordinated Debt Security that would be due and
payable upon a declaration of acceleration of the Maturity
thereof; (v) adversely affect any right of repayment at the
option of the Holder of any Convertible Subordinated Debt
Security; (vi) change the place or currency of payment of
principal of or any premium or interest on any Convertible
Subordinated Debt Security; (vii) impair the right to institute
suit for the enforcement of any such payment on or after the
Stated Maturity thereof or any Redemption Date or Repayment Date
therefor; (viii) reduce the percentage in principal amount of the
Outstanding Convertible Subordinated Debt Securities necessary
to modify or amend the Subordinated Indenture or to
consent to any waiver thereunder or reduce the requirements for
voting or quorum; or (ix) modify the foregoing requirements or
reduce the percentage in principal amount of the Outstanding
Convertible Subordinated Debt Securities necessary to waive any
past default. (Section 902)
Modification and amendment of the Subordinated
Indenture may be made by the Company and Subordinated Trustee
without the consent of any Holder for any of the following
purposes: (i) to evidence the succession of another Person to
the Company as obligor under the Subordinated Indenture;
(ii) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Convertible Subordinated Debt
Securities; (iii) to add Events of Default for the benefit of the
Holders of all or any series of Convertible Subordinated Debt
Securities; (iv) to add or change any provisions of the
Subordinated Indenture to facilitate the issuance of
Bearer Securities; (v) to change or eliminate any provisions of
the Subordinated Indenture, provided, that any such change
or elimination shall become effective only when there are no
Convertible Subordinated Debt Securities Outstanding of any
series created prior thereto that is entitled to the benefit of
such provision; (vi) to establish the form or terms of
Convertible Subordinated Debt Securities of any series and any
related coupons; (vii) to provide for the acceptance of
appointment by a successor Subordinated Trustee or facilitate the
administration of the trusts under the Subordinated
Indenture by more than one Subordinated Trustee; (viii) to close
the Subordinated Indenture with respect to the
authentication and delivery of additional series of Convertible
Subordinated Debt Securities, to cure any ambiguity, defect or
inconsistency in the Subordinated Indenture, provided,
that such action does not adversely affect the interests of
Holders of Convertible Subordinated Debt Securities of any series
in any material respect; or (ix) to supplement any of the
provisions of the Subordinated Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any
series of Convertible Subordinated Debt Securities, provided,
that such action shall not adversely affect the interests of the
Holders of any Convertible Subordinated Debt Securities in any
material respect. (Section 901)
The Subordinated Indenture contains provisions for
convening meetings of the Holders of Convertible Subordinated
Debt Securities of a series of Convertible Subordinated Debt
Securities if that series are issuable as Bearer Securities.
(Section 1501) A meeting may be called at any time by the
Subordinated Trustee and, also, upon request, by the Company or
the Holders of at least 10% in principal amount of the
Outstanding Convertible Subordinated Debt Securities of such
series, in any such case upon notice given as provided in the
Subordinated Indenture. (Section 1502) Except for any
consent that must be given by the Holder of each Convertible
Subordinated Debt Security affected thereby, as described above,
any resolution presented at a meeting or adjourned meeting at
which a quorum is present may be adopted by the affirmative vote
of the Holders of a majority in principal amount of the
Outstanding Convertible Subordinated Debt Securities of that
series; provided, that any resolution with respect to any
request, demand, authorization, direction, notice, consent,
waiver or other action that may be made, given or taken by the
Holders of a specified percentage, which is less than a majority,
in principal amount of the Outstanding Convertible Subordinated
Debt Securities of that series may be adopted at a meeting or
adjourned meeting duly reconvened at which a quorum is present by
the affirmative vote of the Holders of such specified percentage
in principal amount of the Outstanding Convertible Subordinated
Debt Securities of that series. Any resolution passed or
