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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 14, 1994
REGISTRATION NO. 33-55191
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
Amendment No. 3
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
AMR CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 4512 75-1825172
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
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P.O. BOX 619616
DALLAS/FORT WORTH AIRPORT, TEXAS 75261-9616
(817) 963-1234
(Address, including ZIP code, and telephone number,
including area code, of registrant's principal executive offices)
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ANNE H. MCNAMARA, ESQ. JOHN B. BRADY, JR., ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL DEBEVOISE & PLIMPTON
AMR CORPORATION 875 THIRD AVENUE
P.O. BOX 619616 NEW YORK, NEW YORK 10022
DALLAS/FORT WORTH AIRPORT, TEXAS 75261-9616 (212) 909-6000
(817) 963-1234
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(Name, address, including ZIP code, and telephone number of agents for service)
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Copy to:
ROHAN S. WEERASINGHE, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 848-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
---------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, 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.
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<PAGE> 2
AMR CORPORATION
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING
LOCATION IN PROSPECTUS OF ITEMS OF FORM S-4
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FORM S-4 ITEM NO. CAPTION IN PROSPECTUS
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1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................. Facing Page, Outside Front Cover
Page; Cross Reference Sheet; Inside
Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus..................................... Inside Front Cover Page;
Incorporation of Certain Documents by
Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information.......................... Prospectus Summary; Special
Considerations Relating to the
Debentures; The Company; Recent
Operating Results and Developments;
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends; Selected Consolidated
Financial Data
4. Terms of the Transaction......................... The Exchange Offer; Description of
Debentures; Certain Federal Income
Tax Considerations; Certain Federal
Tax Considerations for Non-United
States Persons
5. Pro Forma Financial Information.................. Not Applicable
6. Material Contacts with the Company Being
Acquired....................................... Not Applicable
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be
Underwriters................................... Not Applicable
8. Interests of Named Experts and Counsel........... Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................... Not Applicable
10. Information with Respect to S-3 Registrants...... Incorporation of Certain Documents by
Reference
11. Incorporation of Certain Information by
Reference...................................... Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants.................................... Not Applicable
13. Incorporation of Certain Information by
Reference...................................... Not Applicable
14. Information with Respect to Registrants Other
than
S-3 or S-2 Registrants......................... Not Applicable
15. Information With Respect to S-3 Companies........ Not Applicable
16. Information with Respect to S-2 or S-3
Companies...................................... Not Applicable
17. Information with Respect to Companies Other Than
S-3 or S-2 Companies........................... Not Applicable
18. Information if Proxies, Consents or
Authorizations
are to be Solicited............................ Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in an
Exchange Offer................................. Incorporation of Certain Documents by
Reference
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PROSPECTUS
AMR CORPORATION
OFFER TO EXCHANGE
6 1/8% CONVERTIBLE SUBORDINATED QUARTERLY INCOME CAPITAL SECURITIES DUE 2024
("CONVERTIBLE QUICSSM")
FOR SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
---------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON NOVEMBER 15, 1994, UNLESS EXTENDED.
---------------------------
AMR Corporation (the "Company"), a Delaware corporation, hereby offers, upon
the terms and subject to the conditions set forth in this Prospectus (the
"Prospectus") and the accompanying Letter of Transmittal (the "Letter of
Transmittal" which, together with the Prospectus, constitute the "Exchange
Offer"), to exchange up to $1,100,000,000 aggregate principal amount of
debentures designated as its 6 1/8% Convertible Subordinated Quarterly Income
Capital Securities due 2024 (the "Debentures") for up to all shares of the
outstanding Series A Cumulative Convertible Preferred Stock of the Company (the
"Preferred Stock"). The Debentures are offered in minimum denominations of
$1,000 and integral multiples thereof, and the Preferred Stock has a liquidation
preference of $500 per share. Consequently, the Exchange Offer will be effected
on a basis of $1,000 principal amount of Debentures for every two (2) shares of
Preferred Stock validly tendered and accepted for exchange. The Company will pay
amounts of less than $1,000 due to exchanging shareholders in cash, in lieu of
issuing Debentures with a principal amount of less than $1,000. The dividend on
the Preferred Stock payable on November 1, 1994 will be payable to shareholders
of record on October 14, 1994 regardless of when shares of the Preferred Stock
are tendered pursuant to the Exchange Offer. Dividends accumulated after
November 1, 1994 will not be paid on Preferred Stock accepted for exchange in
the Exchange Offer. In lieu thereof, holders of Debentures will be entitled to
interest from November 1, 1994, as described below.
Ownership of the Preferred Stock may be evidenced by certain $3.00 Depositary
Shares (the "Depositary Shares"). Each Depositary Share represents 1/10 of a
share of Preferred Stock, and entitles the owner, proportionately, to all the
rights and preferences of the Preferred Stock represented thereby. Either
Depositary Shares or Preferred Stock may be tendered in the Exchange Offer. See
"The Exchange Offer -- General".
The Company will accept for exchange Preferred Stock validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on November 15, 1994, or if
extended by the Company, in its sole discretion, the latest date and time to
which extended (the "Expiration Date"). The Exchange Offer will expire on the
Expiration Date. Tenders of Preferred Stock may be withdrawn at any time prior
to the Expiration Date and, unless accepted for exchange by the Company, may be
withdrawn at any time after forty business days after the date of this
Prospectus. The Company expressly reserves the right to (i) extend, amend or
modify the terms of the Exchange Offer in any manner and (ii) withdraw or
terminate the Exchange Offer and not accept for exchange any Preferred Stock, at
any time for any reason, including (without limitation) if fewer than 400,000
shares of Preferred Stock are tendered (which condition may be waived by the
Company). See "The Exchange Offer -- Expiration Date; Extensions; Amendments;
Termination".
The Debentures will mature on November 1, 2024 and will bear interest at an
annual rate of 6 1/8% from the first day following the Expiration Date (the
"Issue Date"). In addition, holders of the Debentures will be entitled to
interest at a rate of 6% per annum from November 1, 1994 through the Expiration
Date in lieu of dividends accumulating after November 1, 1994 on their Preferred
Stock accepted for exchange, payable at the time of the first interest payment
on the Debentures. Interest will be payable quarterly in arrears on February 1,
May 1, August 1, and November 1 of each year, commencing February 1, 1995,
provided that, so long as the Company shall not be in default in the payment of
interest on the Debentures, the Company shall have the right, upon prior notice
by public announcement given in accordance with New York Stock Exchange rules at
any time during the term of the Debentures, to extend the interest payment
period from time to time for a period not exceeding 20 consecutive calendar
quarters (each, an "Extension Period"). No interest shall be due and payable
during an Extension Period, but at the end of each Extension Period the Company
shall pay all interest then accrued and unpaid on the Debentures, together with
interest thereon, compounded quarterly. Upon the termination of any Extension
Period and the payment of all interest then due, the Company may commence a new
Extension Period. After prior notice by public announcement given in accordance
with New York Stock Exchange rules, the Company also may prepay at any time all
or any portion of the interest accrued during an Extension Period. Consequently,
there could be multiple Extension Periods of varying lengths (up to six
Extension Periods of 20 consecutive calendar quarters each or more numerous
shorter Extension Periods) throughout the term of the Debentures. The Company
has no current intention of exercising its right to extend an interest payment
period. However, should the Company determine to exercise such right in the
future, the market price of the Debentures is likely to be affected. See
"Special Considerations Relating to the Debentures" and "Description of
Debentures -- Interest" and "-- Option to Extend Interest Payment Period".
Each Debenture is convertible at the option of the holder at any time after
the date of original issuance thereof, unless previously redeemed, into shares
of common stock, par value $1.00 per share, of the Company (the "Common Stock"),
at a conversion price of $79.00 per share of Common Stock (equivalent to 12.658
shares of Common Stock per $1,000 principal amount of Debentures converted).
Such conversion price is subject to adjustment in certain events, including a
Non-Stock Fundamental Change or Common Stock Fundamental Change (each as defined
herein). See "Description of Debentures -- Conversion". On October 12, 1994, the
last reported sale price of the Common Stock on the New York Stock Exchange was
$51 per share.
The Debentures are redeemable at any time after February 1, 1996 at the
option of the Company, in whole or in part, initially at a redemption price of
104.2% of the principal amount of the Debentures redeemed, and thereafter at
prices declining ratably to 100% of the principal amount of the Debentures
redeemed from and after February 1, 2003, plus interest accrued and unpaid to
the redemption date. No sinking fund will be established for the payment of the
Debentures. See "Description of Debentures -- Redemption". The Debentures are
unsecured obligations of the Company and will be subordinate to all Senior
Indebtedness (as defined herein) of the Company. Because the Company is a
holding company that conducts business through its subsidiaries, the Debentures
are also effectively subordinated to all existing and future obligations of the
Company's subsidiaries. On June 30, 1994, approximately $6.6 billion of such
Senior Indebtedness and approximately $15.5 billion of additional indebtedness,
leases and other obligations of the Company's subsidiaries not included in
Senior Indebtedness were outstanding. See "Description of
Debentures -- Subordination".
For federal income tax purposes, the exchange of Preferred Stock for
Debentures will, depending upon each particular exchanging holder's facts and
circumstances, be treated as either an exchange in which gain or loss is
recognized or as a dividend, and the Debentures will be treated as having been
issued with original issue discount. For a discussion of these and other United
States federal income tax considerations relevant to the Exchange Offer, see
"Certain Federal Income Tax Considerations" and "Certain Federal Tax
Considerations for Non-United States Persons".
SEE "SPECIAL CONSIDERATIONS RELATING TO THE DEBENTURES" FOR A DISCUSSION OF
CERTAIN FACTORS RELATING TO THE DEBENTURES THAT SHOULD BE CONSIDERED BY
INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Debentures constitute a new issue of securities with no established
trading market. While the Debentures have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance, there can be no
assurance that an active market for the Debentures will develop. The Depositary
Shares, the Preferred Stock represented thereby and the Common Stock issuable
upon conversion of such Preferred Stock have not been and will not be registered
under the Securities Act of 1933 and are subject to certain restrictions on
transfer provided for therein. Such restrictions will continue to apply to
Depositary Shares, the Preferred Stock represented thereby and the Common Stock
issuable upon conversion of such Preferred Stock that is not exchanged for
Debentures. Moreover, to the extent that Preferred Stock or Depositary Shares
are tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Preferred Stock or Depositary Shares could be adversely affected.
Lehman Brothers and Goldman Sachs & Co. have been retained as Dealer Managers
to solicit exchanges of Preferred Stock and Depositary Shares for Debentures.
See "The Exchange Offer -- Dealer Managers". D.F. King & Co., Inc. has been
retained by the Company to act as Information Agent to assist in connection with
the Exchange Offer.
---------------------------
The Dealer Managers for the Exchange Offer are:
LEHMAN BROTHERS GOLDMAN, SACHS & CO.
The date of this Prospectus is October 14, 1994.
<PAGE> 4
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHOULD
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE RESPECTIVE DATES AS OF WHICH INFORMATION IS
GIVEN HEREIN. THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE
ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF PREFERRED STOCK IN ANY JURISDICTION IN
WHICH THE MAKING OF THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER, THE COMPANY MAY, AT ITS
DISCRETION, TAKE SUCH ACTION AS IT MAY DEEM NECESSARY TO MAKE THE EXCHANGE OFFER
IN ANY SUCH JURISDICTION AND EXTEND THE EXCHANGE OFFER TO HOLDERS OF PREFERRED
STOCK IN SUCH JURISDICTION. IN ANY JURISDICTION THE SECURITIES LAWS OR BLUE SKY
LAWS OF WHICH REQUIRE THE EXCHANGE OFFER TO BE MADE BY A LICENSED BROKER OR
DEALER, THE EXCHANGE OFFER IS BEING MADE ON BEHALF OF THE COMPANY BY THE DEALER
MANAGERS OR ONE OR MORE REGISTERED BROKERS OR DEALERS WHICH ARE LICENSED UNDER
THE LAWS OF SUCH JURISDICTION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024;
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such material can also be inspected and copied at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, N.Y. 10005.
This Prospectus constitutes a part of a registration statement on Form S-4
(together with all amendments and exhibits, the "Registration Statement") filed
by the Company with 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. Statements
contained herein concerning the provisions of any document do not purport to be
complete and, in each instance, are qualified in all respects by reference to
the copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is subject to and
qualified in its entirety by such reference. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1994 and June 30, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the securities offered hereby shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
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 and superseded, to constitute a part of
this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH
PERSON, INCLUDING ANY BENEFICIAL OWNER OF THE PREFERRED STOCK, TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE, OTHER
THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS FOR SUCH DOCUMENTS
SHOULD BE DIRECTED TO THE CORPORATE SECRETARY OF THE COMPANY AT P.O. BOX 619616,
MAIL DROP 5675, DALLAS/FORT WORTH AIRPORT, TEXAS 75261-9616 (TELEPHONE
817-963-1234). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE NOT LATER THAN FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
2
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary.................................................................... 4
Special Considerations Relating to the Debentures..................................... 8
The Company........................................................................... 10
Recent Operating Results and Developments............................................. 11
Price Range of Common Stock and Dividends............................................. 13
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends............. 14
Capitalization........................................................................ 14
Selected Consolidated Financial Data.................................................. 15
The Exchange Offer.................................................................... 16
Description of Debentures............................................................. 23
Description of Common Stock........................................................... 34
Description of Rights And Junior Preferred Stock...................................... 36
Description of Preferred Stock........................................................ 38
Description of Depositary Shares...................................................... 45
Certain Federal Income Tax Considerations............................................. 48
Certain Federal Tax Considerations for Non-United States Persons...................... 52
Legal Opinions........................................................................ 55
Experts............................................................................... 55
</TABLE>
3
<PAGE> 6
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the detailed information contained elsewhere in this Prospectus.
Unless the context otherwise requires, references herein to the Company's Series
A Cumulative Convertible Preferred Stock (the "Preferred Stock") shall include
Preferred Stock represented by certain $3.00 Depositary Shares (evidenced by
depositary receipts) (the "Depositary Shares") issued pursuant to the Deposit
Agreement, dated February 4, 1993 (the "Deposit Agreement"), among the Company,
First Chicago Trust Company of New York (in such capacity, the "Depositary") and
holders from time to time of depositary receipts issued thereunder. Each
Depositary Share represents 1/10 of a share of Preferred Stock and entitles the
owner, proportionately, to all the rights and preferences of the Preferred Stock
represented thereby. Either Depositary Shares or Preferred Stock may be tendered
in the Exchange Offer. See "The Exchange Offer -- General".
THE COMPANY
The Company has three business units: the Air Transportation Group; The
SABRE Group; and the AMR Management Services Group. The Air Transportation Group
includes the Passenger and Cargo Divisions of American Airlines, Inc.
("American"), the Company's principal subsidiary, and AMR Eagle, Inc. American's
passenger division is one of the largest scheduled passenger airlines in the
world. The SABRE Group includes the Company's information technology businesses.
The AMR Management Services Group includes the Company's airline management,
aviation services, training, consulting, and investment service activities. See
"The Company" and "Recent Developments".
THE EXCHANGE OFFER
PURPOSE OF EXCHANGE OFFER
The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing the Preferred Stock with the Debentures. The
potential cash flow benefit to the Company arises because interest payable on
the Debentures should be deductible by the Company for federal income tax
purposes, while dividends payable on the Preferred Stock are not deductible. See
"The Exchange Offer -- Purpose of the Exchange Offer."
THE EXCHANGE OFFER; SECURITIES OFFERED
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Company hereby offers to exchange up to
$1,100,000,000 aggregate principal amount of debentures designated as its 6 1/8%
Convertible Subordinated Quarterly Income Capital Securities due 2024 (the
"Debentures") for up to all of the outstanding shares of Preferred Stock.
Exchanges will be made on a basis of $1,000 principal amount of Debentures (the
minimum permitted denomination) for every two (2) shares of Preferred Stock
validly tendered and accepted for exchange in the Exchange Offer. The Company
will pay amounts of less than $1,000 due to any exchanging shareholder in cash,
in lieu of issuing Debentures with a principal amount of less than $1,000. See
"The Exchange Offer -- Terms of the Exchange Offer".
The Debentures will mature on November 1, 2024 and will bear interest at an
annual rate of 6 1/8% from the first day following the Expiration Date (the
"Issue Date") or from the most recent interest payment date to which interest
has been paid or duly provided for. Interest will be payable quarterly in
arrears on February 1, May 1, August 1 and November 1 of each year, commencing
February 1, 1995, provided that, so long as the Company shall not be in default
in the payment of interest on the Debentures, the Company shall have the right,
upon prior notice by public announcement given in accordance with New York Stock
Exchange rules at any time during the term of the Debentures, to extend the
interest payment period from time to time for a period not exceeding 20
consecutive calendar quarters. The Company has no current intention of
exercising its right to extend an interest payment period. However, should the
Company determine to exercise such right in the future, the market price of the
Debentures is likely to be affected. See "Special Considerations Relating to the
Debentures" and "Description of Debentures -- Option to Extend Interest Payment
Period."
4
<PAGE> 7
The dividend on the Preferred Stock payable on November 1, 1994 will be
payable to shareholders of record on October 14, 1994, regardless of when shares
of the Preferred Stock are tendered pursuant to the Exchange Offer. Dividends
accumulated after November 1, 1994 will not be paid on Preferred Stock accepted
for exchange in the Exchange Offer. In lieu thereof, holders of the Debentures
will be entitled to interest at a rate of 6% per annum from November 1, 1994
through the Expiration Date, payable at the time of the first interest payment
on the Debentures. The Debentures will be issued pursuant to an indenture, to be
dated as of November 1, 1994, between the Company and The First National Bank of
Chicago, as trustee. See "Description of Debentures".
EXPIRATION DATE; WITHDRAWALS
The Company will accept for exchange Preferred Stock, validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on November 15, 1994, or
if extended by the Company, in its sole discretion, the latest date and time to
which extended (the "Expiration Date"). The Exchange Offer will expire on the
Expiration Date. Tenders of Preferred Stock pursuant to the Exchange Offer may
be withdrawn at any time prior to the Expiration Date and, unless accepted for
exchange by the Company, may be withdrawn at any time after forty business days
after the date of this Prospectus. See "The Exchange Offer -- Withdrawal of
Tenders" and "-- Expiration Date; Extensions; Amendments; Termination".
EXTENSIONS, AMENDMENTS AND TERMINATION
The Company expressly reserves the right to (i) extend, amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Preferred Stock, at any time for
any reason, including (without limitation) if fewer than 400,000 shares of
Preferred Stock are tendered (which condition may be waived by the Company). See
"The Exchange Offer -- Expiration Date; Extensions; Amendments; Termination".
PROCEDURES FOR TENDERING
Each Holder of the Preferred Stock wishing to accept the Exchange Offer
must (i) properly complete and sign the Letter of Transmittal or a facsimile
thereof (all references in this Prospectus to the Letter of Transmittal shall be
deemed to include a facsimile thereof) in accordance with the instructions
contained herein and therein, together with any required signature guarantees,
and deliver the same to the First Chicago Trust Company of New York, as Exchange
Agent, at either of its addresses set forth in "The Exchange Offer -- Exchange
Agent and Information Agent" and either (a) certificates for the Preferred Stock
must be received by the Exchange Agent at such address or (b) such Preferred
Stock must be transferred pursuant to the procedures for book-entry transfer
described herein and a confirmation of such book-entry transfer must be received
by the Exchange Agent, in each case prior to the Expiration Date or (ii) comply
with the guaranteed delivery procedures described herein.
Holders of Depositary Shares may effect a tender of the underlying
Preferred Stock by tendering such Depositary Shares to the Exchange Agent who,
as agent for tendering holders, will withdraw such underlying Preferred Stock
and tender it in the Exchange Offer. When tendering Depositary Shares, holders
must comply with all of the documentation and timing requirements applicable to
tenders of Preferred Stock described herein and in the Letter of Transmittal.
The Exchange Agent will not withdraw Preferred Stock underlying Depositary
Shares tendered in the Exchange Offer unless such Preferred Stock is to be
accepted for exchange by the Company. See "The Exchange Offer -- General" and
"-- Procedures for Tendering".
SPECIAL PROCEDURE FOR BENEFICIAL OWNERS
Any beneficial owner whose Preferred Stock is registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on its own behalf, such owner must, prior to
completing and executing a Letter of Transmittal and delivering its Preferred
Stock, either make appropriate arrangements to register ownership of the
Preferred Stock in such owner's name or obtain a properly completed stock power
from the registered holder. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Date. See "The Exchange Offer -- Procedures for Tendering -- Signature
Guarantee".
5
<PAGE> 8
GUARANTEED DELIVERY PROCEDURES
If a Holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Preferred Stock to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected in accordance with the guaranteed
delivery procedures set forth in "The Exchange Offer -- Procedures for
Tendering -- Guaranteed Delivery".
ACCEPTANCE OF SHARES AND DELIVERY OF DEBENTURES
Upon the terms and subject to the conditions of the Exchange Offer,
including the reservation by the Company of the right to withdraw or terminate
the Exchange Offer and certain other rights, the Company will accept for
exchange shares of Preferred Stock that are properly tendered in the Exchange
Offer and not withdrawn prior to the Expiration Date. Subject to such terms and
conditions, the Debentures issued pursuant to the Exchange Offer will be issued
as of the Issue Date and will be delivered as promptly as practicable following
the Expiration Date. See "The Exchange Offer -- Terms of the Exchange Offer" and
"-- Expiration Date; Extensions; Amendments; Termination".
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Preferred Stock for Debentures pursuant to the Exchange
Offer will be a taxable event. Depending on each exchanging shareholder's
particular facts and circumstances, the exchange may be treated as (i) a
transaction in which gain or loss will be recognized in an amount equal to the
difference between the fair market value of the Debentures received in the
exchange and the exchanging shareholder's tax basis in the shares of Preferred
Stock surrendered or (ii) a distribution taxable as a dividend in an amount
equal to the fair market value of the Debentures received by such exchanging
shareholder. See "Certain Federal Income Considerations" and "Certain Federal
Tax Considerations for Non-United States Persons".
In the event an Extension Period occurs, holders of the Debentures would
continue under the original issue discount rules to accrue income corresponding
to stated interest on the Debentures for United States federal income tax
purposes. As a result, a holder ordinarily would include such amounts in gross
income in advance of the receipt of cash. A holder that disposes of its
Debentures prior to the record date for payment of interest at the end of an
Extension Period will not receive cash from the Company related to such interest
because such interest will be paid to the holder of record on such record date,
regardless of who the holders of record may have been on other dates during the
Extension Period. The extent to which such a holder would receive a return on
the Debentures for the period it held such Debentures will depend on the market
for the Debentures at the time of disposition. In addition, under the original
issue discount rules, a holder will, in effect, be required to accrue the
difference between the fair market value of the Debentures at the time of the
exchange and the stated principal amount as interest income over the term of the
Debentures. See "Certain Federal Income Tax Considerations -- Interest and
Original Issue Discount on Debentures."
UNTENDERED SHARES
Holders of Preferred Stock who do not tender their Preferred Stock in the
Exchange Offer or whose Preferred Stock is not accepted for exchange (including,
without limitation, as a result of the proration referred to below) will
continue to hold such Preferred Stock and will be entitled to all the rights and
preferences, and will be subject to all of the limitations, applicable thereto,
including without limitation the existing restrictions on transfer under the
Securities Act. See "The Exchange Offer -- Listing and Trading of Debentures and
Preferred Stock; Transfer Restrictions."
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange
Agent in connection with the Exchange Offer. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to D.F. King & Co., Inc., which has been retained by the Company to act
as Information Agent for the Exchange Offer. The address and telephone number of
the Information Agent are set forth in "The Exchange Offer -- Exchange Agent and
Information Agent".
DEALER MANAGERS
Lehman Brothers and Goldman, Sachs & Co. have been retained as Dealer
Managers to solicit exchanges of Preferred Stock for Debentures. Questions with
respect to the Exchange Offer may be directed to Lehman Brothers, Equity
Syndicate Desk at (800) 524-4462 and to Goldman, Sachs & Co. at (800) 323-5678.
6
<PAGE> 9
COMPARISON OF DEBENTURES AND PREFERRED STOCK
The following is a brief summary comparison of certain of the principal
terms of the Debentures and the Preferred Stock.
<TABLE>
<CAPTION>
DEBENTURES PREFERRED STOCK
-------------------------------------- --------------------------------------
<S> <C> <C>
Interest/Dividend Rate 6 1/8% annual interest from the Issue 6% annual dividend, payable quarterly
Date (6% per annum for the period from out of funds legally available
and including November 1, 1994 through therefor on February 1, May 1, August
the Expiration Date) payable quarterly 1 and November 1 of each year, when,
in arrears on February 1, May 1, as and if declared by the Company's
August 1 and November 1 of each year, Board of Directors. All dividends on
commencing February 1, 1995, subject the Preferred Stock have been paid to
to the Company's right to extend the date and the Company has declared the
interest payment period from time to dividend payable on November 1, 1994
time to a period of up to 20 to holders of record on October 14,
consecutive calendar quarters, as 1994. In the event dividends are not
described herein. At the end of each paid on a dividend payment date in the
Extension Period the Company shall pay future, holders would not be entitled
to the holders all interest then to receive interest on any dividend
accrued and unpaid, together with arrearages.
interest thereon, compounded
quarterly, at the rate of interest on
the Debentures.
Conversion Convertible into Common Stock at a Convertible into Common Stock at a
conversion price of $79.00 per share conversion price of $78.75 per share
of Common Stock (equivalent to 12.658 of Common Stock (equivalent to 6.349
shares of Common Stock per $1,000 shares of Common Stock per $500
principal amount of Debentures liquidation preference of Preferred
converted), subject to adjustment as Stock converted), subject to
described herein. adjustment as described herein.
Optional Redemption Redeemable at the option of the Redeemable at the option of the
Company at any time on or after Company at any time on or after
February 1, 1996, in whole or in part, February 1, 1996, in whole or in part,
initially at a redemption price of initially at a redemption price of
104.2% of the principal amount of the 104.2% of the liquidation preference
Debentures redeemed, declining ratably of the Preferred Stock redeemed,
to 100% of the principal amount of the declining ratably to 100% of the
Debentures redeemed from and after liquidation preference of the
February 1, 2003, in each case plus Preferred Stock redeemed from and
accrued and unpaid interest to the after February 1, 2003, in each case
date fixed for redemption. plus accumulated and unpaid dividends
to the date fixed for redemption.
Subordination Subordinated to all existing and Subordinate to claims of creditors,
future Senior Indebtedness of the including holders of the Company's
Company, and effectively subordinated outstanding debt securities and the
to all obligations of the Company's Debentures, and effectively
subsidiaries, but senior to preferred subordinated to all obligations of the
stock of the Company, including the Company's subsidiaries, but senior to
Preferred Stock, and to the Common the Common Stock.
Stock. On June 30, 1994, approximately
$6.6 billion of such Senior
Indebtedness and approximately $15.5
billion of additional indebtedness,
leases and other obligations of the
Company's subsidiaries not included in
Senior Indebtedness were outstanding.
Voting Rights None. None, except in certain circumstances.
Transfer Restrictions; The Debentures and the Common Stock The Depositary Shares, the Preferred
New York Stock Exchange issuable upon conversion thereof will Stock represented thereby and the
Listing be registered under the Securities Act Common Stock issuable upon conversion
and will be transferable to the extent of such Preferred Stock have not been
permitted thereunder. The Debentures and will not be registered under the
have been approved for listing on the Securities Act and have not been and
New York Stock Exchange, subject to will not be listed on the New York
official notice of issuance. Stock Exchange. The Depositary Shares,
the Preferred Stock represented
thereby and such Common Stock are
subject to certain significant
restrictions on their transfer under
the Securities Act, and unexchanged
Depositary Shares, Preferred Stock and
Common Stock issued upon conversion
thereof will remain subject to such
transfer restrictions.
Dividends Received Interest will not be eligible for the Dividends are eligible for the
Deduction dividends received deduction for dividends received deduction for
corporate shareholders. corporate shareholders.