decision taken at any meeting of Holders of Convertible
Subordinated Debt Securities of any series duly held in
accordance with the Subordinated Indenture will be binding
on all Holders of Convertible Subordinated Debt Securities of
that series and the related coupons. The quorum at any meeting
called to adopt a resolution and at any reconvened meeting will
be the Persons entitled to vote a majority in principal amount of
the Outstanding Convertible Subordinated Debt Securities of that
series; provided, that if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by
the Holders of not less than a specified percentage in principal
amount of the Outstanding Convertible Subordinated Debt
Securities of a series, then the Persons entitled to vote such
specified percentage in principal amount of the Outstanding
Convertible Subordinated Debt Securities of such series will
constitute a quorum. Notwithstanding the foregoing provisions,
if any action is to be taken at a meeting of Holders of
Convertible Subordinated Debt Securities of any series with
respect to any request, demand, authorization, direction, notice,
consent, waiver or other action that the Subordinated
Indenture expressly provides may be made, given or taken by the
Holders of a specified percentage in principal amount of all
Outstanding Convertible Subordinated Debt Securities affected
thereby, or of the Holders of such series and one or more
additional series, then (i) there shall be no minimum quorum
requirement for such meeting and (ii) the principal amount of the
Outstanding Convertible Subordinated Debt Securities of such
series that are voted in favor of such request, demand,
authorization, direction, notice, consent, waiver or other action
shall determine whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made,
given or taken under the Subordinated Indenture. (Section
1504)
DEFEASANCE AND COVENANT DEFEASANCE
The Subordinated Indenture provides that, unless the
provisions of Article Fourteen are made inapplicable to the
Convertible Subordinated Debt Securities of or within any series
and any related coupons pursuant to Section 301 of the
Subordinated Indenture, then the Company may elect either
(i) to defease and be discharged from any and all obligations
with respect to such Convertible Subordinated Debt Securities and
any related coupons (except for the obligation to pay Additional
Amounts, if any, upon the occurrence of certain events of tax,
assessment or governmental charge with respect to payments on
such Convertible Subordinated Debt Securities and the obligations
to register the transfer or exchange of such Convertible
Subordinated Debt Securities and any related coupons, to replace
temporary or mutilated, destroyed, lost or stolen Convertible
Subordinated Debt Securities and any related coupons, to maintain
an office or agency in respect of such Convertible Subordinated
Debt Securities and any related coupons and to hold moneys for
payment in trust) ("defeasance") (Section 1402) or (ii) to be
released from its obligations with respect to such Convertible
Subordinated Debt Securities and any related coupons under
Section 1006 (being the restriction described under "Limitation
on Liens") or, if provided pursuant to Section 301 of the
Subordinated Indenture, then its obligations with respect
to any other covenant, and any omission to comply with such
obligations shall not constitute a default or an Event of Default
with respect to such Convertible Subordinated Debt Securities and
any related coupons ("covenant defeasance") (Section 1403), in
either case upon the irrevocable deposit by the Company with the
Subordinated Trustee (or other qualifying trustee), in trust, of
an amount, in such Currency in which such Convertible
Subordinated Debt Securities and any related coupons are then
specified as payable at Stated Maturity, or Government
Obligations (as defined below), or both, applicable to such
Convertible Subordinated Debt Securities and any related coupons
(with such applicability being determined on the basis of the
Currency in which such Convertible Subordinated Debt Securities
are then specified as payable at Stated Maturity) that through
the scheduled payment of principal and interest in accordance
with their terms will provide money in an amount sufficient to
pay the principal of (and premium, if any) and interest, if any,
on such Convertible Subordinated Debt Securities and any related
coupons, and any mandatory sinking fund or analogous payments
thereon, on the scheduled due dates therefor.
Such a trust may only be established if, among other things,
the Company has delivered to the Subordinated Trustee an Opinion
of Counsel (as specified in the Subordinated Indenture) to
the effect that the Holders of such Convertible Subordinated Debt
Securities and any related coupons will not recognize income,
gain or loss for United States federal income tax purposes as a
result of such defeasance or covenant defeasance and will be
subject to United States federal income tax on the same amounts,
in the same manner and at the same times as would have been the
case if such defeasance or covenant defeasance had not occurred,
and such Opinion of Counsel, in the case of defeasance under
clause (i) above, must refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable United States
federal income tax law occurring after the date of the
Subordinated Indenture. (Section 1404)
"Government Obligations" means securities that are (i)
direct obligations of the United States of America or the
government that issued the Foreign Currency in which the
Convertible Subordinated Debt Securities of a particular series
are payable for the payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United
States of America or such government that issued the Foreign
Currency in which the Convertible Subordinated Debt Securities of
such series are payable, the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United
States of America or such other government, which, in either
case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a
bank or trust company as custodian with respect to any such
Government Obligation or a specific payment of interest on or
principal of any such Government Obligation held by such
custodian for the account of the holder of a depository receipt,
provided, that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific
payment of interest on or principal of the Government Obligation
evidenced by such depository receipt. (Section 101)
Unless otherwise provided in the Prospectus Supplement, if,
after the Company has deposited funds or Government Obligations
to effect defeasance or covenant defeasance with respect to
Convertible Subordinated Debt Securities of any series, (i) the
Holder of a Convertible Subordinated Debt Security of such series
is entitled to, and does, elect pursuant to the terms of such
Convertible Subordinated Debt Security to receive payment in a
Currency other than that in which such deposit has been made in
respect of such Convertible Subordinated Debt Security or (ii)
the Currency in which such deposit has been made in respect of
any Convertible Subordinated Debt Security of such series ceases
to be used by its government of issuance, then the indebtedness
represented by such Convertible Subordinated Debt Security shall
be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium,
if any) and interest, if any, on such Convertible Subordinated
Debt Security as they become due out of the proceeds yielded by
converting the amount so deposited in respect of such Convertible
Subordinated Debt Security into the Currency in which such
Convertible Subordinated Debt Security becomes payable as a
result of such election or such cessation of usage based on the
applicable Market Exchange Rate. (Section 1405) Unless
otherwise provided in the Prospectus Supplement, all payments of
principal of (and premium, if any) and interest, if any, and
Additional Amounts, if any, on any Convertible Subordinated Debt
Security that is payable in a Foreign Currency that ceases to be
used by its government of issuance shall be made in U.S. dollars.
(Section 312)
In the event the Company effects covenant defeasance with
respect to any Convertible Subordinated Debt Securities and any
related coupons and such Convertible Subordinated Debt Securities
and any related coupons are declared due and payable because of
the occurrence of any Event of Default other than the Event of
Default described in clause (iv) or (vi) under "Events of
Default" with respect to any covenant with respect to which there
has been defeasance, the Currency and Government Obligations on
deposit with the Subordinated Trustee will be sufficient to pay
amounts due on such Convertible Subordinated Debt Securities and
any related coupons at the time of their Stated Maturity but may
not be sufficient to pay amounts due on such Convertible
Subordinated Debt Securities and any related coupons at the time
of the acceleration resulting from such Event of Default.
However, the Company would remain liable to make payment of such
amounts due at the time of acceleration.
The Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant
defeasance, including any modifications to the provisions
described above, with respect to the Convertible Subordinated
Debt Securities of or within a particular series and any related
coupons.
RESIGNATION OF SUBORDINATED TRUSTEE
The Subordinated Trustee may resign or be removed with
respect to one or more series of Convertible Subordinated Debt
Securities and a successor Subordinated Trustee may be appointed
to act with respect to such series. (Section 608) In the event
that two or more persons are acting as Subordinated Trustee with
respect to different series of Convertible Subordinated Debt
Securities, each such Subordinated Trustee shall be a
Subordinated Trustee of a trust under the Subordinated
Indenture separate and apart from the trust administered by any
other such Subordinated Trustee (Section 609), and any action
described herein to be taken by the "Subordinated Trustee" may
then be taken by each such Subordinated Trustee with respect to,
and only with respect to, the one or more series of Indenture
Securities for which it is Subordinated Trustee.
THE SUBORDINATED TRUSTEE
The Company may from time to time maintain bank accounts and
have other customary banking relationships with and obtain credit
facilities and lines of credit from the Subordinated Trustee in
the ordinary course of business. The Subordinated Trustee may
also serve as trustee under other indentures covering other debt
securities of the Company.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus
Supplement, payment of principal of and any premium, interest or
Additional Amounts on Registered Securities issued in
certificated form will be made at any office or agency to be
maintained by the Company in New York City, New York, except
that, at the option of the Company, payment of any interest
(including Additional Amounts, if any) may be made (i) by check
mailed to the address of the person entitled thereto as such
address shall appear in the applicable Security Register or
(ii) by wire transfer to an account maintained by the payee
located inside the United States. (Sections 307, 1001 and 1002)
In the case of Global Securities, such payment will be made to
the Depository or its nominee in accordance with the then-
existing arrangements between the Paying Agent and the
Depository. See "Description of Convertible Subordinated Debt
Securities -- Global Securities" above. Unless otherwise
indicated in an applicable Prospectus Supplement, payment of any
installment of interest on Registered Securities will be made to
the person in whose name such Registered Security is registered
at the close of business on the Regular Record Date for such
payment. (Section 307)
Unless otherwise indicated in an applicable Prospectus
Supplement, payment of principal of and any premium, interest or
Additional Amounts on Bearer Securities will be payable, subject
to any applicable laws and regulations, at the offices of such
Paying Agents outside the United States as the Company may
designate from time to time. (Section 1002) Unless otherwise
indicated in an applicable Prospectus Supplement, payment of
interest and certain Additional Amounts on Bearer Securities on
any Interest Payment Date will be made only against surrender of
the coupon relating to the applicable Interest Payment Date.