</TABLE>
7
<PAGE> 10
SPECIAL CONSIDERATIONS RELATING TO THE DEBENTURES
Prospective exchanging shareholders should carefully consider, in addition
to the other information set forth under "Recent Operating Results and
Developments" and elsewhere in this Prospectus, the following:
EXCHANGE OFFER AS TAXABLE EVENT
The exchange of Preferred Stock for Debentures pursuant to the Exchange
Offer will be a taxable event. Depending on each exchanging shareholder's
particular facts and circumstances, the exchange may be treated as (i) a
transaction in which gain or loss will be recognized in an amount equal to the
difference between the fair market value of the Debentures received in the
exchange and the exchanging shareholder's tax basis in the shares of Preferred
Stock surrendered or (ii) a distribution taxable as a dividend in an amount
equal to the fair market value of the Debentures received by such exchanging
shareholder. See "Certain Federal Income Tax Considerations" and "Certain
Federal Tax Considerations for Non-United States Persons." All holders of
Preferred Stock are advised to consult their own tax advisors regarding the
federal, state, local and foreign tax consequences of the exchange of Preferred
Stock.
RIGHT OF COMPANY TO DEFER INTEREST
So long as the Company shall not be in default in the payment of interest
on the Debentures, the Company shall have the right, upon prior notice by public
announcement given in accordance with New York Stock Exchange rules at any time
during the term of the Debentures, to extend the interest payment period from
time to time for a period not exceeding 20 consecutive calendar quarters (each,
an "Extension Period"). No interest shall be due and payable during an Extension
Period, but on the interest payment date occurring at the end of each Extension
Period the Company shall pay to the holders of record on the record date for
such interest payment date (regardless of who the holders of record may have
been on other dates during the Extension Period) all accrued and unpaid interest
on the Debentures, together with interest thereon, compounded quarterly.
Upon the termination of any Extension Period and the payment of all
interest then due, the Company may commence a new Extension Period. After prior
notice given by public announcement in accordance with New York Stock Exchange
rules, the Company may also prepay at any time all or a portion of the interest
accrued during an Extension Period. Consequently, there could be multiple
Extension Periods of varying lengths (up to six Extension Periods of 20
consecutive calendar quarters each or more numerous shorter Extension Periods)
throughout the term of the Debentures. See "Description of Debentures -- Option
to Extend Interest Payment Period."
The Company has no current intention of exercising its right to defer an
interest payment period.
POTENTIAL MARKET VOLATILITY DURING EXTENSION PERIOD
As described above, the Company has the right to extend an interest payment
period from time to time for a period not exceeding 20 consecutive calendar
quarters. In the event the Company determines to extend an interest payment
period, or in the event the Company thereafter extends an Extension Period or
prepays interest accrued during an Extension Period as described above, the
market price of the Debentures is likely to be affected. In addition, as a
result of such rights, the market price of the Debentures may be more volatile
than other debt instruments with original issue discount that do not have such
rights. A holder that disposes of its Debentures during an Extension Period,
therefore, may not receive the same return on its investment as a holder that
continues to hold its Debentures. See "Description of Debentures -- Option to
Extend Interest Payment Period."
NO CASH PAYMENTS DURING EXTENSION PERIOD TO PAY ACCRUED TAX LIABILITY
In the event an Extension Period occurs, holders of the Debentures would
continue under the original issue discount rules to accrue income corresponding
to stated interest on the Debentures for United States federal income tax
purposes. As a result, a holder ordinarily would include such amounts in gross
income in
8
<PAGE> 11
advance of the receipt of cash. A holder that disposes of its Debentures prior
to the record date for payment of interest at the end of an Extension Period
will not receive cash from the Company related to such interest because such
interest will be paid to the holder of record on such record date, regardless of
who the holders of record may have been on other dates during the Extension
Period. The extent to which such a holder would receive a return on the
Debentures for the period it held such Debentures will depend on the market for
the Debentures at the time of disposition. See "Certain Federal Income Tax
Considerations -- Interest and Original Issue Discount on Debentures."
ORIGINAL ISSUE DISCOUNT
Under the original issue discount rules, a holder will, in effect, be
required to accrue the difference between the fair market value of the
Debentures at the time of the exchange and the stated principal amount as
interest income over the term of the Debentures. See "Certain Federal Income Tax
Considerations -- Interest and Original Issue Discount on Debentures."
SUBORDINATION OF DEBENTURES
The Debentures are unsecured obligations of the Company and will be
subordinate to all Senior Indebtedness (as defined) of the Company. Because the
Company is a holding company that conducts business through its subsidiaries,
the Debentures will also be effectively subordinated to all existing and future
obligations of the Company's subsidiaries. On June 30, 1994, approximately $6.6
billion of such Senior Indebtedness and approximately $15.5 billion of
additional indebtedness, leases and other obligations of the Company's
subsidiaries not included in Senior Indebtedness were outstanding. See
"Description of Debentures -- Subordination."
9
<PAGE> 12
THE COMPANY
The Company was incorporated in 1982 and its principal subsidiary,
American, was founded in 1934. The Company's three business units are the Air
Transportation Group, The SABRE Group and the AMR Management Services Group.
The Air Transportation Group includes American's Passenger and Cargo
Divisions and AMR Eagle, Inc. American's Passenger Division is one of the
largest scheduled passenger airlines in the world. At the end of 1993, American
provided scheduled jet service to 106 cities in the U.S. mainland and Hawaii, 28
in Latin America, 14 in Europe and 24 other destinations worldwide, including
service to six cities provided through cooperative agreements with other
airlines.
The SABRE Group includes the Company's information technology business. The
AMR Management Services Group includes the Company's airline management,
aviation services, training, consulting, and investment service activities.
More detailed descriptions of the Company's three business units, and their
recent operating results, are included in the Company's Annual Report on Form
10-K for the year ended December 31, 1993 and its Quarterly Report on Form 10-Q
for the quarter ended June 30, 1994.
10
<PAGE> 13
RECENT OPERATING RESULTS AND DEVELOPMENTS
GENERAL
The Company incurred aggregate net losses during the period from 1990
through 1993 of $1.325 billion. (See "Selected Consolidated Financial Data".)
During 1993, the Company completed a comprehensive review of the competitive
realities of its businesses and determined that the Company must change
significantly to generate sufficient earnings. The fundamental problems of the
airline -- increasing competition from low-cost, low-fare carriers, its
inability to reduce labor costs to competitive levels, and the changing values
of its customers -- demand new solutions. As an initial response to that need,
the Company created and began implementing a new strategic framework known as
the Transition Plan. The plan has three parts, each intended to improve the
Company's results. First, make the core airline business bigger and stronger
where economically justified. Second, and conversely, shrink the airline where
it cannot compete profitably. Third, reallocate resources and effort to the
growing information and management services businesses, which are more
profitable than the airline.
The Transition Plan recognizes the unfavorable and uncertain economics
which characterized the core airline business in recent years, acknowledges the
airline cost problem and seeks to maximize the contribution of the Company's
more profitable businesses. In 1994, the Company has continued the course of
change initiated in 1993 under the Transition Plan. Over the long term, the
Company will continue its best efforts to reduce airline costs and to restore
the airline operations to profitability. Based upon the success or failure of
those efforts, the Company will make ongoing determinations as to the
appropriate degree of reallocation of resources from the airline operations to
the Company's other businesses, which may include, if the airline cannot be run
profitably, the disposition or termination, over the long term, of a substantial
part or all of the airline operations.
1994 RESULTS OF OPERATIONS
The Company recorded net earnings of $146 million ($1.48 per common share,
both primary and fully diluted) for the six month period ended June 30, 1994
compared with the net earnings of $25 million ($0.03 loss per common share, both
primary and fully diluted) for the same period of 1993. The Company's operating
income improved 16.7 percent to $560 million.
The Company's results for the six months ended June 30, 1994 included a $35
million positive adjustment ($22 million after tax) to passenger revenues
produced by a change in the Company's estimate of the usage patterns of miles
sold to participating companies in American's AAdvantage frequent flyer program.
The results for the six months ended June 30, 1993 included a positive $115
million adjustment ($67 million net of related commission expense and taxes) to
passenger revenues for a change in estimate related to certain earned passenger
revenues and a $125 million charge ($79 million after tax) for the retirement of
31 McDonnell Douglas DC-10 aircraft.
The improvement of the Company's results reflected better performance by
two of the Company's three business units -- the Air Transportation Group, which
includes American's Passenger and Cargo divisions and AMR Eagle, Inc.; and The
SABRE Group, which includes AMR's information technology businesses. The
Company's third business unit is the Management Services Group, which includes
the Company's airline management, aviation services, training, consulting, and
investment service activities.
Air Transportation Group. American's passenger revenues decreased 4.8
percent, $316 million, in the first six months of 1994. Passenger revenue yield
per passenger mile decreased 2.3 percent to 13.44 cents in 1994. Excluding the
impact of the passenger revenue adjustments mentioned previously, yield would
have decreased 1.1 percent. Revenue passenger miles decreased 2.5 percent while
available seat miles (ASMs) fell 7.1 percent, resulting in an improvement of 2.9
points in the passenger load factor. As a result, American's passenger revenue
per ASM increased by 2.4 percent.
The decrease in American's ASMs is the result of retiring 71 aircraft (31
McDonnell Douglas DC-10 and 40 Boeing 727 aircraft) and subleasing two McDonnell
Douglas MD-11 aircraft, partially offset by the addition of 35 new aircraft (24
Fokker F100, seven Boeing 757, and four Boeing 767 aircraft) since June 30,
1993.
11
<PAGE> 14
For the first six months of 1994 compared to the same period in 1993,
American's domestic traffic decreased 4.1 percent on capacity reductions of 7.8
percent and international traffic grew 1.7 percent on a capacity reduction of
5.0 percent. The change in international traffic was driven by an 8.8 percent
growth in Latin America with capacity growth of 0.4 percent, offset by a 4.5
percent decrease in traffic to Europe primarily driven by a capacity reduction
of 10.9 percent.
Passenger revenues of the AMR Eagle carriers increased 12.5 percent, $43
million, primarily due to the expansion of regional operations into larger
markets. Traffic on the AMR Eagle carriers increased 21.0 percent, while
capacity grew 14.3 percent.
Cargo revenues increased 1.6 percent, $5 million, driven by a 7.2 percent
increase in American's domestic and international cargo volumes, partially
offset by a decrease in yields of 4.4 percent brought about by strong price
competition resulting from excess industry capacity.
American's capacity or ASMs decreased 7.1 percent in the first six months
of 1994 primarily as a result of the fleet changes mentioned previously. Air
Transportation Group's operating expenses decreased 3.8 percent, $278 million.
Because capacity decreased more rapidly than expenses, American's passenger
division cost per ASM increased by 2.0 percent to 8.51 cents. Wages, salaries
and benefits rose 0.9 percent, $21 million, due primarily to salary adjustments
for existing employees, partially offset by a 3.8 percent reduction in the
average number of equivalent employees. Aircraft fuel expense decreased 19.3
percent, $187 million, due to an 11.8 percent decrease in American's average
price per gallon, combined with a 9.1 percent decrease in gallons consumed by
American. Commissions to agents decreased 6.5 percent, $46 million, due
principally to decreased passenger revenues. New aircraft acquisitions and other
capital improvements, raised depreciation and amortization costs 7.3 percent,
$36 million. Other operating expenses, consisting of aircraft rentals, other
rentals and landing fees, food service costs, maintenance costs and other
miscellaneous operating expenses decreased 3.9 percent, $102 million, primarily
due to lower maintenance costs as a result of retiring older jet aircraft from
the fleet and increased operating efficiencies. In addition, food costs and
landing fees fell as a result of declines in traffic and capacity, respectively.
The SABRE Group. Revenues for The SABRE Group increased 14.3 percent, $97
million, primarily due to increased booking fee revenues resulting from growth
in booking volumes, increases in average fees per booking collected from
participating vendors and the introduction of a premium product. Wages, salaries
and benefits increased 19.1 percent, $39 million, due to wage and salary
increases and a 7.3 percent increase in the average number of equivalent
employees. Other operating expenses increased 2.6 percent, $6 million, due to
higher incentive payments to travel agents partially offset by a decrease in
maintenance costs on computer equipment.
AMR Management Services Group. Revenues for the AMR Management Services
Group increased 22.3 percent, $47 million. AMR Services' revenues increased 20.5
percent to $165 million, primarily as a result of strong domestic fuel and
deicing service sales, expansion of European operations, and the acquisition of
an additional domestic fixed-base operator in November 1993. Americas Ground
Services, which began operations in the second quarter of 1993, contributed $13
million in revenues. Revenues of AMR Training and Consulting Group, which began
operations in the first quarter of 1993, increased by approximately $14 million
in the first six months of 1994. Wages, salaries and benefits increased 56.0
percent, $28 million, due primarily to a 38.5 percent increase in the average
number of equivalent employees. Other operating expenses increased 12.1 percent,
$17 million, due primarily to the startup of operations for Americas Ground
Services and AMR Training and Consulting Group and the expansion of AMR
Services.
RECENT DEVELOPMENTS
In November 1993, American endured a five-day strike by its flight
attendants' union; the strike ended when both sides agreed to binding
arbitration. The arbitration process is expected to be complex and will likely
not be decided for several months. While the ultimate outcome is uncertain, the
new contract will likely result in higher unit labor costs.
American's labor contract with its pilots' union became amendable on August
31, 1994. The Company and the union leadership have commenced negotiations. The
ultimate outcome of these negotiations cannot be estimated at this time.
12
<PAGE> 15
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is listed on the New York Stock Exchange (the "NYSE") and
traded under the symbol AMR. The following table sets forth, for the calendar
periods indicated, the high and low closing sales prices per share of the Common
Stock as reported on the NYSE Composite Tape. The last reported sale price of
the Common Stock on the NYSE on October 12, 1994 was $51 per share.
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
1991
1st Quarter........................................................ $62 1/4 $44 3/8
2nd Quarter........................................................ 67 3/4 57 1/4
3rd Quarter........................................................ 66 1/2 55 7/8
4th Quarter........................................................ 70 1/2 54 3/4
1992
1st Quarter........................................................ $79 1/4 $69 3/8
2nd Quarter........................................................ 73 61 6/8
3rd Quarter........................................................ 66 7/8 55 1/4
4th Quarter........................................................ 67 1/2 55
1993
1st Quarter........................................................ $69 5/8 $55 5/8
2nd Quarter........................................................ 72 5/8 60 1/2
3rd Quarter........................................................ 67 5/8 59 5/8
4th Quarter........................................................ 71 3/4 63 7/8
1994
1st Quarter........................................................ $71 3/4 $56 1/2
2nd Quarter........................................................ 60 3/4 52 1/4
3rd Quarter........................................................ 62 7/8 50 3/4
4th Quarter (through October 12, 1994)............................. 51 3/4 48 1/8
</TABLE>
On February 13, 1986, the Board of Directors of the Company declared a
dividend of one Right for each outstanding share of the Common Stock to
stockholders of record on February 24, 1986. See "Description of Rights and
Junior Preferred Stock." Except for such dividend, no dividends have been paid
on the Common Stock and, prior to October 1, 1982 (the date as of which the
Company became the parent of American), no dividends had been paid on the common
stock of American after the first quarter of 1980.
13
<PAGE> 16
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends for the Company for the periods indicated.
Earnings represent consolidated earnings (loss) before income taxes and the
cumulative effect of accounting changes and fixed charges (excluding interest
capitalized). Fixed charges consist of interest and the portion of rental
expense deemed representative of the interest factor. The preferred stock
dividend requirements were assumed to be equal to the pre-tax earnings that
would be required to cover such dividend requirements. The amount of such
pre-tax earnings required to cover preferred stock dividends was computed using
the Company's effective tax rate for the applicable year. During 1989, the
Company redeemed all the outstanding shares of no par preferred auction rate
stock issued in 1987. The Company had no preferred stock outstanding from the
end of 1989 until the issuance of the Preferred Stock in 1993.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- -------------
1989 1990 1991 1992 1993 1993 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to combined fixed charges and
preferred stock dividends.......................... 2.11 (a) (a) (a) (a) (a) 1.26
==== ==== ==== ==== ==== ==== ====
</TABLE>
- ---------------
(a) Earnings were inadequate to cover combined fixed charges and preferred stock
dividends by $150 million for the year ended December 31, 1990; by $499
million for the year ended December 31, 1991; by $798 million for the year
ended December 31, 1992; by $224 million for the year ended December 31,
1993; and by $34 million for the six months ended June 30, 1993.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at June 30, 1994 and as adjusted to give effect to the Exchange Offer
(assuming that 50% and 100% of the outstanding shares of the Preferred Stock are
exchanged). The financial data at June 30, 1994 in the following table are
derived from the Company's unaudited financial statements for the quarter ended
June 30, 1994.
<TABLE>
<CAPTION>
AS ADJUSTED ASSUMING
JUNE 30, ----------------------------
1994 50% EXCHANGE 100% EXCHANGE
-------- ------------ -------------
(IN MILLIONS)
<S> <C> <C> <C>
INDEBTEDNESS(1)
Current maturities of long-term debt.................... $ 61 $ 61 $ 61
Current obligations under capital leases................ 128 128 128
Long-term debt, less current maturities................. 5,441 5,441 5,441
Obligations under capital leases, less current
obligations.......................................... 2,269 2,269 2,269
Debentures(2)........................................... -- 550 1,100
-------- ------------ -------------
Total Indebtedness.............................. 7,899 8,449 8,999
-------- ------------ -------------
STOCKHOLDERS' EQUITY(1)
Series A Cumulative Convertible Preferred Stock......... 1,081 541 0
Common stock-76 million shares issued and outstanding... 76 76 76
Additional paid-in capital.............................. 2,038 2,028 2,019
Retained earnings....................................... 1,204 1,204 1,204
-------- ------------ -------------
Total Stockholders' Equity...................... 4,399 3,849 3,299
-------- ------------ -------------
Total Capitalization............................ $ 12,298 $ 12,298 $12,298
======= ========== ===========
</TABLE>
- ---------------
(1) For additional information regarding obligations under capital leases,
long-term debt (including repayment requirements), Preferred Stock, Common
Stock and retained earnings, see notes 4, 5, 6, 8 and 9 to the audited
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1993. See "Incorporation of
Certain Documents by Reference".
(2) The amounts shown for the Debentures are based on their aggregate principal
amount. After the consummation of the Exchange Offer, the amounts shown for
the Debentures on the consolidated financial statements of the Company will
be based on the fair market value of the Debentures at the time of their
issuance, which is expected to be less than such aggregate principal amount.
14
<PAGE> 17
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data in the table below for each of the
five years in the period ended December 31, 1993 have been derived from audited
consolidated financial statements of the Company previously filed with the
Commission. The selected consolidated financial data in the table below as of
June 30, 1994 and for the six months ended June 30, 1993 and 1994 are unaudited
but in the opinion of management include all adjustments necessary for a fair
presentation. The following information should be read in conjunction with the
consolidated financial statements and related notes of the Company included, or
incorporated by reference, in its reports filed under the Exchange Act that are
incorporated by reference herein. See "Incorporation of Certain Documents by
Reference."
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------- ---------------
1989 1990 1991 1992(1) 1993 1993 1994
------- ------- ------- ------- ------- ------ ------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED OPERATING
DATA(2):
Total operating revenues.......... $10,480 $11,720 $12,887 $14,396 $15,816 $8,026 $7,909
Total operating expenses.......... 9,736 11,596 12,882 14,421 15,126 7,546 7,349
Operating income (loss)........... 744 124 5 (25) 690 480 560
Earnings (loss) before
extraordinary loss and
cumulative effect of accounting
changes......................... 455 (40) (240) (475) (96) 25 146
Earnings (loss) before cumulative
effect of accounting changes.... 455 (40) (240) (475) (110) 25 146
Net earnings (loss)............... 455 (40) (240) (935) (110) 25 146
Earnings (loss) per common share
before extraordinary loss and
cumulative effect of accounting
changes:
Primary......................... 7.16 (0.64) (3.54) (6.35) (2.05) (0.03) 1.48
Fully diluted................... 7.15 (0.64) (3.54) (6.35) (2.05) (0.03) 1.48
Net earnings (loss) per common
share:
Primary......................... 7.16 (0.64) (3.54) (12.49) (2.23) (0.03) 1.48
Fully diluted................... 7.15 (0.64) (3.54) (12.49) (2.23) (0.03) 1.48
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------- JUNE 30,
1989 1990 1991 1992(1) 1993 1994
------- ------- ------- ------------- ------- --------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED BALANCE SHEET
DATA(2):
Total assets.......................... $10,877 $13,354 $16,208 $18,706 $19,326 $ 19,867
Long-term debt, less current
maturities.......................... 809 1,674 3,951 5,643 5,431 5,441
Obligations under capital leases, less
current obligations................. 1,497 1,598 1,928 2,195 2,123 2,269
Obligation for postretirement
benefits............................ -- -- -- 1,006 1,090 1,058
Preferred stock....................... -- -- -- -- 1,081 1,081
Common stock and other stockholders'
equity.............................. 3,766 3,727 3,794 3,349 3,195 3,318
Common shares outstanding at end of
period.............................. 62 62 68 75 76 76
Book value per common share........... 60.50 59.82 55.50 44.41 42.17 43.74
</TABLE>
- ---------------
(1) Effective January 1, 1992, the Company adopted Statements of Financial
Accounting Standards No. 106, "Employer's Accounting for Postretirement
Benefits Other Than Pensions," and No. 109, "Accounting for Income Taxes."
(2) No dividends were declared on common shares during any of the periods above.
15
<PAGE> 18
THE EXCHANGE OFFER
GENERAL
Participation in the Exchange Offer is voluntary and Holders (as defined
below) should carefully consider whether to accept. Neither the Board of
Directors nor the Company makes any recommendation to Holders as to whether to
tender or refrain from tendering in the Exchange Offer. Holders of the Preferred
Stock are urged to consult their financial and tax advisors in making their own
decisions on what action to take in light of their own particular circumstances.
Unless the context otherwise requires, all references in this section and
throughout this Prospectus to Preferred Stock shall include Preferred Stock
represented by Depositary Shares. Holders of Depositary Shares may effect
tenders of the underlying Preferred Stock in the Exchange Offer by tendering
such Depositary Shares to the Exchange Agent who, as agent for such tendering
Holders, will withdraw such underlying Preferred Stock and tender it in the
Exchange Offer. When tendering Depositary Shares, Holders must comply with all
of the documentation and timing requirements applicable to tenders of Preferred
Stock described herein and in the Letter of Transmittal. The Exchange Agent will
not withdraw Preferred Stock underlying Depositary Shares tendered in the
Exchange Offer unless such Preferred Stock is to be accepted for exchange by the
Company. See " -- Procedures for Tendering". Unless the context requires
otherwise, the term "Holder" with respect to the Exchange Offer means (i) any
person in whose name any Preferred Stock or Depositary Shares are registered on
the books of the Company or (ii) any other person who has obtained a properly
completed stock power from the registered holder, or (iii) any person whose
Preferred Stock or Depositary Shares are held of record by The Depository Trust
Company ("DTC") who desires to deliver such Preferred Stock by book-entry
transfer at DTC. All references herein and in the Letter of Transmittal to
registered holders of Preferred Stock shall, in the case of Preferred Stock
represented by Depositary Shares, be deemed references to the registered holder
of such Depositary Shares.
PURPOSE OF THE EXCHANGE OFFER
The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing the Preferred Stock with the Debentures. The
potential cash flow benefit to the Company arises because interest payable on
the Debentures (whether paid currently or deferred under the terms of the
Debentures) should be deductible by the Company as it accrues for federal income
tax purposes, while dividends payable on the Preferred Stock are not deductible.
The extent of this cash flow benefit, however, cannot be predicted because it
depends upon the number of shares of Preferred Stock exchanged pursuant to the
Exchange Offer and upon the Company's federal income tax position in any year.
Neither the Company's ability to defer interest payments on the Debentures nor
the lack of voting rights on the part of holders of the Debentures is a purpose
of the Company in making the Exchange Offer.
Except as described herein, the Company has no present plans or intention
to make any acquisitions of or offers for the Preferred Stock. However, if any
shares of Preferred Stock remain outstanding after the expiration of the
Exchange Offer, the Company will continue to monitor the market for the
Preferred Stock and reserves the right, in its sole discretion, to acquire and
to make offers for Preferred Stock subsequent to the Expiration Date for cash or
in exchange for other securities, by optional redemption or otherwise. The terms
of any such acquisitions or offers may differ from the terms of the Exchange
Offer. Such acquisitions or offers, if any, would depend upon, among other
things, the price and availability of such shares and the Company's tax
position.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Company will exchange up to $1,100,000,000 aggregate
principal amount of Debentures for up to all of the outstanding shares of
Preferred Stock. The Debentures are offered in minimum denominations of $1,000
and integral multiples thereof, and the Preferred Stock has a liquidation
preference of $500 per share. Consequently, the Exchange Offer will be effected
on a basis of $1,000 principal amount of Debentures for every two
16
<PAGE> 19
(2) shares of Preferred Stock validly tendered and accepted for exchange. The
Company will pay cash to tendering Holders of Preferred Stock in lieu of issuing
Debentures with a principal amount of less than $1,000. Upon the terms and
subject to the conditions set forth herein and in the Letter of Transmittal, the
Company will accept Preferred Stock validly tendered and not withdrawn as
promptly as practicable after the Expiration Date unless the Exchange Offer has
been withdrawn or terminated. The Company will not accept Preferred Stock for
exchange prior to the Expiration Date. The Company expressly reserves the right,
in its sole discretion, to delay acceptance for exchange of Preferred Stock
tendered under the Exchange Offer or the exchange of the Debentures for the
Preferred Stock accepted for exchange (subject to Rules 13e-4 and 14e-1 under
the Exchange Act, which require that the Company consummate the Exchange Offer
or return the Preferred Stock deposited by or on behalf of the Holders thereof
promptly after the termination or withdrawal of the Exchange Offer), or to
withdraw or terminate the Exchange Offer and not accept any Preferred Stock at
any time for any reason. In all cases, except to the extent waived by the
Company, delivery of Debentures in exchange for the Preferred Stock accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of Preferred Stock (or confirmation of book-entry transfer
thereof), a properly completed and duly executed Letter of Transmittal and any
other documents required thereby.
As of October 12, 1994, there were 2,200,000 shares of Preferred Stock
outstanding. This Prospectus, together with the Letter of Transmittal, is being
sent to all registered Holders as of October 12, 1994.
The Company shall be deemed to have accepted validly tendered Preferred
Stock (or defectively tendered Preferred Stock with respect to which the Company
has waived such defect) when, as and if the Company has given oral or written
notice thereof to the Exchange Agent. The Exchange Agent will act as agent for
the tendering Holders for the purpose of receiving the Debentures from the
Company and remitting such Debentures to tendering Holders. Upon the terms and
subject to the conditions of the Exchange Offer, delivery of Debentures in
exchange for Preferred Stock will be made as promptly as practicable after the
Expiration Date.
If any tendered Preferred Stock is not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, unless otherwise requested by the Holder under "Special Delivery
Instructions" in the Letter of Transmittal, such Preferred Stock will be
returned, without expense, to the tendering Holder thereof (or in the case of
Preferred Stock tendered by book-entry transfer into the Exchange Agent's
account at DTC, such Preferred Stock will be credited to an account maintained
at DTC designated by the participant therein who so delivered such Preferred
Stock), as promptly as practicable after the Expiration Date or the withdrawal
or termination of the Exchange Offer.
Holders of Preferred Stock will not have any appraisal or dissenters'
rights under the General Corporation Law of the State of Delaware (the "DGCL")
in connection with the Exchange Offer. The Company intends to conduct the
Exchange Offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission thereunder.
Holders who tender Preferred Stock in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of
Preferred Stock pursuant to the Exchange Offer. See "-- Fees and Expenses".
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Exchange Offer will expire on the Expiration Date. The term "Expiration
Date" shall mean 5:00 p.m., New York City time, on November 15, 1994, unless the
Company, in its sole discretion, extends the Exchange Offer, in which case the
term "Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended.