(Section 1001) Unless otherwise provided in an applicable
Prospectus Supplement, no payment with respect to any Bearer
Security will be made at any office or agency of the Company in
the United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank
located in the United States. Notwithstanding the foregoing,
payments of principal, premium, if any, and interest, if any, and
Additional Amounts, if any, in respect of Bearer Securities
payable in U.S. dollars will be made at the office of the
Company's Paying Agent in New York City, New York, if (but only
if) payment of the full amount thereof in U.S. dollars at all
offices or agencies located outside the United States is illegal
or effectively precluded by exchange controls or other similar
restrictions. (Section 1002)
Any Paying Agents located outside the United States and any
other Paying Agents in the United States initially designated by
the Company for the Convertible Subordinated Debt Securities will
be named in the Prospectus Supplement. The Company may at any
time designate additional Paying Agents or rescind the
designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, except that, if Convertible
Subordinated Debt Securities of a series are issuable only as
Registered Securities, then the Company will be required to
maintain a Paying Agent in each Place of Payment for such series
and, if Convertible Subordinated Debt Securities of a series are
also issuable as Bearer Securities, then the Company will be
required to maintain (i) a Paying Agent in New York City, New
York, for payments with respect to any Registered Securities of
the series (and for payments with respect to Bearer Securities of
the series in the circumstances described above, but not
otherwise) and (ii) a Paying Agent in a Place of Payment located
outside the United States where Convertible Subordinated Debt
Securities of such series and any coupons appertaining thereto
may be presented and surrendered for payment; provided, that if
the Convertible Subordinated Debt Securities of such series are
listed on any stock exchange located outside the United States
and such stock exchange shall so require, then the Company will
maintain a Paying Agent in any other required city located
outside the United States, as the case may be, for the
Convertible Subordinated Debt Securities of such series.
(Section 1002).
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby (i)
through agents, (ii) to or through underwriters, (iii) through
dealers and (iv) directly to purchasers. The Prospectus
Supplement sets forth the terms of the offering of the Securities
to which such Prospectus Supplement relates, including the name
or names of the underwriters, dealers or agents, the purchase
price of the Securities and the proceeds to the Company from the
sale, any underwriting discounts and other items constituting
underwriters' compensation and any discounts, concessions and
commissions allowed or paid to dealers or agents. Any initial
public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If an underwriter or underwriters are utilized in the sale
of the Securities, the Company will execute an underwriting
agreement with such underwriter or underwriters at the time an
agreement for such sale is reached. The underwriter or
underwriters with respect to an underwritten offering of
Securities are set forth in the Prospectus Supplement relating to
such offering and, if an underwriting syndicate is used, the
managing underwriter or underwriters are set forth on the cover
of such Prospectus Supplement. Only underwriters named in a
Prospectus Supplement will be deemed to be underwriters in
connection with the Securities described therein. Firms not so
named will have no direct or indirect participation in the
offering of such Securities, although such a firm may participate
in the distribution of such Securities under circumstances
entitling it to a dealer's commission. The underwriting
agreement may provide that the obligations of the underwriters
are subject to certain conditions precedent and that the
underwriters with respect to a sale of such offered Securities
will be obligated to purchase all such offered Securities if any
are purchased. In connection with the sale of Securities,
underwriters may be deemed to have received compensation from the
Company in the form of underwriting discounts or commissions and
may also receive commissions from purchasers of Securities for
whom they may act as agent. Underwriters may sell Securities to
or through dealers, and any such dealers may receive compensation
in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they
may act as agent.
Securities may be offered and sold through agents designated
by the Company from time to time. Any such agent involved in the
offer or sale of the Securities in respect of which this
Prospectus is delivered is named in, and any commissions payable
by the Company to such agent are described 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 a dealer is utilized in the sale of the Securities in
respect of which this Prospectus is delivered, the Company will
sell such Securities to the dealer as principal. The dealer may
then resell such Securities to the public at varying prices to be
determined by such dealer at the time of resale. Any such dealer
and the terms of any such sale are set forth in the Prospectus
Supplement relating thereto.
Offers to purchase Securities may be solicited directly by
the Company and sales thereof may be made by the Company directly
to institutional investors or others, who may be deemed to be
underwriters within the meaning of the Securities Act with
respect to any resale thereof. The terms of any such sales are
described in the Prospectus Supplement relating thereto.
Underwriters, dealers and agents participating in the
distribution of Securities may be deemed to be underwriters, and
any discounts and commissions received by them and any profit
realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents participating in the
distribution of Securities may be entitled, under agreements
which may be entered into with the Company, to indemnification by
the Company against certain liabilities, including liabilities
under the Securities Act, or to contribution by the Company to
payments such underwriters, dealers or agents may be required to
make in respect thereof.
The Securities may be sold at a fixed price or prices, which
may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market
prices or negotiated prices. The Company also may offer and sell
the Securities in exchange for one or more of its outstanding
issues of securities.
Underwriters, dealers or agents may be customers of, engage
in transactions with, or perform services for the Company and its
subsidiaries in the ordinary course of business.
The Securities may or may not be listed on a national or
foreign securities exchange. No assurance can be given that
there will be a market for the Securities.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus
Supplement, the legality of the Securities will be passed on for
the Company by Watson & Marshall L.C., Kansas City, Missouri.
The legality of the Securities will be passed on for any
underwriters, dealers or agents by counsel named in the
applicable Prospectus Supplement.
EXPERTS
The audited financial statements of the Company incorporated
in this Prospectus by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 , have been
so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of that firm
as experts in auditing and accounting.
<PAGE>
_____________________________ _____________________________
No dealer, salesperson or
other individual has been
authorized to give any
information or to make any
representations other than $500,000,000
those contained or
incorporated by reference in KANSAS CITY SOUTHERN
this Prospectus in connection INDUSTRIES, INC.
with this offering and, if
given or made, such
information or representations
must not be relied upon as
having been authorized by the
Company or the Underwriters.
Neither the delivery of this Securities
Prospectus, nor any sale made
hereunder shall under any
circumstance create an
implication that there has
been no change in the affairs
of the Company since the date
hereof. This Prospectus does _______________
not constitute an offer to
sell or a solicitation of an PROSPECTUS
offer to buy the _______________
Securities offered
hereby by anyone in any state ___________, 1996
in which such offer or
solicitation is not authorized
or in which the person making
such offer or solicitation is
not qualified to do so or to
anyone to whom it is unlawful
to make such offer or
solicitation.
_______________
TABLE OF CONTENTS
Page ____
Available Information. . . . 3
Incorporation of Certain
Documents by Reference . . 3
The Company. . . . . . . . . 4
Use of Proceeds. . . . . . . 4
Ratio of Earnings to
Fixed Charges . . . . . . . 5
Description of Capital
Stock . . . . . . . . . . . 5
Description of Convertible
Senior Debt Securities
and Debt Securities. . . . 8
Description of Convertible
Subordinated Debt
Securities . . . . . . . . 20
Plan of Distribution . . . . 33
Legal Matters. . . . . . . . 34
Experts. . . . . . . . . . . 34
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
SEC registration fee . . . . . . . . . . . . . . $ 156,250
Blue Sky fees and expenses . . . . . . . . . . . *
Attorneys' fees and expenses . . . . . . . . . . *
Accountants' fees and expenses . . . . . . . . . *
Trustee's fees and expenses. . . . . . . . . . . *
Printing expenses. . . . . . . . . . . . . . . . *
Rating Agency fees . . . . . . . . . . . . . . *
Miscellaneous. . . . . . . . . . . . . . . . . . *
--------
Total . . . . . . . . . . . . . . . . . . $ *
__________
* To be filed by post-effective amendment.