The Company reserves the right to extend the Exchange Offer in its sole
discretion at any time and from time to time by giving oral or written notice to
the Exchange Agent and by timely public announcement communicated, unless
otherwise required by applicable law or regulation, by making a release to the
Dow
17
<PAGE> 20
Jones News Service. During any extension of the Exchange Offer, all Preferred
Stock previously tendered pursuant to the Exchange Offer and not withdrawn will
remain subject to the Exchange Offer.
The Company expressly reserves the right to (i) amend or modify the terms
of the Exchange Offer in any manner and (ii) withdraw or terminate the Exchange
Offer and not accept for exchange any Preferred Stock, at any time for any
reason, including (without limitation) if fewer than 400,000 shares of Preferred
Stock are tendered (which condition may be waived by the Company). If the
Company makes a material change in the terms of the Exchange Offer or if it
waives a material condition of the Exchange Offer, the Company will extend the
Exchange Offer. The minimum period for which the Exchange Offer will be extended
following a material change or waiver, other than a change in the amount of
Preferred Stock sought for exchange, will depend upon the facts and
circumstances, including the relative materiality of the change or waiver. With
respect to a change in the amount of Preferred Stock sought, the offer will be
extended for a minimum of ten business days following public announcement of
such change. Any withdrawal or termination of the Exchange Offer will be
followed as promptly as practicable by public announcement thereof. In the event
the Company withdraws or terminates the Exchange Offer, it will give immediate
notice to the Exchange Agent, and all Preferred Stock theretofore tendered
pursuant to the Exchange Offer will be returned promptly to the tendering
Holders thereof. See " -- Withdrawal of Tenders".
ACCUMULATED DIVIDENDS AND INTEREST ON DEBENTURES
The Debentures will bear interest at an annual rate of 6 1/8% from the
first day following the Expiration Date (the "Issue Date") or from the most
recent interest payment date to which interest has been paid or duly provided
for. The dividend on the Preferred Stock payable on November 1, 1994 will be
payable to shareholders of record on October 14, 1994, regardless of when shares
of the Preferred Stock are tendered pursuant to the Exchange Offer. Dividends
accumulated after November 1, 1994 will not be paid on Preferred Stock accepted
for exchange in the Exchange Offer. In lieu thereof, holders of Debentures will
be entitled to interest at a rate of 6% per annum (equal to the stated dividend
rate on the Preferred Stock) from November 1, 1994 through the Expiration Date,
payable at the time of the first interest payment on the Debentures. See
"Description of Debentures -- Interest".
PROCEDURES FOR TENDERING
The tender of Preferred Stock by a Holder thereof pursuant to one of the
procedures set forth below will constitute an agreement between such Holder and
the Company in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
Each Holder of the Preferred Stock wishing to accept the Exchange Offer
must (i) properly complete and sign the Letter of Transmittal or a facsimile
thereof (all references in this Prospectus to the Letter of Transmittal shall be
deemed to include a facsimile thereof) in accordance with the instructions
contained herein and therein, together with any required signature guarantees,
and deliver the same to the Exchange Agent, at either of its addresses set forth
in "-- Exchange Agent and Information Agent" and either (a) certificates for the
Preferred Stock must be received by the Exchange Agent at such address or (b)
such Preferred Stock must be transferred pursuant to the procedures for
book-entry transfer described below and a confirmation of such book-entry
transfer must be received by the Exchange Agent, in each case prior to the
Expiration Date or (ii) comply with the guaranteed delivery procedures described
below.
LETTERS OF TRANSMITTAL, PREFERRED STOCK AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO THE COMPANY, THE DEALER
MANAGERS OR THE INFORMATION AGENT.
Signature Guarantees. If tendered Preferred Stock is registered in the name
of the signer of the Letter of Transmittal and the Debentures to be issued in
exchange therefor are to be issued (and any untendered Preferred Stock is to be
reissued) in the name of the registered Holder (which term, for the purposes
described herein, shall include any participant in DTC whose name appears on a
security listing as the owner of Preferred Stock), the signature of such signer
need not be guaranteed. If the tendered Preferred Stock is registered in the
name of someone other than the signer of the Letter of Transmittal, such
tendered Preferred Stock must be endorsed or accompanied by written instruments
of transfer in form satisfactory to the
18
<PAGE> 21
Company and duly executed by the registered Holder, and the signature on the
endorsement or instrument of transfer must be guaranteed by a financial
institution (including most banks, savings and loans associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program
or The New York Stock Exchange Medallion Signature Guarantee Program or the
Stock Exchange Medallion Program (any of the foregoing hereinafter referred to
as an "Eligible Institution"). If the Debentures and/or Preferred Stock not
exchanged are to be delivered to an address other than that of the registered
Holder appearing on the register for the Preferred Stock, the signature in the
Letter of Transmittal must be guaranteed by an Eligible Institution. Any
beneficial owner whose Preferred Stock is registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact such registered holder promptly and instruct such registered
holder to tender on such beneficial owner's behalf. If such beneficial owner
wishes to tender on its own behalf, such owner must, prior to completing and
executing a Letter of Transmittal and delivering its Preferred Stock, either
make appropriate arrangements to register ownership of the Preferred Stock in
such owner's name or obtain a properly completed stock power from the registered
holder. The transfer of registered ownership may take considerable time and may
not be able to be completed prior to the Expiration Date.
THE METHOD OF DELIVERY OF PREFERRED STOCK AND ALL OTHER DOCUMENTS IS AT THE
ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PRIOR INSURANCE OBTAINED,
AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE.
Book-Entry Transfer. The Company understands that the Exchange Agent will
make a request promptly after the date of this Prospectus to establish accounts
with respect to the Preferred Stock at DTC for the purpose of facilitating the
Exchange Offer, and subject to the establishment thereof, any financial
institution that is a participant in DTC's system may make book-entry delivery
of Preferred Stock by causing DTC to transfer such Preferred Stock into the
Exchange Agent's account with respect to the Preferred Stock in accordance with
DTC's Automated Tender Offer Program ("ATOP") procedures for such book-entry
transfers. However, the exchange for the Preferred Stock so tendered will only
be made after timely confirmation (a "Book-Entry Confirmation") of such
Book-Entry Transfer of Preferred Stock into the Exchange Agent's account, and
timely receipt by the Exchange Agent of an Agent's Message (as such term is
defined in the next sentence) and any other documents required by the Letter of
Transmittal. The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility and received by the Exchange Agent and forming a
part of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from a participant tendering
Preferred Stock that is the subject of such Book-Entry Confirmation that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal, and that the Company may enforce such agreement against such
participant.
Guaranteed Delivery. If a Holder desires to accept the Exchange Offer and
time will not permit a Letter of Transmittal or Preferred Stock to reach the
Exchange Agent before the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if the
Exchange Agent has received at its office prior to the Expiration Date, a
letter, telegram or facsimile transmission from an Eligible Institution setting
forth the name and address of the tendering Holder, the name(s) in which the
Preferred Stock is registered and, if the Preferred Stock is held in
certificated form, the certificate number of the Preferred Stock to be tendered,
and stating that the tender is being made thereby and guaranteeing that within
five NYSE trading days after the date of execution of such letter, telegram or
facsimile transmission by the Eligible Institution, the Preferred Stock in
proper form for transfer together with a properly completed and duly executed
Letter of Transmittal (and any other required documents), or a confirmation of
book-entry transfer of such Preferred Stock into the Exchange Agent's account at
DTC, will be delivered by such Eligible Institution. Unless the Preferred Stock
being tendered by the above-described method is deposited with the Exchange
Agent within the time period set forth above (accompanied or preceded by a
properly completed Letter of Transmittal and any other required documents) or a
confirmation of book-entry transfer of such Preferred Stock into the Exchange
Agent's account at DTC in accordance with DTC's ATOP procedures is received, the
Company may, at its option, reject the tender. Copies of a Notice of Guaranteed
Delivery which
19
<PAGE> 22
may be used by Eligible Institutions for the purposes described in this
paragraph are available from the Exchange Agent and the Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Preferred Stock will be determined by the Company, whose determination will be
final and binding. The Company reserves the absolute right to reject any or all
tenders not in proper form or the acceptance for exchange of which may, in the
opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any defect or irregularity in the tender of any
Preferred Stock, and the Company's interpretation of the terms and conditions of
the Exchange Offer (including the Instructions in the Letter of Transmittal)
will be final and binding. None of the Company, the Exchange Agent, the Dealer
Managers, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
Tenders of Preferred Stock involving any irregularities will not be deemed
to have been made until such irregularities have been cured or waived. Preferred
Stock received by the Exchange Agent that is not validly tendered and as to
which the irregularities have not been cured or waived will be returned by the
Exchange Agent to the tendering Holder (or in the case of Preferred Stock
tendered by book-entry transfer into the Exchange Agent's account at DTC, such
Preferred Stock will be credited to an account maintained at DTC designated by
the participant therein who so delivered such Preferred Stock), unless otherwise
requested by the Holder in the Letter of Transmittal, as promptly as practicable
after the Expiration Date or the withdrawal or termination of the Exchange
Offer.
LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Preferred Stock for exchange (the "Transferor")
exchanges, assigns and transfers the Preferred Stock to the Company and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Preferred Stock to be assigned,
transferred and exchanged. The Transferor specifically authorizes the Exchange
Agent to withdraw under the Deposit Agreement the Preferred Stock underlying any
tendered Depositary Shares, and to tender such underlying Preferred Stock in the
Exchange Offer. The Transferor represents and warrants that it has full power
and authority to tender, exchange, assign and transfer the Preferred Stock and
to acquire Debentures issuable upon the exchange of such tendered Preferred
Stock, and that, when the same are accepted for exchange, the Company will
acquire good and unencumbered title to the tendered Preferred Stock, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim. The Transferor also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Company to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Preferred Stock or transfer ownership of such Preferred Stock on the
account books maintained by DTC. All authority conferred by the Transferor will
survive the death, bankruptcy or incapacity of the Transferor and every
obligation of the Transferor shall be binding upon the heirs, legal
representatives, successors, assigns, executors and administrators of such
Transferor.
WITHDRAWAL OF TENDERS
Tenders of Preferred Stock pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date and, unless accepted for exchange by
the Company, may be withdrawn at any time after 40 business days after the date
of this Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange Agent
at the address set forth in the Letter of Transmittal. The method of
notification is at the risk and election of the Holder. Any such notice of
withdrawal must specify (i) the Holder named in the Letter of Transmittal as
having tendered Preferred Stock to be withdrawn, (ii) if the Preferred Stock is
held in certificated form, the certificate numbers of the Preferred Stock to be
20
<PAGE> 23
withdrawn, (iii) that such Holder is withdrawing his election to have such
Preferred Stock exchanged, and (iv) the name of the registered Holder of such
Preferred Stock, and must be signed by the Holder in the same manner as the
original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Preferred Stock being withdrawn. The Exchange Agent will return the
properly withdrawn Preferred Stock promptly following receipt of notice of
withdrawal. If Preferred Stock has been tendered pursuant to the procedure for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawn Preferred Stock and
otherwise comply with DTC's procedures. All questions as to the validity of
notice of withdrawal, including time of receipt, will be determined by the
Company, and such determination will be final and binding on all parties.
Withdrawals of tenders of Preferred Stock may not be rescinded and any Preferred
Stock withdrawn will thereafter be deemed not validly tendered for purposes of
the Exchange Offer. Properly withdrawn Preferred Stock, however, may be
retendered by following the procedures therefor described elsewhere herein at
any time prior to the Expiration Date. See "-- Procedures for Tendering."
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange
Agent for the Exchange Offer.
The Exchange Agent:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Hand or Overnight Courier: By Mail:
Tenders & Exchanges Tenders & Exchanges
Suite 4680 -- AMR P.O. Box 2565, Mail Suite 4660
14 Wall Street, 8th Floor Jersey City, NJ 07303-2565
New York, NY 10005
</TABLE>
By Facsimile:
(For Eligible Institutions Only)
(201) 222-4720 or (201) 222-4721
Confirm Receipt of Notice of Guaranteed Delivery by Telephone:
(201) 222-4707
D.F. King & Co., Inc. has been retained by the Company as the Information
Agent to assist in connection with the Exchange Offer. Questions and requests
for assistance regarding the Exchange Offer, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery may be directed to the Information Agent at 77 Water Street,
New York, New York 10005, telephone (800) 347-7869.
The Company will pay the Exchange Agent and Information Agent reasonable
and customary fees for their services and will reimburse them for all their
reasonable out-of-pocket expenses in connection therewith.
DEALER MANAGERS
Lehman Brothers and Goldman, Sachs & Co., as Dealer Managers, have agreed
to solicit exchanges of Preferred Stock for Debentures. The Company will pay
each Dealer Manager a fee that is dependent on the number of shares of Preferred
Stock accepted pursuant to the Exchange Offer. The maximum fee payable is
approximately $6,875,000. The Company will also reimburse the Dealer Managers
for certain reasonable out-of-pocket expenses in connection with the Exchange
Offer and will indemnify the Dealer Managers against certain liabilities,
including liabilities under the Securities Act. Additional solicitation may be
made by telecopier, telephone or in person by officers and regular employees of
the Company and its affiliates. No additional compensation will be paid to any
such officers and employees who engage in soliciting tenders.
21
<PAGE> 24
LISTING AND TRADING OF DEBENTURES AND PREFERRED STOCK; TRANSFER RESTRICTIONS
There has not previously been any public market for the Debentures. While
the Debentures have been approved for listing on the NYSE subject to official
notice of issuance, there can be no assurance that an active market for the
Debentures will develop or be sustained in the future on such exchange. Although
the Dealer Managers have indicated to the Company that they intend to make a
market in the Debentures as permitted by applicable laws and regulations, they
are not obligated to do so and may discontinue any such market-making at any
time without notice. Accordingly, no assurance can be given as to the liquidity
of, or trading markets for, the Debentures.
The Depositary Shares, the Preferred Stock represented thereby and the
Common Stock issuable upon conversion of such Preferred Stock have not been and
will not be registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. The Depositary Shares, such
Preferred Stock and such Common Stock are subject to restrictions on their
transfer designed to ensure compliance with the requirements of the Securities
Act and, upon consummation of the Exchange Offer, will continue to be subject to
such existing restrictions upon transfer. Holders of Preferred Stock who do not
tender their Preferred Stock in the Exchange Offer or whose Preferred Stock is
not accepted for exchange will continue to hold such Preferred Stock and will be
entitled to all the rights and preferences, and will be subject to all of the
limitations applicable thereto. See "Description of Preferred Stock." Moreover,
to the extent that Preferred Stock is tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Preferred Stock could be adversely
affected.
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE PREFERRED STOCK
Except as described herein, there are no contracts, arrangements,
understandings or relationships in connection with the Exchange Offer between
the Company or any of its directors or executive officers and any person with
respect to any securities of the Company, including the Debentures, the
Depositary Shares, the Preferred Stock and the Common Stock issuable upon
conversion thereof.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the Preferred Stock will be borne by
the Company. For compensation to be paid to the Dealer Managers see "-- Dealer
Managers." The total cash expenditures to be incurred by the Company in
connection with the Exchange Offer, other than fees payable to the Dealer
Managers, but including the expenses of the Dealer Managers, printing,
accounting and legal fees, and the fees and expenses of the Exchange Agent, the
Information Agent and the Trustee under the Indenture, are estimated to be
approximately $1,185,000.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Preferred Stock pursuant to the Exchange Offer. If, however, certificates
representing Debentures, or shares of Preferred Stock not tendered or accepted
for exchange, are to be delivered to, or are to be issued in the name of, any
person other than the registered Holder of the Preferred Stock tendered or if a
transfer tax is imposed for any reason other than the exchange of Preferred
Stock pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered Holder or any other persons) will be payable
by the tendering Holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering Holder.
22
<PAGE> 25
DESCRIPTION OF DEBENTURES
GENERAL
The Debentures are to be issued under an Indenture (the "Indenture"), to be
dated as of November 1, 1994, between the Company and The First National Bank of
Chicago, as trustee (the "Trustee"). The following statements with respect to
the Debentures are summaries and are subject to the detailed provisions of the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
Indenture, a copy of the form of which has been filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Indenture do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all the provisions of the Debentures and the
Indenture, including the definitions therein of certain terms capitalized and
not otherwise defined in this Prospectus. Wherever references are made to
particular provisions of the Indenture or terms defined therein, such provisions
or definitions are incorporated by reference as part of the statements made and
such statements are qualified in their entirety by such references.
The Debentures will be unsecured, subordinated obligations of the Company,
will be limited in aggregate principal amount to the aggregate principal amount
of Debentures issued in the Exchange Offer and will mature on November 1, 2024.
The Debentures will be issued only in fully registered form, without coupons, in
minimum denominations of $1,000 and any integral multiples of $1,000 in excess
thereof.
Debentures will be transferable or exchangeable at the agency of the
Company maintained for such purpose in The City of New York (which, unless
changed, shall be a corporate trust office or agency of the Trustee). Debentures
may be transferred or exchanged without service charge, other than any tax or
governmental charge imposed in connection therewith. (Section 3.5 of the
Indenture.)
INTEREST
The Debentures will mature on November 1, 2024 and will bear interest at an
annual rate of 6 1/8% from the Issue Date or from the most recent interest
payment date to which interest has been paid or duly provided for. In addition,
holders of the Debentures will be entitled to interest at a rate of 6% per annum
from November 1, 1994 through the Expiration Date, in lieu of dividends
accumulating after November 1, 1994 on their Preferred Stock accepted for
exchange, payable at the time of the first interest payment on the Debentures.
Interest will be payable quarterly in arrears on February 1, May 1, August 1 and
November 1 of each year commencing February 1, 1995, provided that so long as
the Company shall not be in default in the payment of interest on the
Debentures, the Company shall have the right, upon prior notice by public
announcement given in accordance with NYSE rules at any time during the term of
the Debentures, to extend the interest payment period from time to time for a
period not exceeding 20 consecutive calendar quarters (each, an "Extension
Period"). Interest will continue to accrue on the Debentures during an Extension
Period and will compound quarterly, at the rate specified for the Debentures, to
the extent permitted by applicable law. See "-- Option to Extend Interest
Payment Period." Interest payable on any Debenture that is punctually paid or
duly provided for on any Interest Payment Date shall be paid to the person in
whose name such Debenture is registered at the close of business on the January
15, April 15, July 15 or October 15, respectively, preceding such Interest
Payment Date (each, a "Record Date"). Interest will be computed on the basis of
twelve 30-day months and a 360-day year and, for any period shorter than a full
calendar month, on the basis of the actual number of days elapsed in such
period. If any date on which interest is payable on the Debentures is not a
Business Day, the payment of interest due on such date may be made on the next
succeeding Business Day (and without any interest or other payment in respect of
such delay). A "Business Day" shall mean any day other than a day on which
banking institutions in The City of New York or in Fort Worth, Texas are
authorized or required by law to close. (Section 3.1 of the Indenture.)
Payments in respect of the Debentures will be made at the office or agency
of the Company maintained for that purpose in The City of New York (which,
unless changed, shall be a corporate trust office or agency of the Trustee).
However, at the option of the Company, payments on the Debentures may be made
(i) by checks mailed by the Trustee to the Holders entitled thereto at their
registered addresses or (ii) by wire transfers to accounts maintained by the
Holders entitled thereto as specified in the Register, provided that, in
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either case, the payment of principal with respect to any Debenture will be made
only upon surrender of such Debenture to the Trustee. Interest payable on any
Debenture that is not punctually paid or duly provided for on any Interest
Payment Date will forthwith cease to be payable to the person in whose name such
Debenture is registered on the relevant Record Date, and such defaulted interest
will instead be payable to the person in whose name such Debenture is registered
on the special record date or other specified date determined in accordance with
the Indenture; provided, however, that interest shall not be considered payable
by the Company on any Interest Payment Date falling within an Extension Period
unless the Company has elected to make a full or partial payment of interest
accrued on the Debentures on such Interest Payment Date. (Section 3.7 of the
Indenture.)
In the event the Company fails at any time to make any payment of interest,
principal or premium on the Debentures when due (after giving effect to any
grace period for payment thereof as described in "-- Events of Default, Notice
and Certain Rights on Default") or the Company exercises its option to extend
the interest payment period for an Extension Period as described in "-- Option
to Extend Interest Payment Period", the Company will not, until all defaulted
interest on the Debentures and all interest accrued on the Debentures during an
Extension Period and all principal and premium, if any, then due and payable on
the Debentures shall have been paid in full, (i) declare, set aside or pay any
dividend or distribution on any capital stock of the Company, including the
Preferred Stock and the Common Stock, except for dividends or distributions in
shares of its capital stock or in rights to acquire shares of its capital stock,
or (ii) repurchase, redeem or otherwise acquire, or make any sinking fund
payment for the purchase or redemption of, any shares of its capital stock
(except by conversion into or exchange for shares of its capital stock and
except for a redemption, purchase or other acquisition of shares of its capital
stock made for the purpose of an employee incentive plan or benefit plan of the
Company or any of its subsidiaries); provided, however, that any moneys
deposited in any sinking fund with respect to any preferred stock of the Company
in compliance with the provisions of such sinking fund and not in violation of
this provision may thereafter be applied to the purchase or redemption of such
preferred stock in accordance with the terms of such sinking fund without regard
to the restrictions contained in this provision. (Section 9.7 of the Indenture.)
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as the Company shall not be in default in the payment of interest
on the Debentures, the Company shall have the right, upon prior notice by public
announcement given in accordance with NYSE rules at any time during the term of
the Debentures, prior to an Interest Payment Date as provided below, to extend
the interest payment period from time to time to another Interest Payment Date
by one or more quarterly periods, not to exceed 20 consecutive calendar quarters
from the last Interest Payment Date to which interest was paid in full (each, an
"Extension Period"). No interest shall be due and payable during an Extension
Period, but on the Interest Payment Date occurring at the end of each Extension
Period the Company shall pay to the holders of record on the Record Date for
such Interest Payment Date (regardless of who the holders of record may have
been on other dates during the Extension Period) all accrued and unpaid interest
on the Debentures, together with interest thereon. Interest will continue to
accrue on the Debentures during an Extension Period and will compound quarterly,
at the rate specified for the Debentures, to the extent permitted by applicable
law. Prior to the termination of any Extension Period, the Company may pay all
or any portion of the interest accrued on the Debentures on any Interest Payment
Date to holders of record on the Record Date for such Interest Payment Date or
from time to time further extend the interest payment period, provided that any
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 calendar quarters. If the Company shall elect to pay
all of the interest accrued on the Debentures on an Interest Payment Date during
an Extension Period, such Extension Period shall automatically terminate on such
Interest Payment Date. Upon the termination of any Extension Period and the
payment of all amounts of interest then due, the Company may commence a new
Extension Period, subject to the above requirements. Consequently, there could
be multiple Extension Periods of varying lengths (up to six Extension Periods of
20 consecutive calendar quarters each or more numerous shorter Extension
Periods) throughout the term of the Debentures. The Company has no current
intention of exercising its right to defer an interest payment period. However,
in the event the Company determines to extend an interest payment period, or in
the event the Company thereafter extends an Extension Period or prepays interest
accrued during an Extension Period as described above, the market price of the
Debentures is likely to be affected. In
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<PAGE> 27
addition, as a result of such rights, the market price of the Debentures may be
more volatile than other debt instruments with original issue discount that do
not have such rights. A holder that disposes of its Debentures during an
Extension Period, therefore, may not receive the same return on its investment
as a holder that continues to hold its Debentures.
The Company shall cause the Trustee to give holders of the Debentures prior
notice, by public announcement given in accordance with NYSE rules and by mail
to all such holders, of (i) the Company's election to initiate an Extension
Period and the duration thereof, (ii) the Company's election to extend any
Extension Period beyond the Interest Payment Date on which such Extension Period
is then scheduled to terminate and the duration of such extension and (iii) the
Company's election to make a full or partial payment of interest accrued on the
Debentures on any Interest Payment Date during any Extension Period and the
amount of such payment. In no event shall such notice be given less than five
Business Days prior to the January 15, April 15, July 15 or October 15 next
preceding the applicable Interest Payment Date. (Section 3.1 of the Indenture.)
SUBORDINATION
The payment of the principal of, premium, if any, and interest on the
Debentures will be subordinated to the extent set forth in the Indenture to the
prior payment in full of amounts then due on all Senior Indebtedness (as defined
below). No payments or distributions, whether in cash, securities or other
property (other than securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment the payment of which is
subordinated, at least to the same extent as the Debentures, to the payment of
all Senior Indebtedness at the time outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment) on
account of principal of, premium, if any, or interest on the Debentures may be
made by the Company unless full payment of all amounts then due on Senior
Indebtedness has been made or provided for in money or money's worth. Upon any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (other than securities of the Company or
any other corporation provided for by a plan of reorganization or readjustment
the payment of which is subordinated, at least to the same extent as the
Debentures, to the payment of all Senior Indebtedness at the time outstanding
and to any securities issued in respect thereof under such plan of
reorganization or readjustment) to creditors upon any dissolution or winding up
or total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
proceedings, all amounts due upon all Senior Indebtedness shall first be paid in
full, or payment thereof provided for in money or money's worth, before the
holders of the Debentures or the Trustee shall be entitled to retain any assets
so paid or distributed (other than the securities described in the first
parenthetical of this sentence) in respect of the Debentures (for principal or
interest) or of the Indenture. (Article XI of the Indenture.)
The term "Senior Indebtedness" of the Company means each of the following,
unless the agreement, instrument or lease evidencing the same expressly provides
that it is not senior in right of payment to the Debentures: (1) any Payment
Obligation (as defined) of the Company in respect of any indebtedness, directly
or indirectly, created, incurred or assumed for borrowed money or in connection
with the acquisition of any business, property or asset (including securities),
other than any account payable or other indebtedness created, incurred or
assumed in the ordinary course of business in connection with the obtaining of
materials or services; (2) any Payment Obligation of the Company in respect of
any lease that would, in accordance with generally accepted accounting
principles, be required to be classified and accounted for as a capital lease;
(3) any Payment Obligation of the Company in respect of any interest rate
exchange agreement, currency exchange agreement or similar agreement that
provides for payment (whether or not contingent) over a period or term
(including any renewals or extensions) longer than one year from the execution
thereof; (4) any Payment Obligation of the Company in respect of any agreement
relating to the lease (including a sale and leaseback) of real or personal
property that provides for payment (whether or not contingent) over a period or
term (including any renewals or extensions) longer than one year from the
execution thereof; (5) any Payment Obligation of any Subsidiary (as defined in
the Indenture) or of others of the kind described in the preceding clauses (1)
through (4) assumed or guaranteed by the Company or for which the Company is
otherwise responsible or liable; and (6) any amendment, renewal, extension or
refunding of any of the
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foregoing Payment Obligations. However, Senior Indebtedness does not include the
Company's obligations in respect of the 5 1/4% Subordinated Debentures due 1998
issued by American and for which the Company and American are jointly and
severally liable. The Company's obligations in respect of such 5 1/4%
Subordinated Debentures are equal in rank to the Company's obligations to pay
principal of, premium, if any, and interest on the Debentures. (Article XI of
the Indenture.)
The term "Payment Obligation", when used with respect to Senior
Indebtedness, means an obligation stated in an agreement, instrument or lease to
pay money (whether for principal, premium, interest, sinking fund, periodic
rent, stipulated value, termination value, liquidated damages or otherwise), but
excludes an obligation to pay money in respect of fees (including, without
limitation, availability, commitment and similar fees) of, or as payment or
reimbursement for expenses (including, without limitation, legal, accounting and
ordinary out-of-pocket expenses) incurred by or on behalf of, or as indemnity
for losses, damages, taxes or other indemnity claims of any kind owed to, any
holder of Senior Indebtedness or other party to such agreement, instrument or
lease.
By reason of the subordination described herein, in the event of the
distribution of assets upon insolvency, creditors of the Company who are not
holders of Senior Indebtedness or of the Debentures may recover less, ratably,
than holders of Senior Indebtedness, and may recover more, ratably, than holders
of the Debentures. Moreover, upon any distribution of the assets of the Company,
the holders of the Debentures are required to pay over their share of such
distribution to the holders of Senior Indebtedness to the extent necessary to
pay all holders of Senior Indebtedness in full.