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of
Delaware (the "Delaware Corporation Law") provides that a
Delaware corporation may indemnify directors and officers and
certain other individuals against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred in connection with the defense or
settlement of any threatened, pending or completed legal
proceeding (other than an action by or in the right of the
corporation) in which they are involved because they are a
director, officer or other qualified individual if they acted in
good faith and in a manner that they reasonably believed to be in
or not opposed to the best interest of the corporation and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe that their conduct was unlawful. If the legal
proceeding is by or in the right of the corporation, then
directors, officers or other qualified individuals may not be
indemnified in respect of any claim, issue or matter as to which
they have been adjudged to be liable to the corporation unless
they acted in good faith and in a manner that they reasonably
believed to be in or not opposed to the best interests of the
corporation and a Delaware Court of Chancery determines that such
person is fairly and reasonably entitled to such indemnification.
If such individuals are successful on the merits or otherwise in
defense of any action, then Section 145 provides that such
individuals shall be indemnified. Section 102(b)(7) of the
Delaware Corporation Law provides that the liability of a
director may not be limited or eliminated for the director's
breach of his duty of loyalty to the corporation or its
stockholders, for his intentional acts or omissions not in good
faith, for his concurrence in or vote for an unlawful payment of
a dividend or unlawful stock purchase or redemption or for any
improper personal benefit derived by the director from any
transaction.
The Company's certificate of incorporation provides that, to
the fullest extent permitted by the Delaware Corporation Law, no
director of the Company shall be liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as
a director. The Company's bylaws provide that the directors and
officers of the Company and certain other individuals are to be
indemnified by the Company to the fullest extent permitted by
Section 145 of the Delaware Corporation Law for liability
incurred as a result of being threatened to be or being made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is a director or
officer of the Company or other qualifying person. The foregoing
right of indemnification is not exclusive of any other rights of
indemnifications to which any such individuals may be entitled to
under any agreement, vote of stockholders or disinterested
directors or otherwise.
The Company maintains a policy of insurance under which the
insurer will, subject to certain conditions, defend the directors
and officers of the Company against and indemnify them from any
liability incurred in their capacities as such. In addition,
under the terms of contracts with the Company, certain directors
and officers are entitled to indemnification by the Company
against certain liabilities in their capacities as such.
Item 16. EXHIBITS.
Exhibit
Number Description of Exhibit
1(a) Form of Purchase Agreement.*
1(b) Form of Underwriting Agreement for Equity
Securities.*
1(c) Form of Underwriting Agreement for Debt
Securities.*
1(d) Form of Underwriting Agreement for Convertible
Debt Securities.*
4(a) Indenture between Kansas City Southern Industries,
Inc. and The Chase Manhattan Bank, N.A., Trustee
relating to the Convertible Senior Debt Securities
and the Debt Securities.
Attached as Exhibit 4(a) to the Company's
Registration Statement on Form S-3 dated March 30,
1993 (file no. 33-60192) and incorporated herein
by reference.
4(b) Form of Subordinated Indenture between Kansas City
Southern Industries, Inc. and the subordinated
trustee, relating to the Convertible Subordinated
Debt Securities. ***
4(c) Specimen Certificate for Common Stock. ***
4(d) Specimen Certificate for Series Preferred Stock.*
4(e) Form of Debt Security.
Attached as Exhibit 4(b) to the Company's
Registration Statement on Form S-3 dated March 30,
1993 (file no. 33-60192) and incorporated herein
by reference.
4(f) Form of Convertible Senior Debt Security.*
4(g) Form of Convertible Subordinated Debt Security.*
4(h) Certificate of Incorporation of Kansas City
Southern Industries, Inc., as amended.
Attached as Exhibit 4 to the Company's
Registration Statement on Form S-8, (file no. 33-
8880) and incorporated herein by reference.
5 Opinion of Watson & Marshall L.C. as to the
legality of the Securities.
8 Opinion of Watson & Marshall L.C. regarding tax
matters.**
12 Statements re computation of ratios.
Attached as Exhibit 12 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1995 and incorporated herein by
reference.
23(a) Consent of Price Waterhouse LLP.
23(b) Consent of Watson & Marshall L.C. (included in
Exhibit 5).
24 Power of attorney (included on signature page).***
24(a) Power of attorney of Michael R. Haverty.
25(a) Statement of eligibility of trustee on Form T-
1.***
25(b) Statement of eligibility of subordinated trustee
on Form T-1.*
* To be filed by post-effective amendment.
** To be filed by post-effective amendment if applicable.
*** Indicates exhibits previously filed.
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% 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)
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 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to 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.
(d) The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under
the Securities Act of 1933, the information omitted from the
form of prospectus filed as a part of this registration
statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities 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.
(e) With regard to the trustee under the Indenture relating to
the Convertible Subordinated Debt Securities, the
undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility
of the trustee to act under subsection (a) of section 310 of
the Trust Indenture Act ("Act") in accordance with the rules
and regulations prescribed by the Commission under section
305(b)(2) of the Act.
<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 amendment to this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Kansas City, State of
Missouri, on this 17th day of April, 1996 .
KANSAS CITY SOUTHERN INDUSTRIES, INC.
(Registrant)
By /s/Landon H. Rowland
Landon H. Rowland
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by or on behalf of
the following persons in the capacities and on the dates
indicated.
Signature and Name Capacity Date
/s/ A. Edward Allinson* Director April 17, 1996
/s/ Paul F. Balser* Director April 17, 1996
/s/ James E. Barnes* Director April 17, 1996
/s/ Thomas S. Carter* Director April 17, 1996
/s/ Michael R. Haverty* Executive April 17, 1996
Vice President;
Director
/s/ Michael G. Fitt* Director April 17, 1996
/s/ Paul H. Henson* Chairman April 17, 1996
of the Board of
Directors
/s/ Joseph D. Monello* Vice April 17, 1996
President
and Chief
Financial Officer
(Principal Financial
Officer)
/s/ Landon H. Rowland* President April 17, 1996
and Chief Executive
Officer, Director
/s/ Morton I. Sosland* Director April 17, 1996
/s/ Louis G. Van Horn* April 17, 1996
Comptroller;
(Principal Accounting
Officer)
*/s/ By Joseph D. Monello
As Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
Exhibit No. ___________
5 Opinion of Watson & Marshall L.C. as to the
legality of the securities.
23(a) Consent of Price Waterhouse LLP.
23(b) Consent of Watson & Marshall L.C. (included in
Exhibit 5).
24(a) Power of Attorney of Michael R. Haverty.
Exhibits 5 and 23(b)
April 17, 1996
Kansas City Southern Industries, Inc.
114 West 11th Street
Kansas City, Missouri 64105
Re: "Shelf" Registration Statement on Form S-3
for $500,000,000 Securities
Ladies and Gentlemen:
We have acted as counsel to Kansas City Southern Industries,
Inc., a Delaware corporation (the "Company"), in connection with
the preparation and filing with the U.S. Securities and Exchange
Commission (the "Commission") of a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the proposed offering from time to
time on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of up to $500,000,000 aggregate principal
amount of securities of the Company in one or more series,
including (i) shares of common stock, par value $.01 per share,
and new series preferred stock, par value $1.00 per share
(collectively the "Capital Stock"), and (ii) convertible senior
debt securities, convertible subordinated debt securities and
other debt securities (collectively the "Debt Securities").
In connection with rendering this opinion, we have examined
and relied on the following:
(a) The Registration Statement and exhibits thereto as
filed with the Commission on September 29, 1993, Amendment No. 1
filed with the Commission on April 18, 1995, and Amendment No. 2
and exhibits thereto expected to be filed with the Commission on
or about April 17, 1996 (together the "Registration Statement").
(b) The Indenture with respect to the convertible senior
debt securities and debt securities in the form filed as Exhibit
4(a) to the Registration Statement.
(c) The Subordinated Indenture with respect to the
convertible subordinated debt securities in the form filed as
Exhibit 4(b) to the Registration Statement.
(d) Such documents, certificates and records of public
officials and the Company and its officers and other documents
and legal matters as we have deemed necessary for the purpose of
rendering this opinion.
As used hereinafter, the term "Trustee" refers to the
Trustee under the Indenture with respect to the convertible
senior debt securities and debt securities and to the
Subordinated Trustee under the Subordinated Indenture with
respect to the convertible subordinated debt securities, and the
term "Indenture" refers to the Indenture with respect to the
convertible senior debt securities and debt securities and to the
Subordinated Indenture with respect to the convertible
subordinated debt securities.
Based on and subject to our examination described herein and
the assumptions, exceptions, qualifications and limitations set
forth herein, we are of the opinion that:
1. When the requirements referred to herein are satisfied,
the Capital Stock will be legally issued, fully paid and
nonassessable; provided that each of the requirements set forth
below has been satisfied.