On June 30, 1994 approximately $6.6 billion of Senior Indebtedness was
outstanding. The calculation of the amount of Senior Indebtedness assumes that
the Company is primarily obligated for the present value of future minimum lease
payments under operating leases guaranteed by the Company but does not include
other contingent obligations such as stipulated values or liquidated damages.
There is no restriction under the Indenture on the creation of additional
indebtedness, including Senior Indebtedness, by the Company, including
indebtedness owed by the Company to American and its other subsidiaries.
Because the Company is a holding company that conducts business through its
subsidiaries, the Debentures are effectively subordinated to all existing and
future obligations of the Company's subsidiaries, including American. Any right
of the Company to participate in any distribution of the assets of any of the
Company's subsidiaries, including American, upon the liquidation, reorganization
or insolvency of such subsidiary (and the consequent right of the holders of the
Debentures to participate in those assets) will be subject to the claims of the
creditors (including trade creditors) and preferred stockholders of such
subsidiary, except to the extent that claims of the Company itself as a creditor
of such subsidiary may be recognized, in which case the claims of the Company
would still be subordinate to any security interest in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by the
Company. On June 30, 1994, approximately $15.5 billion of indebtedness, leases
and other obligations (including trade payables) of the Company's subsidiaries
not included in the definition of Senior Indebtedness was outstanding.
Because the Company is a holding company, the Company's cash flow and
consequent ability to meet its debt obligations are primarily dependent upon the
earnings of its subsidiaries, particularly American, and on dividends and other
payments therefrom. The Company's subsidiaries are not obligated or required to
pay any amounts due pursuant to the Debentures or to make funds available
therefor in the form of dividends or advances to the Company. In addition,
certain debt and credit facility agreements of American contain certain
restrictive covenants, including a cash flow coverage test, a minimum net worth
requirement and limitations on indebtedness and the declaration of dividends on
shares of its capital stock, that could affect the Company's ability to pay
principal of, premium, if any, and interest on the Debentures. At June 30, 1994,
under the provisions of the most restrictive of those debt and credit facility
agreements, approximately $859 million of the retained earnings of American were
available for payment of cash dividends to the Company.
CONVERSION
Outstanding Debentures will be convertible at the option of the holder
thereof at any time after the date of original issuance thereof, unless
previously redeemed, into whole shares of Common Stock at a conversion price of
$79.00 per share of Common Stock (equivalent to 12.658 shares of Common Stock
per $1,000 principal amount of Debentures converted), subject to adjustment as
described below. (Sections 12.1 and 12.4
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of the Indenture.) No fractional shares of Common Stock shall be issued upon
conversion of Debentures. Instead of any fractional share of Common Stock that
would otherwise be issuable upon conversion of any Debenture, the Company shall
pay a cash adjustment in respect of such fraction in an amount equal to the same
fraction of the market price per share of Common Stock (as determined or
prescribed by the Board of Directors or a duly authorized committee thereof,
whose determination shall be conclusive, but which, so long as the Common Stock
is listed on the NYSE, shall be the Closing Price reported on the NYSE) at the
close of business on the Trading Day (as defined in the Indenture) immediately
preceding the Date of Conversion. (Section 12.3 of the Indenture.) Holders that
convert their Debentures will not be entitled to payment of any accrued interest
on such Debentures, including interest that accrues during an Extension Period.
Debentures surrendered for conversion during the period beginning on any Record
Date and prior to the corresponding Interest Payment Date must be accompanied by
payment of an amount equal to the interest payable on such Debentures on such
Interest Payment Date. (Section 12.2 of the Indenture.) Debentures called for
redemption will not be convertible after the close of business on the Business
Day preceding the date fixed for redemption, unless the Company defaults in
payment of the Redemption Price. (Section 12.1 of the Indenture.)
The initial conversion price of $79.00 per share of Common Stock is subject
to adjustment (under formulae set forth in the Indenture) in certain events,
including: (i) the issuance of Common Stock as a dividend or distribution on
Common Stock of the Company; (ii) certain subdivisions and combinations of the
Common Stock; (iii) the issuance to all holders of Common Stock of certain
rights or warrants to purchase Common Stock; (iv) the distribution to all
holders of Common Stock of shares of capital stock of the Company (other than
Common Stock) or evidences of indebtedness of the Company or assets (including
securities, but excluding those rights, warrants, dividends and distributions
referred to above and dividends and distributions in connection with the
liquidation, dissolution or winding up of the Company or paid in cash); (v)
distributions consisting of cash, excluding any quarterly cash dividend on the
Common Stock to the extent that the aggregate cash dividend per share of Common
Stock in any fiscal quarter does not exceed the greater of (x) the amount per
share of Common Stock of the next preceding quarterly cash dividend on the
Common Stock to the extent that such preceding quarterly dividend did not
require an adjustment of the Conversion Price pursuant to this clause (v) (as
adjusted to reflect subdivisions or combinations of the Common Stock) and (y)
3.75 percent of the average of the daily Closing Prices (as defined in the
Indenture) per share of Common Stock for the ten consecutive Trading Days
(determined as provided in the Indenture) immediately prior to the date of
declaration of such dividend, and excluding any dividend or distribution in
connection with the liquidation, dissolution or winding up of the Company; and
(vi) payment in respect of a tender or exchange offer by the Company or any
subsidiary of the Company for the Common Stock to the extent that the cash and
value of any other consideration included in such payment per share of Common
Stock exceeds the Current Market Price of the Common Stock on the Trading Day
next succeeding the last time tenders or exchanges may be made pursuant to such
tender or exchange offer (as it shall have been amended). If any adjustment is
required to be made as set forth in clause (v) above as a result of a
distribution which is a quarterly dividend, such adjustment would be based upon
the amount by which such distribution exceeds the amount of the quarterly cash
dividend permitted to be excluded pursuant to such clause (v). If an adjustment
is required to be made as set forth in clause (v) above as a result of a
distribution which is not a quarterly dividend, such adjustment would be based
upon the full amount of such distribution.
In the event that the rights issued pursuant to the Rights Agreement (as
defined below) are separately distributed to holders of Common Stock upon the
occurrence of certain events specified in the Rights Agreement or otherwise such
that holders of Debentures would thereafter not be entitled to receive any such
rights in respect of the Common Stock issuable upon conversion of such
Debentures, the conversion price of the Debentures will be adjusted in
accordance with the provisions of the Indenture governing clause (iv) of the
preceding paragraph. In addition, in lieu of making any adjustment to the
conversion price of the Debentures, the Company has the option to amend the
Rights Agreement to provide that the rights shall be issuable upon conversion of
the Debentures without regard to whether the shares of Common Stock issuable
upon conversion of the Debentures were issued before or after the Distribution
Date (as defined in the Rights Agreement).
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The Company from time to time may to the extent permitted by law reduce the
conversion price by any amount for any period of at least 20 days, in which case
the Company shall give at least 15 days' notice of such reduction, if the Board
of Directors has made a determination that such reduction would be in the best
interests of the Company, which determination shall be conclusive. The Company
may, at its option, make such reductions in the conversion price, in addition to
those set forth above, as the Board of Directors deems advisable to avoid or
diminish any income tax to holders of Common Stock resulting from any dividend
or distribution of stock (or rights to acquire stock) or from any event treated
as such for income tax purposes. (Section 12.5 of the Indenture.) See "Certain
Federal Income Tax Considerations -- Adjustment of Conversion Price."
If any transaction shall occur (including without limitation (i) any
recapitalization or reclassification of the Common Stock (other than a change in
par value, or from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination of the Common Stock), (ii) any
consolidation or merger of the Company with or into any other person or any
merger of another person into the Company (other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of Common
Stock), (iii) any sale or transfer of all or substantially all of the assets of
the Company, or (iv) any compulsory share exchange) pursuant to which either
shares of Common Stock shall be converted into the right to receive other
securities, cash or other property, or, in the case of a sale or transfer of all
or substantially all of the assets of the Company, the holders of Common Stock
shall be entitled to receive other securities, cash or other property, then
appropriate provision shall be made so that the holder of any Debenture then
outstanding shall have the right thereafter to convert such Debenture only into
(x) in the case of any such transaction that does not constitute a Common Stock
Fundamental Change (as defined below) and subject to funds being legally
available for such purpose under applicable law at the time of such conversion,
the kind and amount of the securities, cash and other property that would have
been receivable upon such transaction by a holder of the number of shares of
Common Stock issuable upon conversion of such Debenture immediately prior to
such transaction, after giving effect, in the case of any Non-Stock Fundamental
Change (as defined below), to any adjustment in the conversion price in
accordance with clause (1) of the following paragraph, and (y) in the case of
any such transaction that constitutes a Common Stock Fundamental Change, common
stock of the kind received by holders of Common Stock as a result of such Common
Stock Fundamental Change in an amount determined in accordance with clause (2)
of the following paragraph. The company or the person formed by such
consolidation or resulting from such merger or that acquires such assets or that
acquires the Company's shares, as the case may be, shall execute with the
Trustee a supplemental indenture to establish such right. Such a supplemental
indenture shall provide for adjustments that, for events subsequent to the
effective date of such a supplemental indenture, shall be as nearly equivalent
as may be practicable to the relevant adjustments provided for in the preceding
paragraphs and in this paragraph. (Section 12.6 of the Indenture.)
Notwithstanding any other provision in the preceding paragraphs to the
contrary, if any Fundamental Change (as defined below) occurs, then the
conversion price in effect will be adjusted immediately after such Fundamental
Change as follows:
(1) in the case of a Non-Stock Fundamental Change, the conversion
price of the Debentures immediately following such Non-Stock Fundamental
Change shall be the lower of (A) the conversion price in effect immediately
prior to such Non-Stock Fundamental Change, but after giving effect to any
other prior adjustments effected pursuant to the preceding paragraphs, and
(B) the product of (1) the greater of the Applicable Price (as defined
below) and the then applicable Reference Market Price (as defined below)
and (2) a fraction, the numerator of which is $1,000 and the denominator of
which is the sum of (x) the amount of the redemption price for $1,000
principal amount of Debentures if the redemption date were the date of such
Non-Stock Fundamental Change (or, for the period commencing on the Issue
Date and ending on January 31, 1995 and the twelve-month period commencing
on February 1, 1995, the product of 105.4% and 104.8%, respectively, times
$1,000) plus (y) an amount equal to any then-accrued and unpaid interest on
such Debenture; and
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(2) in the case of a Common Stock Fundamental Change, the conversion
price of the Debentures immediately following such Common Stock Fundamental
Change shall be the conversion price in effect immediately prior to such
Common Stock Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to the preceding paragraphs, multiplied by a
fraction, the numerator of which is the Purchaser Stock Price (as defined
below) and the denominator of which is the Applicable Price; provided,
however, that in the event of a Common Stock Fundamental Change in which
(A) 100% of the value of the consideration received by a holder of Common
Stock is common stock of the successor, acquiror, or other third party (and
cash, if any, paid with respect to any fractional interests in such common
stock resulting from such Common Stock Fundamental Change) and (B) all of
the Common Stock of the Company shall have been exchanged for, converted
into, or acquired for, common stock of the successor, acquiror or other
third party (and any cash paid with respect to fractional interests), the
conversion price of the Debentures immediately following such Common Stock
Fundamental Change shall be the conversion price in effect immediately
prior to such Common Stock Fundamental Change multiplied by a fraction, the
numerator of which is one (1) and the denominator of which is the number of
shares of common stock of the successor, acquiror, or other third party
received by a holder of one share of Common Stock as a result of such
Common Stock Fundamental Change. (Section 12.10 of the Indenture.)
Depending upon whether a Fundamental Change is a Non-Stock Fundamental
Change or a Common Stock Fundamental Change, a Holder may receive significantly
different consideration upon conversion. In the event of a Non-Stock Fundamental
Change, the Holder has the right to convert Debentures into the kind and amount
of the shares of stock and other securities or property or assets (including
cash), except as otherwise provided above, as is determined by the number of
shares of Common Stock receivable upon conversion at the conversion price as
adjusted in accordance with clause (1) of the preceding paragraph. However, in
the event of a Common Stock Fundamental Change in which less than 100% of the
value of the consideration received by a holder of Common Stock is common stock
of the successor, acquiror or other third party, a holder of Debentures who
converts such Debentures following the Common Stock Fundamental Change will
receive consideration in the form of such common stock only, whereas a holder
who converted such Debentures prior to the Common Stock Fundamental Change would
have received consideration in the form of such common stock as well as any
other securities or assets (which may include cash) issuable upon conversion of
such Debentures immediately prior to such Common Stock Fundamental Change.
The term "Applicable Price" means (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by a holder of one share of Common Stock and (ii) in
the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the daily Closing Prices per share of Common
Stock for the 10 consecutive Trading Days (determined as provided in the
Indenture) immediately prior to the record date for the determination of the
holders of Common Stock entitled to receive cash, securities, property or other
assets in connection with such Non-Stock Fundamental Change or Common Stock
Fundamental Change or, if there is no such record date, prior to the date upon
which the holders of the Common Stock shall have the right to receive such cash,
securities, property or other assets.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors, which determination shall be conclusive) of the consideration
received by holders of Common Stock pursuant to such transaction consists of
common stock that, for the 10 Trading Days immediately prior to such Fundamental
Change, has been admitted for listing or admitted for listing subject to notice
of issuance on a national securities exchange or quoted on the Nasdaq National
Market; provided, however, that a Fundamental Change shall not be a Common Stock
Fundamental Change unless either (i) the Company continues to exist after the
occurrence of such Fundamental Change and the outstanding Debentures continue to
exist as outstanding Debentures, or (ii) not later than the occurrence of such
Fundamental Change, a corporation succeeding to the business of the Company
complies with the provisions described under the heading "-- Consolidation,
Merger or Sale by the Company".
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The term "Fundamental Change" means the occurrence of any transaction or
event or series of transactions or events pursuant to which all or substantially
all of the Common Stock shall be exchanged for, converted into, acquired for or
shall constitute solely the right to receive cash, securities, property or other
assets (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of any such series of transactions or
events, for purposes of adjustment of the conversion price, such Fundamental
Change shall be deemed to have occurred when substantially all of the Common
Stock of the Company shall have been exchanged for, converted into, or acquired
for, or shall constitute solely the right to receive such cash, securities,
property or other assets, but the adjustment shall be based upon the
consideration that the holders of Common Stock received in the transaction or
event as a result of which more than 50% of the Common Stock of the Company
shall have been exchanged for, converted into, or acquired for, or shall
constitute solely the right to receive, such cash, securities, property or other
assets; and provided, further, that such term does not include (i) any such
transaction or event in which the Company and/or any of its subsidiaries are the
issuers of all the cash, securities, property or other assets exchanged,
acquired or otherwise issued in such transaction or event, or (ii) any such
transaction or event in which the holders of Common Stock receive securities of
an issuer other than the Company or any of its subsidiaries if, immediately
following such transaction or event, such holders hold a majority of the
securities having the power to vote normally in the election of directors of
such other issuer outstanding immediately following such transaction or other
event.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the closing prices for one share of the
common stock received by holders of Common Stock in such Common Stock
Fundamental Change during the 10 consecutive Trading Days immediately prior to
the date fixed for the determination of the holders of Common Stock entitled to
receive such common stock or, if there is no such date, prior to the date upon
which the holders of Common Stock shall have the right to receive such common
stock.
The term "Reference Market Price" shall initially mean $42.3333 and, in the
event of any adjustment to the conversion price other than as a result of a
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the conversion price after giving
effect to any such adjustment shall always be the same as the ratio of the
initial Reference Market Price to the initial conversion price of $79.00 per
share. (Section 12.11 of the Indenture.)
No adjustment to the conversion price will be required to be made in any
case until cumulative adjustments require an increase or decrease of at least 1%
of the conversion price. (Section 12.5 of the Indenture.)
REDEMPTION
The Debentures will not be subject to any mandatory redemption, sinking
fund or other obligation of the Company to amortize, redeem or retire the
Debentures, and will not be redeemable prior to February 1, 1996. On and after
such date, the Debentures are redeemable at the option of the Company upon
notice at any time, in whole or in part, at the following percentages of the
principal amount thereof redeemed, plus accrued and unpaid interest, if any, up
to but excluding the redemption date, if redeemed during the twelve-month period
commencing February 1 of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION REDEMPTION
YEAR PRICE YEAR PRICE
---- ---------- ---- ----------
<S> <C> <C> <C>
1996........................ 104.2% 2000........................ 101.8%
1997........................ 103.6% 2001........................ 101.2%
1998........................ 103.0% 2002........................ 100.6%
1999........................ 102.4% 2003 and thereafter......... 100.0%
</TABLE>
If fewer than all the outstanding Debentures are to be redeemed, the Company
will select those Debentures to be redeemed by lot or pro rata or in such other
manner permitted by the rules of the NYSE as the Board of Directors may
determine.
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Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Debentures to be
redeemed at the address shown on the stock transfer books. After the redemption
date, interest will cease to accrue on the Debentures called for redemption and
all rights of the holders of such Debentures will terminate, except the right to
receive the redemption price without interest. (Section 10.5 of the Indenture.)
VOTING RIGHTS
The holders of the Debentures will have no voting rights.
CONSOLIDATION, MERGER OR SALE BY THE COMPANY
The Indenture provides that the Company may merge or consolidate with or
into any other corporation or sell, convey, transfer or otherwise dispose of all
or substantially all of its assets to any person, firm or corporation, if (i)
(a) in the case of a merger or consolidation, the Company is the surviving
corporation or (b) in the case of a merger or consolidation where the Company is
not the surviving corporation and in the case of a sale, conveyance, transfer or
other disposition, the successor corporation is a corporation organized and
existing under the laws of the United States of America or a State thereof and
such corporation expressly assumes by supplemental indenture all the obligations
of the Company under the Debentures and under the Indenture, (ii) immediately
after giving effect to such merger or consolidation, or such sale, conveyance,
transfer or other disposition, no Default or Event of Default (as defined below)
shall have occurred and be continuing and (iii) certain other conditions are
met. In the event a successor corporation assumes the obligations of the
Company, such successor corporation shall succeed to and be substituted for the
Company under the Indenture and under the Debentures and all obligations of the
Company thereunder shall terminate. (Section 7.1 of the Indenture.)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
The Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, either the Trustee or the holders of 25% in
aggregate principal amount of the Debentures then outstanding may, by written
notice to the Company (and to the Trustee, if notice is given by such holders of
Debentures), declare the principal of all the Debentures to be due and payable.
However, at any time after a declaration of acceleration with respect to the
Debentures has been made, but before a judgment or decree based on such
acceleration has been obtained, the holders of a majority in aggregate principal
amount of the Debentures then outstanding may, under certain circumstances,
rescind and annul such acceleration. (Section 5.2 of the Indenture.)
Events of Default are defined in the Indenture as being: default for thirty
days in payment of any interest installment when due; default for ten days in
payment of principal or premium, if any, at maturity or on redemption or
otherwise, on the Debentures when due; default for sixty days after notice to
the Company by the Trustee, or to the Company and the Trustee by the holders of
at least 25% in aggregate principal amount of the Debentures then outstanding,
in the performance of any other covenant in the Indenture; default resulting in
acceleration of other indebtedness of the Company for borrowed money where the
aggregate principal amount so accelerated exceeds $150 million and such
acceleration is not rescinded or annulled within ten days after the written
notice thereof to the Company by the Trustee or to the Company and the Trustee
by the holders of at least 25% in aggregate principal amount of the Debentures
then outstanding, provided that such Event of Default will be cured or waived if
the default that resulted in the acceleration of such other indebtedness is
cured or waived; and certain events of bankruptcy, insolvency or reorganization
of the Company. (Section 5.1 of the Indenture.)
The Indenture provides that the Trustee shall, within ninety days after the
occurrence of a Default with respect to the Debentures, give to the holders of
the Debentures notice of all uncured Defaults known to it; provided that, except
in the case of default in payment on the Debentures the Trustee may withhold the
notice if and so long as a Responsible Officer (as defined in the Indenture) in
good faith determines that withholding
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<PAGE> 34
such notice is in the interests of the holders. (Section 6.5 of the Indenture.)
"Default" means any event which is, or after notice or passage of time or both,
would be, an Event of Default. (Section 1.1 of the Indenture.)
The Indenture provides that the holders of a majority in aggregate
principal amount of the Debentures then outstanding may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, provided that such
direction shall not be in conflict with any law or the Indenture and subject to
certain other limitations. (Section 5.8 of the Indenture.) The right of any
holder of Debentures to institute action for any remedy under the Indenture
(except the right to enforce payment of the principal of, interest on, and
premium, if any, on its Debentures when due) is subject to certain conditions
precedent, including a request to the Trustee by the holders of not less than
25% in aggregate principal amount of Debentures then outstanding to take action,
and an offer to the Trustee of satisfactory indemnification against liabilities
incurred by it in so doing. (Section 5.9 of the Indenture.)
The Indenture includes a covenant that the Company will file annually with
the Trustee a certificate as to the Company's compliance with all conditions and
covenants of the Indenture. (Section 9.6 of the Indenture.)
The holders of a majority in aggregate principal amount of the Debentures
then outstanding by notice to the Trustee may waive, on behalf of the holders of
all the Debentures, any past Default or Event of Default and its consequences
except a Default or Event of Default in the payment of the principal of,
premium, if any, or interest on any of the Debentures and certain other
defaults. (Section 5.7 of the Indenture.)
If a bankruptcy proceeding is commenced in respect of the Company under the
Federal Bankruptcy Code or if the principal amount of the Debentures is
accelerated upon the occurrence of an event of default, the holders of the
Debentures may be unable to recover amounts representing the unamortized portion
of any original issue discount at the time such proceeding is commenced or such
acceleration occurs.
AGREED TAX TREATMENT
The Indenture provides that the each holder of a Debenture, each person
that acquires a beneficial ownership interest in a Debenture and the Company
agree that for United States federal, state and local tax purposes it is
intended that such Debenture constitute indebtedness. (Section 3.1 of the
Indenture.)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee to
enter into one or more supplemental indentures without the consent of the
holders of any of the Debentures in order (i) to evidence the succession of
another corporation to the Company and the assumption of the covenants and
obligations of the Company by such successor to the Company; (ii) to add to the
covenants of the Company for the benefit of the holders of the Debentures or
surrender any right or power of the Company; (iii) to add additional Events of
Default; (iv) to secure the Debentures; (v) to evidence and provide for
successor Trustees; (vi) to provide for uncertificated Debentures so long as
such uncertificated Debentures are in registered form for United States federal
income tax purposes; (vii) to correct or supplement any provision of the
Indenture which may be inconsistent with any other provision therein or to make
any other provisions with respect to matters or questions arising under the
Indenture, provided that such action shall not adversely affect the interests of
the holders of the Debentures; (viii) to cure any ambiguity or correct any
mistake; or (ix) to comply with any requirement of the Commission in connection
with the qualification of the Indenture under the Trust Indenture Act. (Section
8.1 of the Indenture.)
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the Debentures then outstanding, to execute supplemental indentures
adding any provisions to or changing or eliminating any of the provisions of the
Indenture or any supplemental indenture or modifying the rights of the holders,
except that no such supplemental indenture may, without the consent of each
holder, (i) change the time for payment of principal, premium, if any, or
interest on any Debenture; (ii) reduce the principal of, or interest on any
Debenture; (iii) reduce the amount of premium, if any, payable upon the
redemption of any Debenture; (iv) impair the
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<PAGE> 35
right to institute suit for the enforcement of any payment on or with respect to
any Debenture; (v) reduce the percentage in principal amount of the outstanding
Debentures the consent of whose holders is required for modification or
amendment of the Indenture or for waiver of compliance with certain provisions
of the Indenture or for waiver of certain default; (vi) adversely affect the
right to convert Debentures; (vii) modify any of the provisions relating to the
subordination of the Debentures in a manner adverse to the holders of the
Debentures; (viii) change the obligation of the Company to maintain an office or
agency in the places and for the purposes specified in the Indenture; or (ix)
modify the provisions relating to waiver of certain defaults or any of the
foregoing provisions. (Section 8.2 of the Indenture.)
THE TRUSTEE
The First National Bank of Chicago is the Trustee under the Indenture.
First Chicago Trust Company of New York, an affiliate of the Trustee, will act
as Exchange Agent for the Exchange Offer, and currently serves as Depositary
under the Deposit Agreement for the Depositary Shares, as Transfer Agent and
Registrar for the Preferred Stock and the Common Stock, and as Rights Agent
under the Rights Agreement (as defined below).
FORM OF DEBENTURES
The Debentures will be issued in fully registered form, without coupons.
Investors may elect to hold their Debentures directly or, subject to the rules
and procedures of DTC described below, hold interests in a global Debenture (the
"Global Debenture") registered in the name of DTC or its nominee.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the Banking Law of the State of New York, a member of
the Federal Reserve System, a "clearing corporation" within the meaning of the
New York Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provisions of section 17A of the Exchange Act. DTC holds securities that its
participants (the "Participants") deposit with DTC and facilitates the clearance
and settlement of securities transactions among its Participants in such
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations, some of
whom (and/or their representatives) own DTC. Access to DTC's book-entry system
is also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly. The Rules applicable to DTC and its Participants
are on file with the Commission.
Upon the issuance of a Global Debenture, DTC will credit on its book-entry
registration and transfer system, the principal amount of the Debentures
represented by such Global Debenture to the accounts of institutions that have
accounts with DTC. The accounts to be credited shall be designated by the
holders that sold such Debentures to such Participants. Ownership of beneficial
interests in a Global Debenture will be limited to Participants or persons that
may hold interests through Participants. Ownership of beneficial interests in a
Global Debenture will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC for such Global Debenture and
on the records of Participants (with respect to the interests of persons holding
through Participants). So long as DTC, or its nominee, is the owner of a Global
Debenture, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Debentures represented by such Global Debenture for all
purposes under the Indenture.
Each person owning a beneficial interest in a Global Debenture must rely on
the procedures of DTC and, if such person is not a Participant, on the
procedures of the Participant through which such person owns its interest, to
exercise any rights of a holder under the Indenture. The Company understands
that under existing industry practices, if it requests any action of holders or
if an owner of a beneficial interest in a Global Debenture desires to give or
take any action which a holder is entitled to give or take under the Indenture,
DTC would authorize the Participants holding the relevant beneficial interests
to give or take such action, and such Participants would authorize beneficial
owners owning through such Participants to give or take such action or would
otherwise act upon the instructions of beneficial owners holding through them.
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<PAGE> 36
Principal and interest payments on the Debentures will be made to DTC. The
Company understands that it is DTC's practice to credit of any Participant's
accounts with payments in amounts proportionate to their respective beneficial
interests in the Debentures represented by the Global Debenture as shown on the
records of DTC on the date payment is scheduled to be made, unless DTC has
reason to believe that it will not receive payment on such date. The Company
expects that payments by Participants to owners of beneficial interests in such
Global Debenture 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," and
will be the responsibility of such Participants. Accordingly, although owners
who hold Debentures through Participants will not possess Debentures in
definitive form, the Participants will provide a mechanism by which holders of
Debentures will receive payments and will be able to transfer their interests.
Principal and interest payments on Debentures represented by a Global
Debenture registered in the name of DTC or its nominee will be made to DTC or
its nominee, as the case may be, as the registered owner of such Global
Debenture. None of the Company, the Trustee or any other agent of the Company
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interest in such Global
Debenture or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
If DTC or a successor depository is at any time unwilling or unable to
continue as depository of the Global Debentures and a successor depository is
not appointed by the Company within ninety days, the Company will issue
Certificated Debentures in exchange for the Global Debentures. In addition, the
Company may at any time determine not to have Debentures represented by a Global
Debenture and, in such event, will issue Certificated Debentures in exchange for
the Global Debentures. In either case, an owner of a beneficial interest in a
Global Debenture will be entitled to have Certificated Debentures equal in
principal amount to such beneficial interest registered in its name and will be
entitled to physical delivery of such Certificated Debentures.
SAME-DAY SETTLEMENT IN RESPECT OF GLOBAL DEBENTURES
So long as any Debentures are represented by Global Debentures registered
in the name of DTC or its nominee, such Debentures will trade in DTC's Same-Day
Funds Settlement System, and secondary market trading activity in such
Debentures will therefore be required by DTC to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Debentures.
DESCRIPTION OF COMMON STOCK
The following statements with respect to the capital stock of the Company
are summaries and are subject to the detailed provisions of the Company's
certificate of incorporation, as amended (the "Certificate of Incorporation"),
and by-laws, as amended (the "By-Laws"). These statements do not purport to be
complete, or to give full effect to the provisions of statutory or common law,
and are subject to, and are qualified in their entirety by reference to, the
terms of the Certificate of Incorporation and the By-Laws, copies of which are
filed as exhibits to the Registration Statement and are incorporated by
reference into this Prospectus.
The Certificate of Incorporation authorizes the issuance of 150,000,000
shares of Common Stock. On October 5, 1994, 75,859,602 shares of Common Stock
were outstanding. The Certificate of Incorporation provides that the Company's
Board of Directors (the "Board of Directors") is authorized to provide for the
issuance of shares of preferred stock, from time to time, in one or more series,
and to fix any voting powers, full or limited, and the designations, preferences
and relative, participating, optional or other special rights, applicable to the
shares to be included in any such series and any qualifications, limitations or
restrictions thereon. No shares of preferred stock of the Company (other than
the Preferred Stock) are outstanding as of the date hereof. However, 1,000,000
shares of Series A Junior Participating Preferred Stock of the Company (the
"Junior Preferred Stock") have been authorized and reserved for issuance in
connection with the
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<PAGE> 37
preferred stock purchase rights (the "Rights") described below in "Description
of Rights and Junior Preferred Stock."
VOTING RIGHTS
Each holder of Common Stock is entitled to one vote for each share
registered in his name on the books of the Company on all matters submitted to a
vote of shareholders. Except as otherwise provided by law, the holders of Common
Stock vote as one class. The shares of Common Stock do not have cumulative
voting rights. As a result, subject to the voting rights, if any, of the holders
of any shares of the Company's preferred stock which may at the time be
outstanding, including the Preferred Stock, the holders of Common Stock entitled
to exercise more than 50% of the voting rights in an election of directors can
elect 100% of the directors to be elected if they choose to do so. In such
event, the holders of the remaining Common Stock voting for the election of
directors will not be able to elect any persons to the Board of Directors.
DIVIDEND RIGHTS
Subject to the rights of the holders of any shares of the Company's
preferred stock which may at the time be outstanding, including the Preferred
Stock, holders of Common Stock are entitled to such dividends as the Board of
Directors may declare out of funds legally available therefor. For a description
of contractual provisions and other factors that limit or affect the ability or
contractual right of the Company to pay dividends, see "Description of Preferred
Stock -- Dividends."
With the exception of the dividend of the Rights, no dividends have been
paid on the Common Stock, and, prior to October 1, 1982 (the date as of which
the Company became the parent of American), no dividends had been paid on the
common stock of American after the first quarter of 1980.
DELAWARE GENERAL CORPORATION LAW SECTION 203
As a corporation organized under the laws of the State of Delaware, the
Company is subject to Section 203 of the DGCL which restricts certain business
combinations between the Company and an "interested stockholder" (in general, a
stockholder owning 15% or more of the Company's outstanding voting stock) or its
affiliates or associates for a period of three years following the date on which
the stockholder becomes an "interested stockholder". The restrictions do not
apply if (i) prior to an interested stockholder becoming such, the Board of
Directors approves either the business combination or the transaction in which
the stockholder becomes an interested stockholder, (ii) upon consummation of the
transaction in which any person becomes an interested stockholder, such
interested stockholder owns at least 85% of the voting stock of the Company
outstanding at the time the transaction commences (excluding shares owned by
certain employee stock ownership plans and persons who are both directors and
officers of the Company) or (iii) on or subsequent to the date an interested
stockholder becomes such, the business combination is both approved by the Board
of Directors and authorized at an annual or special meeting of the Company's
shareholders, not by written consent, by the affirmative vote of at least
66 2/3% of the outstanding voting stock not owned by the interested stockholder.
LIQUIDATION RIGHTS AND OTHER PROVISIONS
Subject to the prior rights of creditors and the holders of any preferred
stock which may be outstanding from time to time, including the Preferred Stock,
the holders of the Common Stock are entitled in the event of liquidation,
dissolution or winding up to share pro rata in the distribution of all remaining
assets.
The Common Stock is not liable to any calls or assessments and is not
convertible into any other securities. The Certificate of Incorporation provides
that the private property of the stockholders shall not be subject to the
payment of corporate debts. There are no redemption or sinking fund provisions
applicable to the Common Stock, and the Certificate of Incorporation provides
that there shall be no preemptive rights.
The Certificate of Incorporation provides that no director of the Company
shall be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for
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<PAGE> 38
liability (i) for any breach of the directors's duty of loyalty to the Company
or its shareholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL or (iv) for any transaction from which the director
derived an improper personal benefit. Section 174 of the DGCL specifies
conditions under which directors of Delaware corporations may be liable for
unlawful dividends or unlawful stock purchases or redemptions.
The Transfer Agent and Registrar for the Common Stock is First Chicago
Trust Company of New York.
DESCRIPTION OF RIGHTS AND JUNIOR PREFERRED STOCK
RIGHTS
On February 13, 1986, the Board of Directors declared a dividend of one
Right for each outstanding share of Common Stock to stockholders of record on
February 24, 1986. Each share of Common Stock issued thereafter and before the
Distribution Date (as defined below) or earlier redemption, exchange or
expiration of the Rights pursuant to the Rights Agreement, dated as of February
13, 1986, as amended (the "Rights Agreement"), between the Company and First
Chicago Trust Company of New York (as successor Rights Agent to J. Henry
Schroder Bank and Trust Company), will also be accompanied by one Right. The
following statements with respect to the Rights are summaries and are subject to
the detailed provisions of the Rights Agreement, which is filed as an exhibit to
the Registration Statement. This summary does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the provisions of
the Rights Agreement, which are incorporated by reference into this Prospectus.
Following the Distribution Date and except as described below, each Right
entitles the registered holder thereof to purchase from the Company one
one-hundredth of a share of Junior Preferred Stock at a price (the "Purchase
Price") of $200 per one one-hundredth of a share of Junior Preferred Stock,
subject to adjustment. See "-- Junior Preferred Stock". The Rights are not
exercisable until the Distribution Date. The Rights will expire on February 29,
1996, unless exercised in connection with a transaction of the type described
below or unless earlier redeemed or exchanged by the Company.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Initially, ownership of the Rights will be evidenced by the Common Stock
certificates representing shares then outstanding, and no separate certificates
representing the Rights (the "Rights Certificates") will be distributed. Until
the Distribution Date (or earlier redemption, exchange or expiration of the
Rights), the Rights will be transferable only with the Common Stock, and the
surrender for transfer of any certificate for Common Stock will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. The Rights will separate from the Common Stock and a Distribution
Date will occur upon the earlier of (i) 10 days following a public announcement
that a person or group of affiliates or associated persons (other than the
Company, its subsidiaries or employee benefit plans thereof) (an "Acquiring
Person") has acquired, or obtained the right to acquire, beneficial ownership of
10% or more of the outstanding Common Stock or (ii) 10 days following the
commencement of or announcement of an intention to make a tender offer or
exchange offer, the consummation of which would result in the Acquiring Person
becoming the beneficial owner of 30% or more of such outstanding Common Stock
(such date being called the Distribution Date). As soon as practicable following
the Distribution Date, Rights Certificates will be mailed to holders of record
of Common Stock as of the close of business on the Distribution Date. After such
time, such separate Rights Certificates alone will evidence the Rights and could
trade independently from the Common Stock.
In the event that any person or group of affiliated or associated persons
becomes the beneficial owner of 10% or more of the outstanding Common Stock,
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person (which will thereafter be void), will thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price of the
Right and in lieu of Junior Preferred Stock, that number of shares of Common
Stock having a market value at the time of the 10% acquisition of two times the
then current Purchase Price.
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<PAGE> 39
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power is acquired, proper provision will be made so that each holder of a Right
shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price of the Right and in lieu of Junior Preferred Stock,
that number of shares of common stock of the acquiring company which at the time
of such transaction would have a market value of two times the then current
Purchase Price.
At any time after any person or group has become an Acquiring Person but
before any person or group becomes the beneficial owner of 50% or more of the
outstanding Common Stock, the Board of Directors may exchange each Right (other
than Rights beneficially owned by the Acquiring Person) for one share of Common
Stock (or one one-hundredth of a share of Junior Preferred Stock), subject to
adjustment.
At any time prior to the time that an Acquiring Person acquires beneficial
ownership of 10% or more of the outstanding Common Stock, the Board of Directors
may redeem the Rights in whole, but not in part, at a price of $.05 per Right
(the "Redemption Price"). Immediately upon the action of the Board of Directors
ordering redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
The Purchase Price payable, and the number of shares of Junior Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment upon the occurrence of certain events with respect to the
Company, including stock dividends, sub-divisions, combinations,
reclassifications, rights or warrants offerings of Junior Preferred Stock at
less than the then current market price and certain distributions of property or
evidences of indebtedness of the Company to holders of Junior Preferred Stock,
all as set forth in the Rights Agreement.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors since the Rights may be redeemed by the Company at $.05 per
Right prior to the time that a person or group has acquired beneficial ownership
of 10% or more of the Common Stock.
JUNIOR PREFERRED STOCK
In connection with the Rights Agreement, 1,000,000 shares of Junior
Preferred Stock have been authorized and reserved for issuance by the Board of
Directors. No shares of Junior Preferred Stock are outstanding as of the date
hereof. The following statements with respect to the Junior Preferred Stock are
summaries and are subject to the detailed provisions of the Certificate of
Incorporation and the certificate of designation relating to the Junior
Preferred Stock, which is filed as an exhibit to the Registration Statement (the
"Junior Preferred Stock Certificate of Designation"). These statements do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, the terms of the Certificate of Incorporation and the Junior
Preferred Stock Certificate of Designation, which are incorporated by reference
in this Prospectus.
Subject to the prior payment of cumulative dividends on any class of
preferred stock ranking senior to the Junior Preferred Stock, a holder of Junior
Preferred Stock will be entitled to cumulative dividends out of funds legally
available therefor, when, as and if declared by the Board of Directors, at a
quarterly rate per share of Junior Preferred Stock equal to the greater of (a)
$5.00 or (b) 100 times (subject to adjustment upon certain dilutive events) the
aggregate per share amount of all cash dividends and 100 times (subject to
adjustment upon certain dilutive events) the aggregate per share amount of all
non-cash dividends or other distributions (other than dividends payable in
Common Stock) declared on Common Stock since the last quarterly dividend payment
date for the Junior Preferred Stock (or since the date of issuance of the Junior
Preferred Stock if no such dividend payment date has occurred).
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A holder of Junior Preferred Stock will be entitled to 100 votes (subject
to adjustment upon certain dilutive events) per share of Junior Preferred Stock
on all matters submitted to a vote of shareholders of the Company. Such holders
will vote together with the holders of Common Stock as a single class.
In the event of a merger or consolidation of the Company which results in
Common Stock being exchanged or changed for other stock, securities, cash and/or
other property, the shares of Junior Preferred Stock shall similarly be
exchanged or changed in an amount per share equal to 100 times (subject to
adjustment upon certain dilutive events) the aggregate amount of stock,
securities, cash and/or other property, as the case may be, into which each
share of Common Stock has been exchanged or changed.
In the event of liquidation, dissolution or winding up of the Company, a
holder of Junior Preferred Stock will be entitled to receive $100 per share,
plus accrued and unpaid dividends, before any distribution may be made to
holders of shares of stock of the Company ranking junior to the Junior Preferred
Stock, and the holders of Junior Preferred Stock are entitled to receive an
aggregate amount per share equal to 100 times (subject to adjustment upon
certain dilutive events) the aggregate amount to be distributed per share to
holders of Common Stock.
The Junior Preferred Stock is not subject to redemption. The terms of the
Junior Preferred Stock provide that the Company is subject to certain
restrictions with respect to dividends and distributions on and redemptions and
purchases of shares of stock of the Company ranking junior to or on a parity
with the Junior Preferred Stock in the event that payments of dividends or other
distributions payable on the Junior Preferred Stock are in arrears.
DESCRIPTION OF PREFERRED STOCK
The following statements with respect to the Preferred Stock are summaries
and are subject to the detailed provisions of the Certificate of Incorporation
and the By-Laws, as well as the certificate of designations relating to the
Preferred Stock (the "Certificate of Designation"). These statements do not
purport to be complete, or to give full effect to the provisions of statutory or
common law, and are subject to, and are qualified in their entirety by reference
to, the terms of the Certificate of Incorporation, the By-Laws, and the
Certificate of Designation, copies of which are filed as exhibits to the
Registration Statement and are incorporated by reference into this Prospectus.
GENERAL
The Certificate of Incorporation provides that the Company's Board of
Directors (the "Board of Directors") is authorized, without stockholder
approval, to provide for the issuance of up to 20,000,000 shares of preferred
stock, from time to time, in one or more series, and to fix any voting powers,
full or limited, and the designations, preferences and relative participating,
optional or other special rights, applicable to the shares to be included in any
such series and any qualifications, limitations or restrictions thereon. Thus,
without stockholder approval, the Company could authorize the issuance of
preferred stock with voting, conversion and other rights that could dilute the
voting power and other rights of holders of the Common Stock and other series of
preferred stock, including the Preferred Stock. No shares of preferred stock of
the Company (other than the Preferred Stock) are outstanding as of the date
hereof. However, 1,000,000 shares of Junior Preferred Stock have been authorized
and reserved for issuance in connection with the Rights described above in
"Description of Rights and Junior Preferred Stock."
The Board of Directors has designated 2,200,000 shares of the Company's
preferred stock as the Preferred Stock. When issued, the Preferred Stock was
fully paid and nonassessable. The holders of the Preferred Stock have no
preemptive rights to subscribe for any additional securities which may be issued
by the Company.
RANKING
The Preferred Stock, with respect to dividend rights and rights on
liquidation, winding up and dissolution of the Company, ranks prior to the
Common Stock and Junior Preferred Stock. While any shares of Preferred
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<PAGE> 41
Stock are outstanding, the Company may not authorize, create or issue any class
of stock that shall, with respect to dividend rights or rights upon liquidation,
winding up and dissolution of the Company, rank prior to the Preferred Stock
without the consent of the holders of two-thirds of the outstanding shares of
Preferred Stock. See "-- Voting Rights" below. The Company may, however, create
additional classes of stock or issue series of preferred stock ranking on a
parity with the Preferred Stock with respect to the payment of dividends or upon
liquidation, dissolution and winding up without the consent of any holder of
Preferred Stock.
DIVIDENDS
Holders of shares of Preferred Stock are entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available therefor,
cash dividends at an annual rate of $30.00 per share (equivalent to $3.00 per
Depositary Share), payable quarterly in February 1, May 1, August 1 and November
1 of each year, except that if any such date is a Saturday, Sunday or legal
holiday then such dividend shall be payable on the next day that is not a
Saturday, Sunday or legal holiday. Each such dividend is payable to holders of
record as they appear on the stock transfer books on such record dates, not more
than 60 nor less than 10 days preceding the payment dates thereof, as are fixed
by the Board of Directors. Dividends have accrued from the date of issuance of
the Preferred Stock. Dividends are cumulative from such date, whether or not in
any dividend period or periods there shall be funds of the Company legally
available for the payment of such dividends. Accumulations of dividends on
shares of Preferred Stock do not bear interest. Dividends payable on the
Preferred Stock for any period greater or less than a full dividend period are
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Dividends payable on the Preferred Stock for each full dividend period are
computed by dividing the annual dividend rate by four.
A certain debt agreement of the Company contains covenants restricting the
declaration or payment of any dividend or the making of any distribution in
respect of the Company's capital stock (other than a dividend or distribution
payable in capital stock of the Company), including Preferred Stock and Common
Stock, or the purchase, redemption or other acquisition or retirement of any
capital stock of the Company, including Preferred Stock and Common Stock, by the
Company or any subsidiary of the Company. At June 30, 1994, under the provisions
of this agreement, all of the retained earnings of the Company were available
for the payment of dividends. In addition, the Indenture relating to the
Debentures will contain a covenant restricting the Company's ability to declare
or pay dividends or distributions on its capital stock or repurchase, redeem or
otherwise acquire shares of its capital stock in certain circumstances as
described in "Description of Debentures -- Interest". There presently are no
other contractual agreements of the Company that limit the payment by the
Company of dividends on shares of Preferred Stock or Common Stock. However,
because the Company is primarily a holding company that conducts its business
through its wholly-owned subsidiaries, the Company's cash flow and consequent
ability to pay dividends on the Preferred Stock and the Common Stock are
primarily dependent upon the earnings of such subsidiaries, particularly
American, and on dividends and other payments therefrom. See "Description of
Debentures -- Subordination."
No full dividends shall be declared or paid or set apart for payment on
stock of the Company of any series ranking, as to dividends, on a parity with
(the "Parity Dividend Stock") or junior to (the "Junior Dividend Stock") the
Preferred Stock unless full dividends for the immediately preceding dividend
period on the Preferred Stock (including any accumulation in respect of unpaid
dividends for prior dividend periods) have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof is
set apart for such payment. When dividends are not so paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Preferred Stock
and any Parity Dividend Stock, dividends upon the Preferred Stock and such
Parity Dividend Stock shall be declared pro rata so that the amount of dividends
declared per share on the Preferred Stock and such Parity Dividend Stock shall
in all cases bear to each other the same ratio that accrued dividends for the
then-current dividend period per share on the shares of Preferred Stock
(including any accumulation in respect of unpaid dividends for prior dividend
periods) and accrued dividends, including required or permitted accumulations,
if any, on shares of such Parity Dividend Stock, bear to each other. Unless full
dividends on the Preferred Stock have been declared and paid or set apart for
payment for the immediately preceding dividend period (including any
accumulation in respect of unpaid dividends for prior
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<PAGE> 42
dividend periods) (a) no dividend or distribution (other than in shares of
Junior Dividend Stock) may be declared, set aside or paid on the Junior Dividend
Stock, (b) the Company may not repurchase, redeem or otherwise acquire any
shares of its Junior Dividend Stock (except by conversion into or exchange for
Junior Dividend Stock and except for a redemption, purchase or other acquisition
of shares of Junior Dividend Stock made for the purpose of an employee incentive
or benefit plan of the Company or any of its subsidiaries) and (c) the Company
may not, directly or indirectly, repurchase, redeem or otherwise acquire any
shares of Preferred Stock or Parity Dividend Stock (except by conversion into or
exchange for Junior Dividend Stock) other than pursuant to a concurrent
redemption of all of the outstanding shares of Preferred Stock or except in
accordance with a purchase or exchange offer made by the Company to all holders
of Preferred Stock and Parity Dividend Stock. The Company does not currently
have outstanding any Parity Dividend Stock.
LIQUIDATION RIGHTS
In the case of the voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, holders of shares of Preferred Stock
will be entitled to receive the liquidation preference of $500 per share
(equivalent to $50 per Depositary Share), plus an amount equal to any accrued
and unpaid dividends to the payment date, before any payment or distribution is
made to the holders of Common Stock or any series or class of stock hereafter
issued that ranks junior as to liquidation rights to the Preferred Stock
("Junior Liquidation Stock"), but the holders of the shares of the Preferred
Stock will not be entitled to receive the liquidation preference of such shares
until the liquidation preference of any other series or class of stock hereafter
issued that ranks senior as to liquidation rights to the Preferred Stock
("Senior Liquidation Stock") has been paid in full. If, upon such voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Company, the assets of the Company are insufficient to pay in full the amounts
payable thereon with respect to the Preferred Stock and any series or classes of
stock ranking on a parity with the Preferred Stock as to liquidation,
dissolution or winding up, the holders of the Preferred Stock and of such other
class or series of stock will share ratably in any such distribution of assets
of the Company (after payment of the liquidation preference of the Senior
Liquidation Stock) first in proportion to their respective liquidation
preferences until such preferences are paid in full, and then in proportion to
their respective amounts of accrued but unpaid dividends. After payment in full
of the liquidation preference of the shares of the Preferred Stock and accrued
dividends, the holders of such shares will not be entitled to any further
participation in any distribution of assets by the Company. Neither the sale of
all or substantially all the assets of the Company, nor the merger or
consolidation of the Company into or with any other corporation, will be deemed
to be a liquidation, dissolution or winding up of the Company.
REDEMPTION
The Preferred Stock is not subject to any mandatory redemption, sinking
fund or other obligation of the Company to redeem or retire the Preferred Stock,
and will not be redeemable prior to February 1, 1996. On and after such date,
the Preferred Stock is redeemable at the option of the Company upon notice at
any time, in whole or in part, at the following redemption prices per share
(expressed as a percentage of the $500 liquidation preference thereof), plus
accrued and unpaid dividends, if any, up to but excluding the redemption date,
if redeemed during the twelve-month period commencing February 1 of the years
indicated:
<TABLE>
<CAPTION>
REDEMPTION REDEMPTION
YEAR PRICE YEAR PRICE
----- ---------- ----- ----------
<S> <C> <C> <C>
1996........................ 104.2% 2000....................... 101.8%
1997........................ 103.6% 2001........................ 101.2%
1998........................ 103.0% 2002........................ 100.6%
1999........................ 102.4% 2003 and thereafter......... 100.0%
</TABLE>
If fewer than all the outstanding shares of Preferred Stock are to be redeemed,
the Company will select those shares to be redeemed by lot or pro rata or in
such manner as the Board of Directors may determine.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of shares of Preferred
Stock to be redeemed at the address shown on the stock
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<PAGE> 43
transfer books. After the redemption date, dividends will cease to accumulate on
the shares of Preferred Stock called for redemption and all rights of the
holders of such shares will terminate, except the right to receive the
redemption price without interest.
VOTING RIGHTS
The holders of the Preferred Stock have no voting rights except as
described below or as required by law.
At any time dividends in an aggregate amount equal to at least six
quarterly dividends on the Preferred Stock (whether or not consecutive) shall
have accrued and be unpaid, the maximum authorized number of directors of the
Company will be increased by two and the holders of the Preferred Stock shall
have the right to a separate class vote (together with the holders of shares of
any Parity Dividend Stock upon which like voting rights have been conferred and
are exercisable ("Voting Parity Stock")) to elect two members of the Board of
Directors at the next annual meeting of stockholders and thereafter until
dividends on the Preferred Stock have been paid or declared and set apart for
payment. Upon payment or declaration and setting apart of funds for payment of
all such dividends in arrears, the term of office of each director elected will
immediately terminate and the number of directors constituting the entire Board
of Directors of the Company will be reduced by the number of directors elected
by the holders of the Preferred Stock and Voting Parity Stock.
Additionally, without the affirmative vote of the holders of two-thirds of
the shares of Preferred Stock then outstanding (voting separately as a class
together with any Voting Parity Stock), the Company may not, either directly or
indirectly or through merger or consolidation with any other corporation, (i)
approve the authorization, creation or issuance of, or an increase in the
authorized or issued amount of, any class or series of stock ranking prior to
the shares of Preferred Stock in rights and preferences or any security
convertible into any such class or series of stock, or (ii) amend, alter or
repeal its Certificate of Incorporation or the Certificate of Designation so as
to materially and adversely affect the preferences, rights, powers, privileges,
qualifications or restrictions of the Preferred Stock. An amendment which
increases the number of authorized shares of or authorizes the creation or
issuance of other classes or series of preferred stock ranking junior to or on a
parity with the Preferred Stock with respect to the payment of dividends or
distribution of assets on liquidation, dissolution or winding up shall not be
considered to be such an adverse change.
CONVERSION
Shares of the Preferred Stock are convertible at the option of the holder
thereof at any time into such number of whole shares of Common Stock as is equal
to the aggregate liquidation preference of the shares of Preferred Stock
surrendered for conversion divided by the conversion price of $78.75 per share
of Common Stock, subject to adjustment as described below. Shares of Preferred
Stock surrendered for conversion during the period after any dividend payment
record date and prior to the corresponding dividend payment date must be
accompanied by payment of an amount equal to the dividend payable on such shares
on such dividend payment date. Shares of Preferred Stock called for redemption
will not be convertible after the close of business on the business day
preceding the date fixed for redemption, unless the Company defaults in payment
of the redemption price.
The initial conversion price of $78.75 per share of Common Stock is subject
to adjustment (under formulae set forth in the Certificate of Designation) in
certain events, including: (i) the issuance of Common Stock as a dividend or
distribution on Common Stock of the Company; (ii) certain subdivisions and
combinations of the Common Stock; (iii) the issuance to all holders of Common
Stock of certain rights or warrants to purchase Common Stock; (iv) the
distribution to all holders of Common Stock of shares of capital stock of the
Company (other than Common Stock) or evidences of indebtedness of the Company or
assets (including securities, but excluding those rights, warrants, dividends
and distributions referred to above and dividends and distributions in
connection with the liquidation, dissolution or winding up of the Company or
paid in cash); (v) distributions consisting of cash, excluding any quarterly
cash dividend on the Common Stock to the extent that the aggregate cash dividend
per share of Common Stock in any quarter does not exceed the greater of (x) the
amount per share of Common Stock of the next preceding quarterly cash dividend
on the Common Stock to the extent that such preceding quarterly dividend did not
require an
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<PAGE> 44
adjustment of the Conversion Price pursuant to this clause (v) (as adjusted to
reflect subdivisions or combinations of the Common Stock), and (y) 3.75 percent
of the average of the daily Closing Prices (as defined in the Certificate of
Designation) of the Common Stock for the ten consecutive Trading Days (as
defined in the Certificate of Designation) immediately prior to the date of
declaration of such dividend, and excluding any dividend or distribution in
connection with the liquidation, dissolution or winding up of the Company; and
(vi) payment in respect of a tender or exchange offer by the Company or any
subsidiary of the Company for the Common Stock to the extent that the cash and
value of any other consideration included in such payment per share of Common
Stock exceeds the current market price per share of Common Stock on the last
Trading Day preceding the date on which the Company becomes irrevocably
obligated to make such payment. If any adjustment is required to be made as set
forth in clause (v) above as a result of a distribution which is a quarterly
dividend, such adjustment would be based upon the amount by which such
distribution exceeds the amount of the quarterly cash dividend permitted to be
excluded pursuant to such clause (v). If an adjustment is required to be made as
set forth in (v) above as a result of a distribution which is not a quarterly
dividend, such adjustment would be based upon the full amount of such
distribution.
In the event that the rights issued pursuant to the Rights Agreement (as
defined above) are separately distributed to holders of Common Stock upon the
occurrence of certain events specified in the Rights Agreement or otherwise,
such that holders of Preferred Stock would thereafter not be entitled to receive
any such rights in respect of the Common Stock issuable upon conversion of such
Preferred Stock, the conversion price of the Preferred Stock will be adjusted as
provided in clause (iv) of the preceding paragraph.
The Company from time to time may to the extent permitted by law reduce the
conversion price by any amount for any period of at least 20 days, in which case
the Company shall give at least 15 days' notice of such reduction, if the Board
of Directors has made a determination that such reduction would be in the best
interests of the Company, which determination shall be conclusive. The Company
may, at its option, make such reductions in the conversion price, in addition to
those set forth above, as the Board of Directors deems advisable to avoid or
diminish any income tax to holders of Common Stock resulting from any dividend
or distribution of stock (or rights to acquire stock) or from any event treated
as such for income tax purposes.
If any transaction shall occur (including without limitation (i) any
recapitalization or reclassification of shares of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination of the Common Stock),
(ii) any consolidation or merger of the Company with or into another person or
any merger of another person into the Company (other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of Common
Stock), (iii) any sale or transfer of all or substantially all of the assets of
the Company, or (iv) any compulsory share exchange pursuant to which either
shares of Common Stock shall be converted into the right to receive other
securities, cash or other property, or, in the case of a sale or transfer of all
or substantially all of the assets of the Company, the holders of Common Stock
shall be entitled to receive other securities, cash or other property, then
appropriate provision shall be made so that the holder of each share of
Preferred Stock then outstanding shall have the right thereafter to convert such
share only into (x) in the case of any such transaction that does not constitute
a Common Stock Fundamental Change (as defined below) and subject to funds being
legally available for such purpose under applicable law at the time of such
conversion, the kind and amount of the securities, cash or other property that
would have been receivable upon such recapitalization, reclassification,
consolidation, merger, sale, transfer or share exchange by a holder of the
number of shares of Common Stock issuable upon conversion of such share of
Preferred Stock immediately prior to such recapitalization, reclassification,
consolidation, merger, sale, transfer or share exchange, after giving effect, in
the case of any Non-Stock Fundamental Change (as defined below), to any
adjustment in the conversion price in accordance with clause (i) of the
following paragraph, and (y) in the case of any such transaction that
constitutes a Common Stock Fundamental Change, common stock of the kind received
by holders of Common Stock as a result of such Common Stock Fundamental Change
in an amount determined in accordance with clause (ii) of the following
paragraph. The company formed by such consolidation or resulting from such
merger or that acquires such assets or that acquires the Company's shares, as
the case may be, shall make provisions in its certificate or articles of
incorporation or other constituent document to establish such right. Such
certificate or articles of incorporation or other constituent document shall
provide
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<PAGE> 45
for adjustments that, for events subsequent to the effective date of such
certificate or articles of incorporation or other constituent documents, shall
be as nearly equivalent as may be practicable to the relevant adjustments
provided for in the preceding paragraphs and in this paragraph.
Notwithstanding any other provision in the preceding paragraphs to the
contrary, if any Fundamental Change (as defined below) occurs, then the
conversion price in effect will be adjusted immediately after such Fundamental
Change as follows:
(1) in the case of a Non-Stock Fundamental Change, the conversion
price of the shares of Preferred Stock immediately following such Non-Stock
Fundamental Change shall be the lower of (A) the conversion price in effect
immediately prior to such Non-Stock Fundamental Change, but after giving
effect to any other prior adjustments effected pursuant to the preceding
paragraphs, and (B) the product of (1) the greater of the Applicable Price
(as defined below) and the then applicable Reference Market Price (as
defined below) and (2) a fraction, the numerator of which is $500 and the
denominator of which is (x) the amount of the redemption price for one
share of Preferred Stock if the redemption date were the date of such
Non-Stock Fundamental Change (or, for the twelve-month periods commencing
February 1, 1994 and 1995, the product of 105.4% and 104.8%, respectively,
times $500) plus (y) any then-accumulated and unpaid dividends on such
Preferred Stock; and
(2) in the case of a Common Stock Fundamental Change, the conversion
price of the shares of Preferred Stock immediately following such Common
Stock Fundamental Change shall be the conversion price in effect
immediately prior to such Common Stock Fundamental Change, but after giving
effect to any other prior adjustments effected pursuant to the preceding
paragraphs, multiplied by a fraction, the numerator of which is the
Purchaser Stock Price (as defined below) and the denominator of which is
the Applicable Price; provided, however, that in the event of a Common
Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of Common Stock is common stock of the
successor, acquiror, or other third party (and cash, if any, paid with
respect to any fractional interests in such common stock resulting from
such Common Stock Fundamental Change) and (B) all of the Common Stock of
the Company shall have been exchanged for, converted into, or acquired for,
common stock of the successor, acquiror or other third party (and any cash
with respect to fractional interests), the conversion price of the shares
of Preferred Stock immediately following such Common Stock Fundamental
Change shall be the conversion price in effect immediately prior to such
Common Stock Fundamental Change multiplied by a fraction, the numerator of
which is one (1) and the denominator of which is the number of shares of
common stock of the successor, acquiror, or other third party received by a
holder of one share of Common Stock as a result of such Common Stock
Fundamental Change.
Depending upon whether a Fundamental Change is a Non-Stock Fundamental
Change or a Common Stock Fundamental Change, a holder may receive significantly
different consideration upon conversion. In the event of a Non-Stock Fundamental
Change, the holder has the right to convert shares of Preferred Stock into the
kind and amount of the shares of stock and other securities or property or
assets (including cash), except as otherwise provided above, as is determined by
the number of shares of Common Stock receivable upon conversion at the
conversion price as adjusted in accordance with clause (i) of the preceding
paragraph. However, in the event of a Common Stock Fundamental Change in which
less than 100% of the value of the consideration received by a holder of Common
Stock is common stock of the successor, acquiror or other third party, a holder
of a share of Preferred Stock who converts such share following the Common Stock
Fundamental Change will receive consideration in the form of such common stock
only, whereas a holder who converted such share prior to the Common Stock
Fundamental Change would have received consideration in the form of such common
stock as well as any other securities or assets (which may include cash)
issuable upon conversion of such share of Preferred Stock immediately prior to
such Common Stock Fundamental Change.
The term "Applicable Price" means (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by a holder of one share of Common Stock and (ii) in
the event of any other Non-Stock Fundamental Change or any Common Stock
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<PAGE> 46
Fundamental Change, the average of the reported last sale price for one share of
the Common Stock (determined as provided in the Certificate of Designation)
during the 10 Trading Days immediately prior to the record date for the
determination of the holders of Common Stock entitled to receive cash,
securities, property or other assets in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change or, if there is no such
record date, prior to the date upon which the holders of the Common Stock shall
have the right to receive such cash, securities, property or other assets.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Common
Stock consists of common stock that, for the 10 Trading Days immediately prior
to such Fundamental Change, has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on the Nasdaq National Market; provided, however, that a Fundamental
Change shall not be a Common Stock Fundamental Change unless either (i) the
Company continues to exist after the occurrence of such Fundamental Change and
the outstanding shares of Preferred Stock continue to exist as outstanding
shares of Preferred Stock, or (ii) not later than the occurrence of such
Fundamental Change, the outstanding shares of Preferred Stock are converted into
or exchanged for shares of convertible preferred stock of a corporation
succeeding to the business of the Company, which convertible preferred stock has
powers, preferences and relative, participating, optional or other rights, and
qualifications, limitations and restrictions substantially similar to those of
the Preferred Stock.
The term "Fundamental Change" means the occurrence of any transaction or
event or series of transactions or events pursuant to which all or substantially
all of the Common Stock of the Company shall be exchanged for, converted into,
acquired for or shall constitute solely the right to receive cash, securities,
property or other assets (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise); provided, however, in the case of any such
series of transactions or events, for purposes of adjustment of the conversion
price, such Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock of the Company shall have been exchanged
for, converted into, or acquired for, or shall constitute solely the right to
receive, such cash, securities, property or other assets, but the adjustment
shall be based upon the consideration that the holders of Common Stock received
in the transaction or event as a result of which more than 50% of the Common
Stock of the Company shall have been exchanged for, converted into, or acquired
for, or shall constitute solely the right to receive, such cash, securities,
property or other assets; and provided, further, that such term does not include
(i) any such transaction or event in which the Company and/or any of its
subsidiaries are the issuers of all the cash, securities, property or other
assets exchanged, acquired or otherwise issued in such transaction or event, or
(ii) any such transaction or event in which the holders of Common Stock receive
securities of an issuer other than the Company or any of its subsidiaries if,
immediately following such transaction or event, such holders hold a majority of
the securities having the power to vote normally in the election of directors of
such other issuer outstanding immediately following such transaction or other
event.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the reported last sale price for one share of
the common stock received by holders of Common Stock (determined as provided in
the Certificate of Designation) in such Common Stock Fundamental Change during
the 10 Trading Days immediately prior to the date fixed for the determination of
the holders of Common Stock entitled to receive such common stock or, if there
is no such date, prior to the date upon which the holders of Common Stock shall
have the right to receive such common stock.
The term "Reference Market Price" shall initially mean $42.3333 and, in the
event of any adjustment to the conversion price other than as a result of a
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the conversion price after giving
effect to any such
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<PAGE> 47
adjustment shall always be the same as the ratio of the initial Reference Market
Price to the initial conversion price of $78.75 per share.
No adjustment to the conversion price will be required to be made in any
case until cumulative adjustments amount to 1% or more of the conversion price.
DESCRIPTION OF DEPOSITARY SHARES
The Depositary Shares were sold by the Company on February 4, 1993 in
reliance on Section 4(2) under the Securities Act to Morgan Stanley & Co.
Incorporated and Goldman, Sachs & Co. (the "Initial Purchasers"), who informed
the Company that they resold the Depositary Shares (i) within the United States
to Qualified Institutional Buyers (as defined in Rule 144A under the Securities
Act) in reliance on Rule 144A under the Securities Act, (ii) within the United
States to a limited number of other institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that, prior
to their purchase, delivered a letter to the Initial Purchasers and the Company
containing certain representations and agreements and (iii) outside the United
States to certain persons other than U.S. persons in reliance on Regulation S
under the Securities Act.
GENERAL
Each Depositary Share represents 1/10 of a share of Preferred Stock. The
Company has deposited the shares of Preferred Stock underlying the Depositary
Shares pursuant to the Deposit Agreement. Subject to the terms of the Deposit
Agreement, each owner of Depositary Shares is entitled, in proportion to the
applicable fractional interest in a share of Preferred Stock underlying such
Depositary Shares, to all the rights and preferences of the Preferred Stock
underlying such Depositary Shares (including dividend, voting, redemption,
conversion and liquidation rights).
The Depositary Shares are evidenced by receipts ("Depositary Receipts")
issued pursuant to the Deposit Agreement. Immediately following the issuance and
delivery of the Preferred Stock by the Company to the Depositary, the Company
caused the Depositary to issue, on behalf of the Company, the Depositary
Receipts evidencing the Depositary Shares to the initial purchasers thereof.
Copies of the Deposit Agreement and Form of Depositary Receipt may be obtained
from the Company upon request, and the following summary is qualified in its
entirety by reference thereto.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date, subject to certain obligations of holders to file proofs, certificates and
other information and to pay certain charges and expenses to the Depositary.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares in
proportion to the numbers of Depositary Shares owned by such holders on the
relevant record date, subject to certain obligations of holders to file proofs,
certificates and other information and to pay certain charges and expenses to
the Depositary, unless the Depositary determines that it is not feasible to make
such distribution, in which case the Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.
WITHDRAWAL OF STOCK
Upon surrender of Depositary Receipts at the corporate trust office of the
Depositary (unless the related Depositary Shares have previously been called for
redemption), a holder of Depositary Shares evidenced thereby is entitled to have
the Depositary deliver to such holder at such office to or upon his order, the
number of whole shares of Preferred Stock underlying the Depositary Shares
evidenced by the surrendered Depositary Receipts, and any money or other
property represented by such Depositary Shares. Holders of Depositary
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Shares will be entitled to receive whole shares of Preferred Stock on the basis
of one share of Preferred Stock for each ten Depositary Shares, but holders of
such whole shares of Preferred Stock will not thereafter be entitled to receive
Depositary Shares therefor. If the Depositary Receipts delivered by the holder
evidence a number of Depositary Shares in excess of the number of Depositary
Shares representing the number of whole shares of Preferred Stock to be
withdrawn, the Depositary will deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares. The
Depositary also acts as Transfer Agent and Registrar for the Preferred Stock.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems shares of Preferred Stock held by the
Depositary, the Depositary will redeem as of the same redemption date the number
of Depositary Shares relating to the shares of Preferred Stock so redeemed,
provided the Company shall have paid in full to the Depositary the redemption
price of the Preferred Stock to be redeemed plus an amount equal to any accrued
and unpaid dividends thereon to the date fixed for redemption. The redemption
price per Depositary Share will be equal to 1/10 of the redemption price and any
other amounts per share payable with respect to such shares of Preferred Stock.
If fewer than all of the Depositary Shares are to be redeemed, the Depositary
Shares to be redeemed will be selected by lot, pro rata or other equitable
method, in each case as may be determined by the Company.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of voting rights pertaining to the number of shares of Preferred Stock
underlying such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the number of shares of Preferred Stock
underlying such Depositary Shares in accordance with such instructions, and the
Company will agree to take all reasonable action which may be deemed necessary
by the Depositary in order to enable the Depositary to do so. The Depositary
will abstain from voting shares of Preferred Stock to the extent it does not
receive special instructions from the holders of Depositary Shares relating to
such Preferred Stock.
CONVERSION OF PREFERRED STOCK
The Depositary Shares, as such, are not convertible into Common Stock or
any other securities or property of the Company. Nevertheless, the Depositary
Receipts may be surrendered by holders thereof to the Depositary with written
instructions to the Depositary to instruct the Company to cause conversion of
the Preferred Stock represented by the Depositary Shares evidenced by such
receipts into whole shares of Common Stock, and the Company has agreed that upon
receipt of such instructions and any amounts payable in respect thereof, it will
cause the conversion thereof utilizing the same procedures as those provided for
delivery of Preferred Stock to effect such conversions. If the Depositary Shares
represented by a Depositary Receipt are to be converted in part only, a new
Depositary Receipt or Receipts will be issued for any Depositary Shares not to
be converted. See "Description of Preferred Stock -- Conversion."
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the existing holders of Depositary Shares
will not be effective unless such amendment has been approved by the record
holders of at least a majority (or, in the case of amendments relating to or
affecting rights to receive dividends or distributions, or voting, redemption or
conversion rights, two-thirds) of the Depositary Shares then outstanding.
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The Deposit Agreement may be terminated by the Company upon not less that
60 days' notice whereupon the Depositary shall deliver or make available to each
holder of Depositary Receipts, upon surrender of the Depositary Receipts held by
such holder, such number of whole or fractional shares of Preferred Stock
represented by such receipts. The Deposit Agreement will terminate automatically
if (i) all outstanding Depositary Shares relating thereto have been redeemed,
(ii) there has been a final distribution in respect of the Preferred Stock in
connection with any liquidation, dissolution or winding up of the Company and
such distribution has been distributed to the holders of Depositary Receipts or
(iii) each share of Preferred Stock shall have been converted into or exchanged
for shares of Common Stock.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay the fees and expenses of the Depositary in connection with the
performance of its duties under the Deposit Agreement. Holders of Depositary
Receipts will pay transfer and other taxes and governmental charges and such
other charges as are expressly provided in the Deposit Agreement to be for their
accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company notice
of its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary, which successor Depositary must be appointed within 60
days after delivery of the notice of resignation or removal and must be a bank
or trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Depositary will forward to holders of Depositary Shares any reports and
communications from the Company which are received by the Depositary.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performing their
duties thereunder without negligence or willful misconduct, and the Company and
the Depositary will not be obligated to prosecute or defend any legal proceeding
in respect of any Depositary Shares or Preferred Stock unless satisfactory
indemnity is furnished. The Company and the Depositary will be entitled to rely
on advice of counsel and accountants, on information provided by persons
presenting Preferred Stock for deposit, holders of Depositary Shares or other
persons believed to be authorized or competent and on documents believed to be
genuine.
In the event the Depositary shall receive conflicting claims, requests or
instructions from any holders of Depositary Receipts, on the one hand, and the
Company, on the other hand, the Depositary shall be entitled to act on such
claims, requests or instructions received from the Company.
BOOK-ENTRY, DELIVERY AND FORM
The Depositary Receipts have been issued in fully registered form, without
coupons. Depositary Shares held by "qualified institutional buyers", as defined
in Rule 144A under the Securities Act ("QIBs"), but not by other purchasers, are
evidenced by a global Depositary Receipt (the "Global Certificate") which has
been deposited with DTC and registered in the name of Cede & Co. ("Cede") as
DTC's nominee. Except as set forth below, the Global Certificate may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee.
QIBs may hold their interests in the Global Certificate directly through
DTC, or indirectly through organizations which are participants in DTC (the
"Participants"). Transfers between Participants will be effected in the ordinary
way in accordance with DTC rules and will be settled in New York Clearing House
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funds. The laws of some states require that certain persons take physical
delivery in definitive form of securities. Consequently, the ability to transfer
beneficial interests in the Global Certificate to such persons may be limited.
QIBs who are not Participants may beneficially own interests in the Global
Certificate held by DTC only through Participants or certain banks, brokers,
dealers, trust companies and other parties that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants"). So long as Cede, as the nominee of DTC, is the
registered owner of the Global Certificate, Cede for all purposes will be
considered the sole holder of the Global Certificate. Except as provided below,
owners of beneficial interests in the Global Certificate will not be entitled to
have certificates registered in their names, will not receive or be entitled to
receive physical delivery of certificates in definitive form, and will not be
considered the holders thereof.
Payment of dividends and the redemption price of the Global Certificate
will be made to Cede, the nominee for DTC, as the registered owner of the Global
Certificate by wire transfer of immediately available funds. Neither the
Company, the Depositary nor any Transfer Agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Certificate or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
With respect to any payment of dividends on or the redemption price of the
Global Certificate, DTC's practice is to credit Participants' accounts on the
payment date therefor with payments in amounts proportionate to their respective
beneficial interests in the shares represented by the Global Certificate as
shown on the records of DTC, unless DTC has reason to believe that it will not
receive payment on such payment date. Payments by Participants to owners of
beneficial interests in shares represented by the Global Certificate held
through such Participants will be the responsibility of such Participants, as is
now the case with securities held for the accounts of customers registered in
"street name."
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and banks, the ability of a person having a
beneficial interest in shares represented by the Global Certificate to pledge
such interest to persons or entities that do not participate in the DTC system,
or otherwise take actions in respect of such interest, may be affected by the
lack of a physical certificate evidencing such interest.
Neither the Company nor the Transfer Agent will have any responsibility for
the performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations.
If DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by the Company within 90 days, the Company
will cause Depositary Receipts to be issued in definitive form in exchange for
the Global Certificate.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material United States federal
income tax considerations relevant to an exchange of Preferred Stock for
Debentures and the ownership, disposition and conversion of Debentures by
persons acquiring Debentures pursuant to the Exchange Offer. To the extent it
relates to matters of law or legal conclusion, this summary constitutes the
opinion of Debevoise & Plimpton, special counsel to the Company. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations (including Proposed Regulations and Temporary Regulations)
promulgated thereunder, Internal Revenue Service ("IRS") rulings, official
pronouncements and judicial decisions, all as in effect on the date hereof and
all of which are subject to change, possibly with retroactive effect, or
different interpretations. This summary is applicable only to holders who are
United States persons for federal income tax purposes and who hold Preferred
Stock as a capital asset and who will hold Debentures and any Common Stock
received on conversion of Debentures as capital assets. For a discussion of
certain material United States federal income and estate tax considerations that
may be relevant to non-United States persons, see "Certain Federal Tax
Considerations for Non-United States Persons".
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This summary does not discuss all the tax consequences that may be relevant
to a particular holder in light of the holder's particular circumstances and it
is not intended to be applicable in all respects to all categories of investors,
some of whom--such as insurance companies, tax-exempt persons, financial
institutions, regulated investment companies, dealers in securities or
currencies, persons that hold Preferred Stock or the Debentures received in the
exchange as a position in a "straddle", as part of a "synthetic security",
"hedge", "conversion transaction" or other integrated investment or persons
whose functional currency is other than United States dollars--may be subject to
different rules not discussed below. In addition, this summary does not address
any state, local or foreign tax considerations that may be relevant to a
holder's decision to exchange Preferred Stock for Debentures pursuant to the
Exchange Offer.
References in this discussion and below under the caption "Certain Federal
Tax Considerations For Non-United States Persons" to a holder of Preferred Stock
includes a holder of Depositary Shares.
ALL PREFERRED STOCK HOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE EXCHANGE
OF PREFERRED STOCK FOR DEBENTURES AND OF THE OWNERSHIP, CONVERSION AND
DISPOSITION OF DEBENTURES RECEIVED IN THE EXCHANGE IN LIGHT OF THEIR OWN
PARTICULAR CIRCUMSTANCES.
EXCHANGE OF PREFERRED STOCK FOR DEBENTURES
The exchange of Preferred Stock for Debentures pursuant to the Exchange
Offer will be a taxable event. If, with respect a particular holder, such
exchange satisfies one of the tests of section 302 of the Code described below,
it will be treated as a transaction in which capital gain or loss is recognized,
rather than as a dividend. The tests under Section 302 of the Code are applied
on a shareholder-by-shareholder basis; therefore, whether an exchange will be
treated as a transaction in which capital gain or loss is recognized or as a
dividend with respect to a particular holder will depend on that holder's
particular facts and circumstances. If the exchange of Preferred Stock for
Debentures is treated as a transaction in which capital gain or loss is
recognized with respect to a particular holder, the capital gain or loss will be
based on the difference between the fair market value of the Debentures received
in the exchange and such holder's adjusted tax basis in the Preferred Stock
surrendered therefor. Such capital gain or loss will be long-term capital gain
or loss if the Preferred Stock surrendered in the exchange was held by such
holder for more than one year. The exchanging holder's tax basis in the
Debentures received in the exchange will equal the fair market value of such
Debentures at the time of the exchange and the holding period for such
Debentures will begin on the day after the day on which the Debentures are
acquired by such holder.
Pursuant to section 302 of the Code, an exchange will be treated as a
transaction in which gain or loss is recognized if, after giving effect to the
constructive ownership rules of section 318 of the Code, the exchange (i)
represents a "complete termination" of the exchanging holder's stock interest in
the Company, (ii) is "substantially disproportionate" with respect to the
exchanging holder or (iii) is "not essentially equivalent to a dividend" with
respect to the exchanging holder, all within the meaning of section 302(b) of
the Code. Under the constructive ownership rules of section 318 of the Code, a
holder of a Debenture will be treated as owning the Common Stock into which such
Debenture is convertible. Accordingly, an exchange pursuant to the Exchange
Offer could not, standing alone, satisfy the "complete termination" or the
"substantially disproportionate" tests. An exchange will be "not essentially
equivalent to a dividend" as to a particular holder if it results in a
"meaningful reduction" in such holder's interest in the Company (after
application of the constructive ownership rules of section 318 of the Code).
Because the conversion price of a Debenture is higher than that of the
equivalent amount of Preferred Stock to be surrendered therefor, an exchange of
Preferred Stock for Debentures would, standing alone, result in some reduction
in an exchanging holder's constructive stock interest in the Company. There is
no authority, however, on whether such reduction would constitute a "meaningful
reduction" in a particular holder's interest in the Company. No assurance can be
given that any of these tests will be satisfied. EACH HOLDER SHOULD CONSULT ITS
OWN TAX ADVISOR AS TO ITS ABILITY TO SATISFY ANY OF THE FOREGOING TESTS,
POSSIBLY BY DISPOSING OF A PORTION OF ITS STOCK INTEREST IN THE COMPANY
CONTEMPORANE-
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OUSLY, AND AS PART OF AN INTEGRATED PLAN, WITH THE EXCHANGE OF PREFERRED STOCK
FOR DEBENTURES, IN LIGHT OF ITS OWN PARTICULAR CIRCUMSTANCES.
If an exchange is treated as a dividend with respect to a particular
exchanging holder under section 302 of the Code, such holder (i) will not
recognize any loss on the exchange and (ii) will recognize dividend income
(rather than capital gain) in an amount equal to the fair market value of the
Debentures (and any cash in lieu of fractional Debentures) received (without
regard to such holder's basis in the Preferred Stock surrendered in the
exchange), to the extent of its proportionate share of the Company's current or
accumulated earnings and profits. Such holder's tax basis in the Debentures
generally will equal the fair market value of such Debentures at the time of the
exchange (without regard to such holder's basis in the Preferred Stock
surrendered in the exchange). The holder's adjusted tax basis in its Preferred
Stock surrendered in the exchange will be transferred to any remaining Preferred
Stock held by such holder or, if such holder does not retain any Preferred
Stock, to any Common Stock held by such holder. If the holder does not retain
any stock ownership in the Company, it is unclear whether the holder will be
permitted to add such basis to any Debentures received in the exchange or will
lose such basis entirely. The amount treated as a dividend will qualify for the
70% dividends received deduction for corporate shareholders, subject to the
minimum holding period requirement under section 246(c) of the Code and other
applicable requirements. Section 1059 of the Code, however, would require a
corporate shareholder to reduce its tax basis (and possibly to recognize gain)
in any stock of the Company held by it by the nontaxed portion of any such
dividend. The holding period for the Debentures will begin on the day after the
day on which the Debentures are acquired by the exchanging holder.
INTEREST AND ORIGINAL ISSUE DISCOUNT ON DEBENTURES
In accordance with sections 1271 through 1275 of the Code and the final
Treasury Regulations promulgated thereunder (the "OID Regulations"), a debt
instrument bears original issue discount ("OID") if its "stated redemption price
at maturity" exceeds its "issue price" by more than a de minimis amount. The
issue price of the Debentures will be their fair market value at the time of the
exchange. The stated redemption price at maturity of a debt instrument generally
includes all amounts payable other than "qualified stated interest" (i.e.,
payments that are unconditionally required to be paid at least annually at a
single fixed rate over the term of the instrument). Because the Company has the
right to elect to extend the interest payment period to a period of up to 20
consecutive quarterly periods, none of the payments of stated interest on the
Debentures will be qualified stated interest. Thus, the Debentures will have OID
in an amount equal to the excess of all payments required to be made under the
Debentures over their issue price. A holder will be required to include OID in
income, based on a constant yield method, before the receipt of cash
attributable to such income, regardless of such holder's regular method of
accounting. As a result, during any period in which the Company has elected to
extend the interest payment period a holder generally would be required to
include OID in income but would not receive cash from the Company sufficient to
pay tax thereon. A holder will not recognize any income upon the receipt of a
payment of stated interest on a Debenture; instead, a holder's basis in the
Debentures will be increased by the amount of OID includible in income and
reduced by all payments made on the Debentures.
The amount of OID includible in income is the sum of the daily portions of
OID with respect to such Debenture for each day during the taxable year on which
such holder held such Debenture. The daily portion of OID on a Debenture is
determined by allocating to each day in any "accrual period" a ratable portion
of the OID allocable to such accrual period. The term "accrual period" means a
period of any length selected by the holder, provided that each accrual period
must be no longer than one year and each scheduled payment date of principal or
interest on a Debenture must occur either on the final day of an accrual period
or the first day of an accrual period. The amount of OID allocable to an accrual
period is the product of the "adjusted issue price" at the beginning of the
accrual period and the "yield to maturity" of the Debenture. For the first
accrual period, the adjusted issue price of the Debentures will be their issue
price. Thereafter, the adjusted issue price of a Debenture generally will be its
issue price increased by any OID previously includible in the gross income of
the holder and decreased by any payment previously made on the Debenture.
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Under the OID Regulations, in computing the yield to maturity of an
instrument the issuer is deemed to elect to exercise any option available to it
under the instrument if doing so will minimize the yield on the instrument. If
the issuer does not exercise such option, then, solely for purposes of the
accrual of OID, the yield and maturity of the instrument are redetermined by
treating the instrument as reissued for an amount equal to its adjusted issue
price. Thus, for example, in the case of the first accrual period with respect
to the Debentures, the OID Regulations require that the yield to maturity of the
Debentures be computed assuming that the Company would elect to extend the
interest payment period to the maximum 20 consecutive quarters (because doing so
would minimize the yield on the Debentures). Assuming quarterly accrual periods,
the aggregate amount of OID for the first quarterly accrual period would equal
the product of the issue price and the yield to maturity (as so determined). If,
contrary to this assumption under the OID Regulations, the Company does not
elect to extend the interest payment period and pays the stated interest at the
end of the first quarterly interest payment period, the instrument will be
treated, solely for OID purposes, as having been reissued on such payment date.
The yield to maturity would then be recomputed, again assuming that the Company
would elect to extend the interest payment period to the maximum 20 consecutive
quarters (again, because doing so would minimize the yield on the Debentures).
The amount of OID for this second accrual period would equal the product of such
recomputed yield to maturity and the adjusted issue price on the date of such
deemed reissuance (i.e., the issue price plus the amount of previously accrued
OID minus the interest previously paid on the Debentures). In the case of the
final accrual period, the allocable OID is the difference between the amount
payable at maturity and the adjusted issue price at the beginning of the accrual
period.
If an exchange of Preferred Stock for Debentures is treated as a dividend
to the exchanging holder (see "-- Exchange of Preferred Stock for Debentures",
above), and the exchanging holder's basis in the Preferred Stock surrendered in
the exchange is transferred to the Debentures, such holder may have acquisition
premium with respect to the Debentures, which would reduce the amount includible
in such holder's income as OID in each taxable year.
SALE OR REDEMPTION OF DEBENTURES
Generally, a sale or redemption of Debentures will result in taxable gain
or loss equal to the difference between the amount realized and the holder's tax
basis in the Debentures. Such gain or loss would be long-term capital gain or
loss if the Debentures were held for more than one year.
CONVERSION OF DEBENTURES
In general, no gain or loss will be recognized on conversion of Debentures
solely into Common Stock. The tax basis for the Common Stock received upon such
conversion will be equal to the tax basis of the Debentures converted (reduced
by the portion of such basis allocable to any fractional Common Stock interest
paid in cash). The holding period for the Common Stock generally will include
the holding period of the Debentures converted. However, the holding period for
the Common Stock allocable to original issue discount accrued during the
holder's holding period for the Debentures converted may be treated as
commencing on the day after the date of the conversion. A holder generally will
recognize gain (or loss) upon a conversion to the extent that any cash paid in
lieu of a fractional share of Common Stock exceeds (or is less than) its tax
basis in such fractional share.
Conversion of the Debentures into cash, property or securities other than
stock of the Company (or stock of a successor to the Company) as a result of a
Fundamental Change or other transaction with similar effect will be treated as a
redemption of the Debentures.
SALE OR DISPOSITION OF COMMON STOCK
A holder will recognize gain or loss on the sale or exchange of Common
Stock received upon conversion of a Debenture equal to the difference between
the amount realized on such sale or exchange and the holder's adjusted tax basis
in the Common Stock sold or exchanged. Such gain or loss would be long-term
capital gain or loss if the holder's holding period for the Common Stock were
more than one year. See "-- Conversion of Debentures".
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ADJUSTMENT OF CONVERSION PRICE
Pursuant to Treasury Regulations promulgated under section 305 of the Code,
a holder of a Debenture will be treated as having received a constructive
distribution from the Company upon an adjustment in the conversion price of the
Debentures if (i) as a result of such adjustment, the proportionate interest of
such holder in the assets or earnings and profits of the Company were increased
and (ii) the adjustment was not made pursuant to a bona fide, reasonable
anti-dilution formula. An adjustment in the conversion price would not be
considered made pursuant to such a formula if the adjustment was made to
compensate for certain taxable distributions with respect to the stock into
which the Debentures are convertible. Thus, under certain circumstances, a
decrease in the conversion price for the Debentures may be taxable to a holder
as a dividend to the extent of the current or accumulated earnings and profits
of the Company. In addition, the failure to adjust fully the conversion price of
the Debentures to reflect distributions of stock dividends with respect to the
Common Stock (or rights to acquire Common Stock) may result in a taxable
dividend to the holders of the Common Stock and holders of rights to acquire
Common Stock.
BACKUP WITHHOLDING
A holder of Preferred Stock, a Debenture or Common Stock issued upon
conversion of a Debenture may be subject to backup withholding at a rate of 31%
with respect to dividends or interest (including OID) on, or the proceeds of a
sale, exchange, or redemption of, such Preferred Stock, Debenture or Common
Stock, as the case may be, unless (i) such holder is a corporation or comes
within certain other exempt categories and, when required, demonstrates this
fact or (ii) provides a taxpayer identification number, certifies as to no loss
of exemption from backup withholding, and otherwise complies with applicable
backup withholding rules.
CERTAIN FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES PERSONS
The following is a general summary of the material United States federal
income and estate tax considerations relevant to the exchange of Preferred Stock
for Debentures by non-United States persons and the ownership, disposition and
conversion of Debentures by non-United States persons acquiring Debentures
pursuant to the Exchange Offer. To the extent it relates to matters of law or
legal conclusion, this summary constitutes the opinion of Debevoise & Plimpton,
special counsel to the Company. This summary is based on the Code, Treasury
Regulations (including Proposed Regulations and Temporary Regulations)
promulgated thereunder, IRS rulings, official pronouncements and judicial
decisions, all as in effect on the date hereof and all of which are subject to
change, possibly with retroactive effect, or different interpretations. This
summary does not discuss all the tax consequences that may be relevant to a
particular holder that is a non-United States person in light of the holder's
particular circumstances and it is not intended to be applicable in all respects
to all categories of non-United States persons, some of whom -- such as foreign
governments and certain international organizations -- may be subject to special
rules not discussed below. In addition, this summary does not address any state,
local or foreign tax considerations that may be relevant to a holder's decision
to exchange Preferred Stock for Debentures pursuant to the Exchange Offer. For a
discussion of certain United States federal income tax considerations, some of
which may also be relevant to non-United States persons, see "Certain Federal
Income Tax Considerations".
As used herein, "non-United States person" means any person who, for United
States federal income tax purposes, is neither (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any State or of any of
its territories or possessions or (iii) a domestic trust or estate.
ALL PREFERRED STOCK HOLDERS THAT ARE NON-UNITED STATES PERSONS ARE ADVISED
TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF THE EXCHANGE OF PREFERRED STOCK FOR DEBENTURES AND
THE OWNERSHIP, CONVERSION AND DISPOSITION OF DEBENTURES RECEIVED IN THE EXCHANGE
IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
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EXCHANGE OF PREFERRED STOCK FOR DEBENTURES
Subject to the discussion of backup withholding below, if a holder that is
a non-United States person proves, in a manner and under arrangements
satisfactory to the Company or other withholding agent that the exchange of
Preferred Stock for Debentures by such holder qualifies as a transaction in
which gain or loss is recognized, rather than as a dividend (see "Certain
Federal Income Tax Considerations -- Exchange of Preferred Stock for
Debentures", above), the Company or such withholding agent will not withhold
federal income tax on the issuance of Debentures to such holder and such holder
generally will not be subject to United States federal income tax in respect of
gain recognized on such exchange unless (i) such gain is effectively connected
with a trade or business conducted by such non-United States person within the
United States (in which case the branch profits tax may also apply if the holder
is a foreign corporation), (ii) in the case of a non-United States person that
is an individual, such holder is present in the United States for a period or
periods aggregating 183 days or more in the taxable year of the exchange and
certain other conditions are satisfied or (iii) the Company is or has been a
"United States real property holding corporation" for federal income tax
purposes within the five-year period ending on the date of the exchange (which
the Company does not believe it has been or is currently) and certain other
conditions are satisfied, and no treaty exception is applicable.
If a holder that is a non-United States person who exchanges Preferred
Stock for Debentures does not prove, in a manner satisfactory to the Company or
other withholding agent, that such exchange qualifies as a transaction in which
gain or loss is recognized, United States federal withholding tax will be
withheld from the gross proceeds to such holder in an amount equal to 30% of
such proceeds (including Debentures that such holder would otherwise have
received) unless such holder is eligible for a reduced tax treaty rate with
respect to dividend income, in which case the tax will be withheld at the
reduced rate, or establishes that it is exempt from such tax (e.g., by providing
the appropriate form certifying its status as a foreign government). Except as
may be otherwise provided in an applicable income tax treaty, a holder that is a
non-United States person will be taxed at ordinary federal income tax rates on a
net income basis if such dividend is effectively connected with the conduct of a
trade or business of such holder within the United States (in which case the
branch profits tax may also apply if the holder is a foreign corporation) and
will not be subject to the withholding tax described in the preceding sentence.
A holder that is a non-United States person may be eligible to obtain from the
IRS a refund of tax withheld if such holder meets one of the three tests of
Section 302 described above under "Certain Federal Income Tax
Considerations -- Exchange of Preferred Stock for Debentures" or is otherwise
able to establish that no tax (or a reduced amount of tax) was due.
PAYMENTS ON DEBENTURES
Subject to the discussion of backup withholding below, payments of
principal, premium (if any) and interest (including original issue discount) on
a Debenture by the Company or its agent (in its capacity as such) to a
beneficial owner that is a non-United States person will not be subject to
United States federal withholding tax; provided that (a) such person does not
actually or constructively own 10% or more of the total combined voting power of
all classes of stock of the Company entitled to vote, (b) such person is not a
controlled foreign corporation that is related to the Company actually or
constructively through stock ownership, (c) such person is not a bank that
acquired its Debenture in consideration of an extension of credit made pursuant
to a loan agreement entered into in the ordinary course of business and (d)
either (i) the beneficial owner certifies to the Company or its agent, under
penalties of perjury, in a suitable form that it is a not a United States person
and provides its name and address or (ii) a qualifying securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business and that holds the
Debenture certifies to the Company or its agent under penalties of perjury that
such statement has been received from the beneficial owner in a suitable form by
it or by a qualifying intermediary and furnishes the payor with a copy thereof.
If a beneficial owner of a Debenture who is a non-United States person is
engaged in a trade or business within the United States and interest (including
original issue discount) and premium, if any, on the Debenture is effectively
connected with the conduct of such trade or business, such beneficial owner may
be subject to United States federal income tax on such interest (including
original issue discount) and premium
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at ordinary federal income tax rates on a net basis (in which case the branch
profits tax may also apply if the holder is a foreign corporation).
CONVERSION OF DEBENTURE
An exchanging holder that is non-United States person generally will not be
subject to United States federal income tax on the conversion of Debentures
solely into Common Stock. To the extent such a holder receives cash in lieu of
fractional shares of Common Stock, such payment will be subject to the rules
described below under " -- Sale or Exchange of Debentures or Common Stock".
SALE OR EXCHANGE OF DEBENTURES OR COMMON STOCK
Subject to the discussion of backup withholding below, any capital gain
realized upon a sale or exchange of a Debenture (including upon retirement of a
Debenture) or Common Stock issued upon conversion of a Debenture by a beneficial
owner who is a non-United States person ordinarily will not be subject to United
States federal income tax unless (i) such gain is effectively connected with a
trade or business conducted by such non-United States person within the United
States (in which case the branch profits tax may also apply if the holder is a
foreign corporation), (ii) in the case of a non-United States person that is an
individual, such holder is present in the United States for a period or periods
aggregating 183 days or more in the taxable year of the sale or exchange and
certain other conditions are met or (iii) the Company is or has been a "United
States real property holding corporation" for federal income tax purposes (which
the Company does not believe it has been or is currently) and such non-United
States person has held, directly or constructively, more than 5% of the
outstanding Common Stock within the five-year period ending on the date of the
sale or exchange, and no treaty exception is applicable.
DIVIDENDS ON COMMON STOCK
Generally, any dividends paid on Common Stock received upon the conversion
of a Debenture will be subject to United States federal withholding tax at a
rate of 30% of the amount of the dividend, or at a lower applicable treaty rate.
However, if the dividend is effectively connected with a United States trade or
business of a holder that is a non-United States person, it will be subject to
United States federal income tax at ordinary federal income tax rates on a net
basis (in which case the branch profits tax may also apply if such holder is a
foreign corporation), rather than the 30% withholding tax.
Under current Treasury Regulations, a holder's status as a non-United
States person and eligibility for a tax treaty reduced rate of withholding will
be determined by reference to the holder's address and to any outstanding
certificates or statements concerning eligibility for a reduced rate of
withholding, unless facts and circumstances indicate that reliance is not
warranted. However, the IRS has issued Proposed Regulations that, if adopted in
final form, would require a non-United States person to provide certifications
under penalties of perjury in order to obtain treaty benefits.
FEDERAL ESTATE TAXES
Debentures beneficially owned by an individual who at the time of death is
neither a citizen nor a resident of the United States will not be subject to
United States federal estate tax as a result of such individual's death,
provided that at the time of death the income from the Debentures was not or
would not have been effectively connected with the conduct by such individual of
a trade or business within the United States and that such individual qualified
for the exemption from United States federal withholding tax (without regard to
the certification requirements) on premium and interest that is described above
under "-- Payments on Debentures".
Common Stock that is beneficially owned by an individual who is neither a
citizen nor a resident of the United States at the time of death will be
included in such holder's gross estate for United States federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.
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<PAGE> 57
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting on IRS Form 1099 and backup withholding at a rate of
31% will not apply to payments of principal, premium (if any) and interest
(including original issue discount) made by the Company or a paying agent to a
non-United States holder on a Debenture if the certification described in clause
(d) under "-- Payments on Debentures" above is received, provided that the payor
does not have actual knowledge that the holder is a United States person.
However, interest (including original issue discount) on a Debenture owned by a
holder that is a non-United States person may be required to be reported
annually on IRS Form 1042S.
Generally, dividends on Common Stock paid to holders that are non-United
States persons that are subject to the 30% or a reduced treaty rate of United
States federal withholding tax will be exempt from backup withholding tax.
Otherwise, backup withholding of United States federal income tax at a rate of
31% may apply to dividends paid with respect to Common Stock to holders that are
not "exempt recipients" and that fail to provide certain information (including
the holder's taxpayer identification number) in the manner required by United
States law and applicable regulations.
Payments of the proceeds from the sale by a holder that is a non-United
States person of a Debenture or Common Stock issued upon conversion of a
Debenture made to or through a foreign office of a broker will not be subject to
information reporting or backup withholding, except that if the broker is a
United States person, a controlled foreign corporation for United States tax
purposes or a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified three-year
period, information reporting may apply to such payments. Payments of the
proceeds from the sale of a Debenture or Common Stock to or through the United
States office of a broker is subject to information reporting and backup
withholding unless the holder certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
LEGAL OPINIONS
The validity of the Debentures will be passed upon for the Company by
Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, and for the
Dealer Managers by Shearman & Sterling, 599 Lexington Avenue, New York, New York
10022. Shearman & Sterling from time to time represents the Company with respect
to certain legal matters.
EXPERTS
The consolidated financial statements and schedules of the Company
appearing in the Company's Annual Report (Form 10-K) for the year ended December
31, 1993 have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements and schedules are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, as amended, provides
in regard to indemnification of directors and officers as follows:
Sec. 145. Indemnification of officers, directors, employees and agents;
insurance
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2)
if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on
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behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems
appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Article VII of the Company's By-Laws provides in regard to indemnification
of directors and officers as follows:
Section 1. Nature of Indemnity. The corporation shall indemnify any
person who was or is a party or is threatened to be 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
or was or has agreed to become a director or officer of the corporation, or
is or was serving or has agreed to serve at the request of the corporation
as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged to
have been taken or omitted in such capacity, and may indemnify any person
who was or is a party or is threatened to be made a party to such an action
by reason of the fact that he is or was or has agreed to become an employee
or agent of the corporation, or is or was serving or has agreed to serve at
the request of the corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or on his
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behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding had no reasonable cause to
believe his conduct was unlawful; except that in the case of an action or
suit by or in the right of the corporation to procure a judgment in its
favor (1) such indemnification shall be limited to expenses (including
attorneys' fees) actually and reasonably incurred by such person in the
defense or settlement of such action or suit, and (2) no indemnification
shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless and
only to the extent that the Delaware Court of Chancery or the court in
which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such
other court shall deem proper.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
Section 2. Successful Defense. To the extent that a director, officer,
employee or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
Section 1 hereof or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.
Section 3. Determination That Indemnification Is Proper. Any
indemnification of a director or officer of the corporation under Section 1
hereof (unless ordered by a court) shall be made by the corporation unless
a determination is made that indemnification of the director or officer is
not proper in the circumstances because he has not met the applicable
standard of conduct set forth in Section 1 hereof. Any indemnification of
an employee or agent of the corporation under Section 1 hereof (unless
ordered by a court) may be made by the corporation upon a determination
that indemnification of the employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set
forth in Section 1 hereof. Any such determination shall be made (1) by the
board of directors by a majority vote of a quorum consisting of directors
who were not parties too such action, suit or proceeding or (2) if such a
quorum is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(3) by the stockholders.
Section 4. Advance Payment of Expenses. Expenses (including attorneys'
fees) incurred by a director or officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by
the corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director
or officer to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the corporation as authorized in
this Article. Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and conditions, if any,
as the board of directors deems appropriate. The board of directors may
authorize the corporation's counsel to represent a director, officer,
employee or agent in any action, suit or proceeding, whether or not the
corporation is a party to such action, suit or proceeding.
Section 5. Procedure for Indemnification of Directors or Officers. Any
indemnification of a director or officer of the corporation under Sections
1 and 2, or advance of costs, charges and expenses of a director or officer
under Section 4 of this Article, shall be made promptly, and in any event
within 60 days, upon the written request of the director or officer. If the
corporation fails to respond within 60 days, then the request for
indemnification shall be deemed to be approved. The right to
indemnification or advances as granted by this Article shall be enforceable
by the director or officer in any court of competent jurisdiction if the
corporation denies such request, in whole or in part. Such persons's costs
and
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expenses incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the corporation. It shall be a defense to any such action
(other than an action brought to enforce a claim for the advance of costs,
charges and expenses under Section 4 of this Article where the required
undertaking, if any, has been received by the corporation) that the
claimant has not met the standard of conduct set forth in Section 1 of this
Article, but the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation (including its board of
directors, its independent legal counsel, and its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he
has met the applicable standard of conduct set forth in Section 1 of this
Article, nor the fact that there has been an actual determination by the
corporation (including its board of directors, its independent legal
counsel and its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of
conduct.
Section 6. Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the
corporation and each director, officer, employee and agent who serves in
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any
action, suit, or proceeding previously or thereafter brought or threatened
based in whole or in part upon any such state of facts. Such a "contract
right" may not be modified retroactively without the consent of such
director, officer, employee or agent.
The indemnification provided by this Article VII shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators
of such a person.
Section 7. Insurance. The corporation shall purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the corporation, or is or was serving at the request
of the corporation as director or officer of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him or on his behalf in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of this Article, provided that such insurance is
available on acceptable terms, which determination shall be made by a vote
of a majority of the entire board of directors.
Section 8. Savings Clause. If this Article or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then
the corporation shall nevertheless indemnify each director or officer and
may indemnify each employee or agent of the corporation as to costs,
charges and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including an
action by or in the right of the corporation, to the full extent permitted
by any applicable portion of this Article that shall not have been
invalidated and to the full extent permitted by applicable law.
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Section 102(b)(7) of the Delaware General Corporation Law, as amended,
provides in regard to the limitation of liability of directors and officers
as follows:
(b) In addition to the matters required to be set forth in the
certificate of incorporation by subsection (a) of this section, the
certificate of incorporation may also contain any or all of the
following matters:
* * * *
(7) A provision eliminating or limiting the personal liability
of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that
such provision shall not eliminate or limit the liability of a
director: (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under section 174 of this Title; or (iv) for
any transaction from which the director derived an improper personal
benefit. No such provision shall eliminate or limit the liability of
a director for any act or omission occurring prior to the date when
such provision becomes effective. All references in this paragraph to
a director shall also be deemed to refer (x) to a member of the
governing body of a corporation which is not authorized to issue
capital stock, and (y) to such other person or persons, if any, who,
pursuant to a provision of the certificate of incorporation in
accordance with subsection (a) of sec. 141 of this title, exercise or
perform any of the powers or duties otherwise conferred or imposed
upon the board of directors by this title.
Article Ninth of the Company's Certificate of Incorporation provides in
regard to the limitation of liability of directors and officers as follows:
NINTH: No director of the corporation shall be liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its shareholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
The Company's directors and officers are also insured against claims
arising out of the performance of their duties in such capacities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- ------------------ ------------------------------------------------------------------------
<S> <C>
4(a) -- Certificate of Incorporation of the Company, as amended.*
4(b) -- By-Laws of the Company, as amended.*
4(c) -- Form of Certificate of the Company's Common Stock, par value $1.00
per share (incorporated by reference to Exhibit 4(c) to the Company's
Registration Statement on Form S-3 No. 33-38393).*
4(d) -- Certificate of Designation of Series A Cumulative Convertible
Preferred Stock, without par value (included in Exhibit 4(a)).*
4(e) -- Rights Agreement between the Company and J. Henry Schroder Bank and
Trust Company, as Rights Agent, dated as of February 13, 1986
(incorporated by reference to Exhibit 1 to the Company's Registration
Statement on Form 8-A (File No. 1-8400) dated February 19, 1986).*
</TABLE>
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<PAGE> 63
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- ---------------------------------------------------------------------------------------------
<S> <C>
4(f) -- Amendment to Rights Agreement, dated as of August 11, 1989, between
the Company and First Chicago Trust Company of New York (as successor
Rights Agent) (incorporated by reference to Exhibit 2 to the
Company's Registration Statement on Form 8, dated August 16, 1989, to
its Registration Statement on Form 8-A (File No. 1-8400) dated
February 19, 1986).*
4(g) -- Certificate of Designation of Series A Junior Participating Preferred
Stock, without par value (included in Exhibit 4(a)).*
4(h) -- Certificate of Increase, dated April 21, 1989, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(i) -- Certificate of Increase, dated July 24, 1990, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(j) -- Certificate of Increase, dated February 1, 1991, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(k) -- Certificate of Increase, dated January 13, 1992, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(l) -- Certificate of Increase, dated May 24, 1993, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(m) -- Form of Indenture between the Company and The First National Bank of
Chicago, as Trustee.
4(n) -- Deposit Agreement, dated as of February 4, 1993, between the Company
and First Chicago Trust Company of New York, as Depositary, and the
Holders from time to time of the Depositary Receipts described
therein.*
5 -- Opinion of Debevoise & Plimpton as to the validity of the Debentures.
8 -- Tax opinion of Debevoise & Plimpton.
12 -- Statement Re: Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.*
23(a) -- Consent of Ernst & Young LLP.
23(b) -- Consents of Debevoise & Plimpton (included in Exhibits 5 and 8).
24 -- Powers of Attorney.*
25 -- Statement of Eligibility and Qualification of the Trustee under the
Trust Indenture Act of 1939.*
99(a) -- Proposed Form of Letter of Transmittal.
99(b) -- Proposed Form of Notice of Guaranteed Delivery.
99(c) -- Proposed Form of Letter to Registered Holders and DTC Participants.
99(d) -- Proposed Form of Letter to Clients.
99(e) -- Form of Exchange Agent Agreement.
99(f) -- Form of Information Agent Agreement.
99(g) -- Form of Newspaper Announcement.
</TABLE>
- ---------------
* Previously filed
II-6
<PAGE> 64
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any 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;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change in such information 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.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act 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 Securities 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 Securities Act and will be
governed by the final adjudication of such issue.
(6) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Item 4, 10(b), 11 or 13 of Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first-class mail or equally prompt means. This
includes information contained in documents filed subsequent to the
effective date of the registration statement throughout the date responding
to the request.
(7) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
II-7
<PAGE> 65
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AMR Corporation
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Fort
Worth, State of Texas, on this 14th day of October, 1994.
AMR CORPORATION
By /s/ ANNE H. MCNAMARA
Anne H. McNamara
Senior Vice President and
General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<S> <C> <C>
ROBERT L. CRANDALL Chairman of the Board, President )
and Chief Executive Officer; )
Director (Principal Executive )
Officer) )
)
DONALD J. CARTY Executive Vice President and )
Chief Financial Officer )
(Principal Financial and )
Accounting Officer) )
) )
HOWARD P. ALLEN ) )
) )
EDWARD A. BRENNAN ) ) By /s/ ANNE H. MCNAMARA
) ) Anne H. McNamara
CHRISTOPHER F. EDLEY ) ) (Attorney-in Fact)
) ) Date: October 14, 1994
CHARLES T. FISHER, III ) )
) )
DEE J. KELLY ) Directors )
) )
ANN D. MCLAUGHLIN ) )
) )
JOE M. RODGERS ) )
) )
MAURICE SEGALL ) )
) )
EUGENE F. WILLIAMS, JR. ) )
</TABLE>
[/R]
II-8
<PAGE> 66
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- -----------------------------------------------------------------------------------
<S> <C>
4(a) -- Certificate of Incorporation of the Company, as amended.*
4(b) -- By-Laws of the Company, as amended.*
4(c) -- Form of Certificate of the Company's Common Stock, par value $1.00
per share (incorporated by reference to Exhibit 4(c) to the Company's
Registration Statement on Form S-3 No. 33-38393).*
4(d) -- Certificate of Designation of Series A Cumulative Convertible
Preferred Stock, without par value (included in Exhibit 4(a)).*
4(e) -- Rights Agreement between the Company and J. Henry Schroder Bank and
Trust Company, as Rights Agent, dated as of February 13, 1986
(incorporated by reference to Exhibit 1 to the Company's Registration
Statement on Form 8-A (File No. 1-8400) dated February 19, 1986).*
4(f) -- Amendment to Rights Agreement, dated as of August 11, 1989, between
the Company and First Chicago Trust Company of New York (as successor
Rights Agent) (incorporated by reference to Exhibit 2 to the
Company's Registration Statement on Form 8, dated August 16, 1989, to
its Registration Statement on Form 8-A (File No. 1-8400) dated
February 19, 1986).*
4(g) -- Certificate of Designation of Series A Junior Participating Preferred
Stock, without par value (included in Exhibit 4(a)).*
4(h) -- Certificate of Increase, dated April 21, 1989, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(i) -- Certificate of Increase, dated July 24, 1990, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(j) -- Certificate of Increase, dated February 1, 1991, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(k) -- Certificate of Increase, dated January 13, 1992, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(l) -- Certificate of Increase, dated May 24, 1993, to Certificate of
Designation of Series A Junior Participating Preferred Stock, without
par value (included in Exhibit 4(a)).*
4(m) -- Form of Indenture between the Company and The First National Bank of
Chicago, as Trustee.
4(n) -- Deposit Agreement, dated as of February 4, 1993, between the Company
and First Chicago Trust Company of New York, as Depositary, and the
Holders from time to time of the Depositary Receipts described
therein.*
5 -- Opinion of Debevoise & Plimpton as to the validity of the Debentures.
8 -- Tax opinion of Debevoise & Plimpton.
12 -- Statement Re: Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.*
23(a) -- Consent of Ernst & Young LLP.
23(b) -- Consents of Debevoise & Plimpton (included in Exhibits 5 and 8).
</TABLE>
<PAGE> 67
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- -----------------------------------------------------------------------------------
<S> <C>
24 -- Powers of Attorney.*
25 -- Statement of Eligibility and Qualification of the Trustee under the
Trust Indenture Act of 1939.*
99(a) -- Proposed Form of Letter of Transmittal.
99(b) -- Proposed Form of Notice of Guaranteed Delivery.
99(c) -- Proposed Form of Letter to Registered Holders and DTC Participants.
99(d) -- Proposed Form of Letter to Clients.
99(e) -- Form of Exchange Agent Agreement.
99(f) -- Form of Information Agent Agreement.
99(g) -- Form of Newspaper Announcement.
</TABLE>
- ---------------
* Previously filed
<PAGE> 1
================================================================================
AMR CORPORATION
and
THE FIRST NATIONAL BANK OF CHICAGO
__________
INDENTURE
Dated as of November 1, 1994
__________
6 1/8% Convertible Subordinated
Quarterly Income Capital Securities due 2024
================================================================================
<PAGE> 2
Reconciliation and tie between Indenture, dated as of
November 1, 1994, and the Trust Indenture Act of 1939, as amended.
<TABLE>
<CAPTION>
Trust Indenture Act Indenture
of 1939 Section Section
- ------------------- ---------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . TIA
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . TIA
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9; TIA
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . TIA
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . TIA
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . TIA
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . TIA
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6; TIA
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . TIA
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6; TIA
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . TIA
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5; 9.6; TIA
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . TIA
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . TIA
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . TIA
(d)(1) . . . . . . . . . . . . . . . . . . . . . . . . TIA
(d)(2) . . . . . . . . . . . . . . . . . . . . . . . . TIA
(d)(3) . . . . . . . . . . . . . . . . . . . . . . . . TIA
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . TIA
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . 1.1
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . 5.2; 5.8
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . 5.7
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9; 5.10
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . TIA
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . 5.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . TIA
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11; TIA
</TABLE>
____________________
This reconciliation and tie section does not constitute part of the
Indenture.
2
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Compliance Certificates and Opinions . . . . . . . . . . . . . 12
Section 1.3. Form of Documents Delivered to Trustee . . . . . . . . . . . . 13
Section 1.4. Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1.5. Notices, etc., to Trustee and Company . . . . . . . . . . . . 15
Section 1.6. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . 16
Section 1.7. Headings and Table of Contents . . . . . . . . . . . . . . . . 17
Section 1.8. Successor and Assigns . . . . . . . . . . . . . . . . . . . . 17
Section 1.9. Separability . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 1.10. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . 17
Section 1.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 1.12. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 1.13. No Recourse Against Others . . . . . . . . . . . . . . . . . . 18
ARTICLE II DEBENTURE FORM . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.1. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.2. Debentures in Global Form . . . . . . . . . . . . . . . . . . 19
Section 2.3. Form of Legend for Debentures
in Global Form . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III THE DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.1. Title and Terms . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.2. Denominations . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.3. Execution, Authentication
and Delivery . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.4. Temporary Debentures . . . . . . . . . . . . . . . . . . . . . 25
Section 3.5. Registration, Transfer and Exchange . . . . . . . . . . . . . 25
Section 3.6. Replacement Debentures . . . . . . . . . . . . . . . . . . . . 28
Section 3.7. Payment of Interest; Interest Rights
Preserved . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.8. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . 31
Section 3.9. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.10. Computation of Interest . . . . . . . . . . . . . . . . . . . 32
ARTICLE IV SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . 32
Section 4.1. Termination of Company's Obligations
Under the Indenture . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
i
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 4.2. Application of Trust Funds . . . . . . . . . . . . . . . . . . 34
ARTICLE V DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . 34
Section 5.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.2. Acceleration; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.3. Collection of Indebtedness and Suits
for Enforcement by Trustee . . . . . . . . . . . . . . . . . 37
Section 5.4. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . 37
Section 5.5. Trustee May Enforce Claims Without
Possession of Debentures . . . . . . . . . . . . . . . . . . 38
Section 5.6. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . 38
Section 5.7. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . 38
Section 5.8. Control by Majority . . . . . . . . . . . . . . . . . . . . . 38
Section 5.9. Limitation on Suits by Holders . . . . . . . . . . . . . . . . 39
Section 5.10. Rights of Holders to Receive Payment . . . . . . . . . . . . . 39
Section 5.11. Application of Money Collected . . . . . . . . . . . . . . . . 40
Section 5.12. Restoration of Rights and Remedies . . . . . . . . . . . . . . 40
Section 5.13. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . 40
ARTICLE VI THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.1. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.2. Trustee May Hold Debentures . . . . . . . . . . . . . . . . . 42
Section 6.3. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . 42
Section 6.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . 42
Section 6.5. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.6. Reports by Trustee to Holders . . . . . . . . . . . . . . . . 43
Section 6.7. Debentureholder Lists . . . . . . . . . . . . . . . . . . . . 43
Section 6.8. Compensation and Indemnity . . . . . . . . . . . . . . . . . . 43
Section 6.9. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . 44
Section 6.10. Acceptance of Appointment by
Successor . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.11. Eligibility; Disqualification . . . . . . . . . . . . . . . . 46
Section 6.12. Merger, Conversion, Consolidation
or Succession to Business . . . . . . . . . . . . . . . . . 46
Section 6.13. Appointment of Authenticating Agent . . . . . . . . . . . . . 47
ARTICLE VII CONSOLIDATION, MERGER OR SALE BY
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.1. Consolidation, Merger or Sale of
Assets Permitted . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
ii
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VIII SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . 50
Section 8.1. Supplemental Indentures Without
Consent of Holders . . . . . . . . . . . . . . . . . . . . . 50
Section 8.2. With Consent of Holders . . . . . . . . . . . . . . . . . . . 51
Section 8.3. Compliance with Trust Indenture Act . . . . . . . . . . . . . 52
Section 8.4. Execution of Supplemental Indentures . . . . . . . . . . . . . 52
Section 8.5. Effect of Supplemental Indentures . . . . . . . . . . . . . . 52
Section 8.6. Reference in Debentures to
Supplemental Indentures . . . . . . . . . . . . . . . . . . 52
ARTICLE IX COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.1. Payment of Principal, Premium,
if any, and Interest . . . . . . . . . . . . . . . . . . . . 53
Section 9.2. Maintenance of Office or Agency . . . . . . . . . . . . . . . 53
Section 9.3. Money for Debentures to Be Held in
Trust; Unclaimed Money . . . . . . . . . . . . . . . . . . . 53
Section 9.4. Corporate Existence . . . . . . . . . . . . . . . . . . . . . 55
Section 9.5. Reports by the Company . . . . . . . . . . . . . . . . . . . . 55
Section 9.6. Annual Review Certificate . . . . . . . . . . . . . . . . . . 56
Section 9.7. Limitation on Dividends and
Capital Stock Acquisitions . . . . . . . . . . . . . . . . . 56
ARTICLE X REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.1. Right of Redemption . . . . . . . . . . . . . . . . . . . . . 57
Section 10.2. Applicability of Article . . . . . . . . . . . . . . . . . . . 57
Section 10.3. Election to Redeem; Notice to
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.4. Selection of Debentures to Be
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.5. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . 58
Section 10.6. Deposit of Redemption Price . . . . . . . . . . . . . . . . . 59
Section 10.7. Debentures Payable on Redemption
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.8. Debentures Redeemed in Part . . . . . . . . . . . . . . . . . 60
ARTICLE XI SUBORDINATION OF DEBENTURES . . . . . . . . . . . . . . . . . . 60
Section 11.1. Agreement to Subordinate . . . . . . . . . . . . . . . . . . . 60
Section 11.2. No Payment on Debentures if Senior
Indebtedness in Default . . . . . . . . . . . . . . . . . . 61
Section 11.3. Priority of Senior Indebtedness Upon
Distribution of Assets . . . . . . . . . . . . . . . . . . . 61
Section 11.4. Trustee May Rely on Certificate of Liquidating Agent . . . . . 62
Section 11.5. Subrogation of Debentures . . . . . . . . . . . . . . . . . . 62
</TABLE>
iii
<PAGE> 7
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 11.6. Company Obligation to Pay
Unconditional . . . . . . . . . . . . . . . . . . . . . . . 63
Section 11.7. Authorization of Debentureholders to
Trustee to Effect Subordination . . . . . . . . . . . . . . 63
Section 11.8. Notice to Trustee of Effectuation of
Subordination . . . . . . . . . . . . . . . . . . . . . . . 63
Section 11.9. Relationship of Other Indenture
Provisions to Article XI . . . . . . . . . . . . . . . . . . 64
Section 11.10. Trustee's Relationship to Holders of
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . 64
ARTICLE XII CONVERSION OF DEBENTURES . . . . . . . . . . . . . . . . . . . 64
Section 12.1. Conversion Privilege . . . . . . . . . . . . . . . . . . . . . 64
Section 12.2. Exercise of Conversion Privilege . . . . . . . . . . . . . . . 65
Section 12.3. No Fractional Shares . . . . . . . . . . . . . . . . . . . . . 66
Section 12.4. Conversion Price . . . . . . . . . . . . . . . . . . . . . . . 67
Section 12.5. Adjustment of Conversion Price . . . . . . . . . . . . . . . . 67
Section 12.6. Reclassification, Consolidation,
Merger or Sale of Assets . . . . . . . . . . . . . . . . . . 74
Section 12.7. Taxes on Conversions . . . . . . . . . . . . . . . . . . . . . 76
Section 12.8. Reservation of Shares . . . . . . . . . . . . . . . . . . . . 76
Section 12.9. Prior Notice of Certain Events . . . . . . . . . . . . . . . . 77
Section 12.10. Adjustments in Case of Fundamental
Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 12.11. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.12. Dividend or Interest Reinvestment
Plans; Other . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.13. Treasury Stock Not Included . . . . . . . . . . . . . . . . . 82
Section 12.14. Return of Money Deposited for
Converted Debentures . . . . . . . . . . . . . . . . . . . . 82
Section 12.15. Responsibility of Trustee . . . . . . . . . . . . . . . . . . 82
SIGNATURES
EXHIBIT A -- Form of Debenture
</TABLE>
iv
<PAGE> 8
INDENTURE, dated as of November 1, 1994, between AMR
CORPORATION, a Delaware corporation (the "Company"), and THE FIRST NATIONAL
BANK OF CHICAGO, Trustee, a national banking association (the "Trustee").
Recitals
For its lawful corporate purposes, the Company has duly
authorized the issue of Debentures of the Company designated as its 6 1/8%
Convertible Subordinated Quarterly Income Capital Securities due 2024 (the
"Debentures"), in the aggregate principal amount specified in Section 3.1(a)
and, in order to provide the terms and conditions on which the Debentures are
to be authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture.
All things necessary to make the Debentures, when executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
For and in consideration of the premises and the purchase of
the Debentures by the Holders thereof, it is mutually covenanted and agreed as
follows for the equal and ratable benefit of the Holders of the Debentures:
ARTICLE I
Definitions and Other Provisions
of General Application
Section 1.1. Definitions. (a) For all purposes of this
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
<PAGE> 9
(3) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally
accepted accounting principles; and
(4) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision.
"Affiliate" of any specified Person means any Person directly
or indirectly controlling or controlled by, or under direct or indirect common
control with, such specified Person. For purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Paying Agent or Registrar.
"Authenticating Agent" means any authenticating agent
appointed by the Trustee pursuant to Section 6.13.
"Board" or "Board of Directors" means the Board of Directors
of the Company, the Executive Committee or any other duly authorized committee
thereof.
"Board Resolution" means a copy of a resolution of the Board
of Directors, certified by the Corporate Secretary or an Assistant Secretary of
the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of the certificate, and delivered to the
Trustee.
"Business Day" means each day which is not a Saturday, Sunday
or other day on which banking institutions in The City of New York or Fort
Worth, Texas are authorized or obligated by law or required by executive order
to remain closed.
"Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and asked
prices, regular way, in each case on the New York Stock Exchange, or, if such
security is not listed or admitted to trading on
2
<PAGE> 10
such Exchange, on the principal national security exchange or quotation system
on which such security is quoted or listed or admitted to trading or, if not
quoted or listed or admitted to trading on any national securities exchange or
quotation system, the average of the closing bid and asked prices of such
security on the over-the-counter market on the day in question as reported by
the National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as furnished by any
New York Stock Exchange member firm selected from time to time by the Board for
that purpose, or a price determined in good faith by the Board, whose
determination shall be conclusive.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this Indenture such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Stock" means the shares of common stock, par value
$1.00 per share, of the Company as in existence on the date of this Indenture.
"Company" means the party named as the Company in the first
paragraph of this Indenture until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
means such successors.
"Company Order" and "Company Request" mean, respectively, a
written order or request signed in the name of the Company by the Chairman of
the Board, the President, any Executive Vice President or any Senior Vice
President, signing alone, or by any Vice President signing together with the
Treasurer, any Assistant Treasurer, the Corporate Secretary or any Assistant
Secretary of the Company.
"Corporate Trust Office" means the principal corporate trust
office of the Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date hereof is located at
One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention:
Corporate Trust Services Division, except that, for purposes of Section 9.2,
such term means the office or agency of the Trustee in the Borough of
Manhattan, The City
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<PAGE> 11
of New York, which office at the date hereof is located at 14 Wall Street,
Eighth Floor, New York, New York 10005.
"Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive Trading Days
immediately prior to the date in question; provided, however, that (1) if the
"ex" date (as hereinafter defined) for any event (other than the issuance,
distribution or Fundamental Change requiring such computation) that requires an
adjustment to the Conversion Price pursuant to subparagraph (i), (ii), (iii),
(iv), (v) or (vi) of Section 12.5 occurs during such ten consecutive Trading
Days, the Closing Price for each Trading Day prior to the "ex" date for such
other event shall be adjusted by multiplying such Closing Price by the same
fraction by which the Conversion Price is so required to be adjusted as a
result of such other event, (2) if the "ex" date for any event (other than the
issuance, distribution or Fundamental Change requiring such computation) that
requires an adjustment to the Conversion Price pursuant to subparagraph (i),
(ii), (iii), (iv), (v) or (vi) of Section 12.5 occurs on or after the "ex" date
for the issuance or distribution requiring such computation and prior to the
date in question, the Closing Price for each Trading Day on and after the "ex"
date for such other event shall be adjusted by multiplying such Closing Price
by the reciprocal of the fraction by which the Conversion Price is so required
to be adjusted as a result of such other event, and (3) if the "ex" date for
the issuance, distribution or Fundamental Change requiring such computation is
prior to the day in question, after taking into account any adjustment required
pursuant to clause (1) or (2) of this proviso, the Closing Price for each
Trading Day on or after such "ex" date shall be adjusted by adding thereto the
amount of any cash and the fair market value (as determined by the Board in a
manner consistent with any determination of such value for purposes of
subparagraph (iv) or (vi) of Section 12.5, whose determination shall be
conclusive and described in a Board Resolution) of the evidences of
indebtedness, share of capital stock or assets being distributed applicable to
one share of Common Stock as of the close of business on the day before such
"ex" date. For purposes of any computation under subparagraph (vi) of Section
12.5, the Current Market Price of the Common Stock on any date shall be deemed
to be the average of the daily Closing Prices per share of Common Stock for
such day and the next two succeeding Trading Days; provided, however, that if
the "ex" date for any event (other than the tender or exchange offer requiring
such computa-
4
<PAGE> 12
tion) that requires an adjustment to the Conversion Price pursuant to
subparagraph (i), (ii), (iii), (iv), (v) and (vi) of Section 12.5 occurs on or
after the Expiration Time for the tender or exchange offer requiring such
computation and prior to the day in question, the Closing Price for each
Trading Day on and after the "ex" date for such other event shall be adjusted
by multiplying such Closing Price by the reciprocal of the fraction by which
the Conversion Price is so required to be adjusted as a result of such other
event. For purposes of this paragraph, the term "ex" date, (1) when used with
respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Price was obtained without the right to receive
such issuance or distribution, (2) when used with respect to any subdivision or
combination of shares of Common Stock, means the first date on which the Common
Stock trades regular way on such exchange or in such market after the time at
which such subdivision or combination becomes effective, and (3) when used with
respect to any tender or exchange offer means the first date on which the
Common Stock trades regular way on such exchange or in such market after the
Expiration Time of such offer.
"Debenture" or "Debentures" has the meaning stated in the
first recital of this Indenture and more particularly means any Debenture or
Debentures of the Company issued, authenticated and delivered under this
Indenture.
"Default" means any event which is, or after notice or passage
of time, or both, would be, an Event of Default.
"Depositary", when used with respect to any Debentures
issuable or issued in global form, means the Person designated as Depositary by
the Company pursuant to Section 3.1 until a successor Depositary shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter shall mean or include each Person which is then a Depositary
hereunder, and if at any time there is more than one such Person, shall be a
collective reference to such Persons.
"Extension Period" means the period from and including the
Interest Payment Date next following the date of any notice of extension of the
interest payment period on the Debentures given pursuant to clause (1) of the
last sentence of Section 3.1(d) to but excluding the Interest
5
<PAGE> 13
Payment Date to which payment of interest on the Debentures is so extended,
after giving effect to any further extensions of the interest payment period on
the Debentures pursuant to the third sentence of Section 3.1(d); provided that
(1) no Extension Period shall exceed 20 consecutive quarters from the last date
to which interest on the Debentures was paid in full, (2) any Extension Period
shall end on an Interest Payment Date and (3) if the Company shall elect to pay
all of the interest accrued on an Interest Payment Date during any Extension
Period, such Extension Period shall automatically terminate on such Interest
Payment Date. Notwithstanding the foregoing, in no event shall any Extension
Period exceed the final Stated Maturity of the principal of the Debentures.
"fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction.
"Government Obligations" means securities which are (i) direct
obligations of the United States or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States,
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States, which are not callable or redeemable at
the option of the issuer thereof, and shall also include a depositary 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 depositary 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 depositary receipt from any amount received by the custodian
in respect of the Government Obligation evidenced by such depositary receipt.
"Holder" means, with respect to a Debenture, the Person,
including a Depositary, in whose name such Debenture is registered on the
Register.
"Indenture" means this Indenture as originally executed or as
amended or supplemented from time to time and shall include the forms and terms
of the Debentures established as contemplated hereunder.
6
<PAGE> 14
"Interest Payment Date", when used with respect to any
Debenture, means the Stated Maturity of an installment of interest on such
Debenture.
"Maturity" when used with respect to any Debenture, means the
date on which the principal of such Debenture or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
"Officer" means the Chairman of the Board of Directors, the
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Treasurer or the Corporate Secretary of the Company.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President, any Executive Vice President or any
Senior Vice President, signing alone, or by any Vice President signing together
with the Corporate Secretary, any Assistant Secretary, the Treasurer, or any
Assistant Treasurer of the Company.
"Opinion of Counsel" means a written opinion of legal counsel,
who may be (a) the senior attorney employed by the Company, (b) Debevoise &
Plimpton or (c) other counsel designated by the Company and who shall be
reasonably acceptable to the Trustee.
"Outstanding", when used with respect to Debentures, means, as
of the date of determination, all Debentures theretofore authenticated and
delivered under this Indenture, except:
(i) Debentures theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Debentures, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of
such Debentures, provided that, if such Debentures are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provisions therefor satisfactory to the Trustee have been
made; and
7
<PAGE> 15
(iii) Debentures which have been paid pursuant to Section
3.6 or in exchange for or in lieu of which other Debentures have been
authenticated and delivered pursuant to this Indenture, other than any
such Debentures in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Debentures are held by
a bona fide purchaser in whose hands such Debentures are valid
obligations of the Company;
provided, however, that Holders of Debentures which cease to be Outstanding by
reason of a call for redemption prior to their Stated Maturity shall
nevertheless be entitled to convert the same or any portion thereof in
accordance with Article XII; and provided, further, that in determining whether
the Holders of the requisite principal amount of the Outstanding Debentures
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, or whether sufficient funds are available for redemption or
for any other purpose, and for the purpose of making the calculations required
by section 313 of the Trust Indenture Act, Debentures owned by the Company or
any other obligor upon the Debentures or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in making
such calculation or in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Debentures which the Trustee knows
to be so owned shall be so disregarded. Debentures so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect
to such Debentures and that the pledgee is not the Company or any other obligor
upon the Debentures or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of, premium, if any, or interest on any Debentures on behalf
of the Company.
"Payment Obligation", when used with respect to Senior
Indebtedness, means an obligation stated in an agreement, instrument or lease
to pay money (whether for principal, premium, interest, sinking fund, periodic
rent, stipulated value, termination value, liquidated damages or otherwise),
but excluding an obligation to pay money in respect of fees (including, without
limitation, availability, commitment and similar fees) of, or as payment or
reim-
8
<PAGE> 16
bursement for expenses (including, without limitation, legal, accounting and
ordinary out-of-pocket expenses) incurred by or on behalf of, or as indemnity
for losses, damages, taxes or other indemnity claims of any kind owed to, any
holder of Senior Indebtedness or other party to such agreement, instrument or
lease.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Predecessor Debenture" of any particular Debenture means
every previous Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under Section 3.6 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Debenture
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Debenture.
"Redemption Date", when used with respect to any Debenture to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Debenture to
be redeemed, in whole or in part, means the price at which it is to be redeemed
pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the close of business on January 15, April 15, July 15 or
October 15, as the case may be (whether or not a Business Day), next preceding
such Interest Payment Date; provided that it is understood that there shall be
no Regular Record Date for any February 1, May 1, August 1 or November 1, as
the case may be, occurring during an Extension Period on which the Company has
not elected to make a full or partial payment of interest accrued on the
Debentures.
"Responsible Officer", when used with respect to the Trustee,
shall mean the chairman or any vice chairman of the board of directors, the
chairman or any vice-chairman of the executive committee of the board of
directors, the chairman of the trust committee, the president, any senior vice
president, any vice president, any assistant vice president, the secretary, any
assistant secretary, any associ-
9
<PAGE> 17
ate, the treasurer, any assistant treasurer, the cashier, any assistant
cashier, any senior trust officer, any trust officer, the controller, any
assistant controller, or any officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his knowledge of and familiarity with a particular subject.
"Senior Indebtedness" means each of the following, whether
outstanding on the date hereof or hereafter created, incurred or assumed:
(a) any Payment Obligation of the Company in respect of
any indebtedness, directly or indirectly, created, incurred or assumed
(i) for borrowed money or (ii) in connection with the acquisition of
any business, property or asset (including securities), other than any
account payable or other indebtedness created, incurred or assumed in
the ordinary course of business in connection with the obtaining of
materials or services;
(b) any Payment Obligation of the Company in respect of
any lease that would, in accordance with generally accepted accounting
principles, be required to be classified and accounted for as a
capital lease;
(c) any Payment Obligation of the Company in respect of
any interest rate exchange agreement, currency exchange agreement or
similar agreement that provides for payment (whether or not
contingent) over a period or term (including any renewals or
extensions) longer than one year from the execution thereof;
(d) any Payment Obligation of the Company in respect of
any agreement relating to the lease (including a sale and leaseback)
of real or personal property that provides for payment (whether or not
contingent) over a period or term (including any renewals or
extensions) longer than one year from the execution thereof;
(e) any Payment Obligation of any Subsidiary or of others
of the kind described in the preceding clauses (a) through (d) assumed
or guaranteed by the Company or for which the Company is otherwise
responsible or liable; and
10
<PAGE> 18
(f) any amendment, renewal, extension or refunding of any
Payment Obligation described in the preceding subparagraphs (a)
through (e);
unless in the agreement, instrument or lease in which any such Payment
Obligation is stated it is expressly provided that such Payment Obligation is
not senior in right of payment to the Debentures; provided, however, that
Senior Indebtedness shall not include the 5 1/4% Subordinated Debentures due
1998 issued by American Airlines, Inc. and for which the Company is jointly
and severally liable.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 3.7(b).
"Stated Maturity", when used with respect to any Debenture or
any installment of principal thereof or interest thereon, means the date
specified in such Debenture as the fixed date on which the principal of such
Debenture or such installment of principal or interest is due and payable;
provided that, with respect to any payment of interest on a Debenture, no date
during an Extension Period on which the Company has not elected to make a full
or partial payment of interest shall be a date of Stated Maturity.
"Subsidiary" means any corporation of which the Company at the
time owns or controls, directly or indirectly, more than 50% of the shares of
outstanding stock having general voting power under ordinary circumstances to
elect a majority of the Board of Directors of such corporation (irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency).
"Trading Day" means (x) if the applicable security is listed
or admitted for trading on the New York Stock Exchange or another national
security exchange, a day on which the New York Stock Exchange or another
national security exchange is open for business or (y) if the applicable
security is quoted on the Nasdaq National Market, a day on which trades may be
made on such National Market System or (z) if the applicable security is not so
listed, admitted for trading or quoted, any day other than a Saturday or Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
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<PAGE> 19
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in effect on the date of this Indenture, except as provided in Section 8.3.
"Trustee" means the party named as such in the first paragraph
of this Indenture until a successor Trustee replaces it pursuant to the
applicable provisions of this Indenture, and thereafter means such successor
Trustee.
(b) The following terms shall have the meanings specified
in the Sections referred to opposite such term below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
"Act" 1.4(a)
"Applicable Price" 12.11
"Bankruptcy Law" 5.1
"Common Stock Fundamental
Change" 12.11
"Conversion Price" 12.5
"Custodian" 5.1
"Date of Conversion" 12.2
"Defaulted Interest" 3.7(b)
"Event of Default" 5.1
"Expiration Time" 12.5(v)
"Fundamental Change" 12.11
"Non-Stock Fundamental Change" 12.11
"Purchased Shares" 12.5(vi)
"Purchaser Stock Price" 12.11
"Reference Market Price" 12.11
"Register" 3.5
"Registrar" 3.5
"Rights" 12.5(iv)
"Rights Agreement" 12.5(iv)
"Securities" 12.5(iv)
</TABLE>
Section 1.2. Compliance Certificates and Opinions. Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically
12
<PAGE> 20
required by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than pursuant to
Section 9.6) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such condition or covenant and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether
or not such condition or covenant has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
13
<PAGE> 21
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
as to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Section 1.4. Acts of Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such
Holders in person or by agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and conclusive in favor
of the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgements of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof. Where such execution is by a signer acting in a capacity other than
his individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
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<PAGE> 22
(c) The ownership of Debentures shall be conclusively
proved by the Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any Debenture shall bind
every future Holder of the same Debenture and the Holder of every Debenture
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Debenture.
(e) If the Company shall solicit from the Holders any
request, demand, authorization, direction, notice, consent, waiver or other
Act, the Company may, at its option, by or pursuant to a Board Resolution, fix
in advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
Act, but the Company shall have no obligation to do so. If such a record date
is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Debentures have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or
other Act, and for that purpose the Outstanding Debentures shall be computed as
of such record date; provided that no such authorization, agreement or consent
by the Holders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
six months after the record date.
Section 1.5. Notices, etc., to Trustee and Company. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
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(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at AMR Corporation, P.O. Box
619616, Dallas/Fort Worth Airport, Texas 75261-9616 or at any other
address previously furnished in writing to the Trustee by the Company.
Section 1.6. Notice to Holders; Waiver. Where this
Indenture provides for notice to Holders of any event, such notice to the
Holders thereof shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each such
Holder affected by such event, at its address as it appears in the Register,
within the time prescribed for the giving of such notice; provided that public
notice shall also be given in accordance with the rules of the New York Stock
Exchange if required by such rules.
In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders, and any notice mailed to a Holder in the manner herein
prescribed shall be conclusively deemed to have been received by such Holder,
whether or not such Holder actually receives such notice.
If by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice as
provided above, then such notification as shall be made with the approval of
the Trustee shall constitute a sufficient notification for every purpose
hereunder.
Any request, demand, authorization, direction, notice, consent
or waiver required or permitted under this Indenture shall be in the English
language.
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Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
Section 1.7. Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 1.8. Successor and Assigns. All covenants and
agreements in this Indenture by the Company shall bind its successor and
assigns, whether so expressed or not.
Any act or proceeding that is required or permitted by any
provision of this Indenture and that is authorized or required to be done or
performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the successor or assign of
the Company.
Section 1.9. Separability. In case any provision of this
Indenture or the Debentures shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 1.10. Benefits of Indenture. Nothing in this
Indenture or in the Debentures, expressed or implied, shall give to any Person,
other than the parties hereto and their successors hereunder and the Holders,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 1.11. Governing Law. THIS INDENTURE AND THE
DEBENTURES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. This Indenture is subject to the Trust Indenture Act
and if any provision hereof limits, qualifies or conflicts with the Trust
Indenture Act, the Trust Indenture Act shall control.
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Section 1.12. Legal Holidays. In any case where any Interest
Payment Date, Redemption Date, Stated Maturity or Maturity of any Debenture, or
the last date on which a Holder has the right to convert his Debentures (or the
right to convert his Debentures at a particular conversion price or rate) shall
not be a Business Day, then, notwithstanding any other provision of this
Indenture or any Debenture, payment of principal, premium, if any or interest
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on such date; provided that no
interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date, Stated Maturity or Maturity or on
such last date for conversion, as the case may be.
Section 1.13. No Recourse Against Others. No recourse for
the payment of the principal of or interest on the Debentures, or for any claim
based on the Debentures or this Indenture, and no recourse under or upon any
obligation, covenant or agreement of the Company in this Indenture or any
indenture supplemental thereto or in any Debenture, or because of the creation
of any indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the Company
or any successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty otherwise, all
such liability being, by the acceptance of a Debenture by each Holder and as
part of the consideration for the issue of such Debenture, expressly waived and
released.
ARTICLE II
Debenture Form
Section 2.1. Forms Generally. The Debentures and the
certificates of authentication thereon shall be in substantially the form set
forth in Exhibit A attached hereto, which is hereby incorporated in and
expressly made part of this Indenture, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon, as may be
required to comply with any law or with any rules promulgated pursuant thereto
or with the rules of any securities exchange or governmental
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agency, or as may, consistently herewith, be determined by the officers
executing such Debentures, as evidenced by their execution of the Debentures.
Any portion of the text of any Debenture may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Debenture.
Section 2.2. Debentures in Global Form. Any Debenture may
provide that it shall represent the aggregate or specified amount of
Outstanding