(i) The number of shares of Capital Stock, together
with the number of shares of issued and outstanding shares of the
Company's capital stock and shares thereof held in treasury,
reserved for issuance or as to which options or other similar
rights have been granted, shall not exceed the number of shares
of capital stock in the aggregate or of the class or series of
which they are a part as authorized in the Company's certificate
of incorporation and any amendments thereto, and any pre-emptive
rights with respect to the issuance of the Capital Stock shall
have been satisfied or waived.
(ii) The issuance of the Capital Stock shall have been
duly authorized by the Company's board of directors and in
accordance with any applicable requirements of the Company's
certificate of incorporation and bylaws and any amendments
thereto and the General Corporation Law of Delaware ("Delaware
Corporation Law"), and any filing requirements under the Delaware
Corporation Law shall have been satisfied.
(iii)The certificates evidencing the Capital Stock
shall (A) conform to the form thereof as established by the
Company's board of directors, (B) have been duly authorized,
executed and authenticated, with the Company's corporate seal
affixed thereto if required, and (C) delivered by the Company to
the purchasers thereof against payment of the purchase price
therefor by such purchasers, as described in the Prospectus
included in the Registration Statement and in the applicable
Prospectus Supplement thereto.
(iv) The purchase price for the Capital Stock shall
constitute adequate consideration therefor as required by the
Delaware Corporation Law.
2. When the requirements referred to herein are satisfied,
the Debt Securities will constitute the legal, valid and binding
obligations of the Company, entitled to the benefits and subject
to the provisions of the Indenture, except to the extent that
(a) enforcement of the Company's obligations under the Debt
Securities may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to or affecting creditors' rights
generally and general principles of equity (regardless of whether
enforcement is considered in proceeding at law or in equity) and
(b) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceedings
therefor may be brought; provided, that each of the requirements
set forth below has been satisfied.
(i) The Indenture shall have been qualified under the
Trust Indenture Act of 1939, as amended, and duly authorized,
executed and delivered by the Company and the Trustee in
substantially the form filed as an exhibit to the Registration
Statement.
(ii) The Debt Securities shall (A) conform to the
terms and form thereof as established by the Board Resolution (as
defined in the Indenture) establishing the series of which such
Debt Securities are a part, (B) have been duly authorized and
executed by the Company and delivered to the Trustee for
authentication and delivery by the Trustee, (C) have been duly
authenticated by the Trustee in accordance with the Indenture and
(D) have been delivered by the Trustee in accordance with the
Indenture to the purchasers thereof against payment of the
purchase price therefor by such purchasers, as described in the
Prospectus included in the Registration Statement and in the
applicable Prospectus Supplement thereto.
In the case of both the Capital Stock and the Debt
Securities, we have assumed that on the dates of issuance thereof
the Registration Statement shall have been declared effective by
the Commission and no stop order suspending the effectiveness
thereof shall have been issued under the Securities Act, and any
other requirements under the Securities Act and the Commission's
rules and regulations thereunder shall have been satisfied.
This opinion is based on applicable law and our
understanding of factual matters at the date hereof and we
disclaim any obligation to revise or supplement this opinion
based on any change in applicable law or any factual matter that
occurs or comes to our attention after the date hereof.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to our
firm under the caption "Legal Matters" in the Prospectus included
in the Registration Statement. In giving such consent, however,
we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act or the
General Rules and Regulations of the Commission.
Very truly yours,
/s/WATSON & MARSHALL L.C.
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting part of the Registratoin Statement on
Form S-3 of our report dated February 22, 1996, which appears on
page 35 of Kansas City Southern Industries, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1995. We also
consent to the reference to us under the heading "Experts" in
such Prospectus.
/s/Price Waterhouse LLP
Kansas City, Missouri
April 16, 1996
EXHIBIT 24(a)
POWER OF ATTORNEY
The undersigned, Michael R. Haverty, hereby constitutes and
appoints Landon H. Rowland and Joseph D. Monello his true and
lawful attorney-in-fact and agent, each acting alone, with full
power of substitution and resubstitution, for and in his name,
place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to the
Registration Statement on Form S-3 under the Securities Act of
1933 of Kansas City Southern Industries, Inc., Registration No.
33-69648, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto such attorneys-in-fact and
agents, each acting alone, full power and authority to do and
perform each and every act and thing required and necessary to be
done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Dated: April 16, 1996 /s/ Michael R. Haverty
Executive Vice President and
Director
Kansas City Southern Industries, Inc.
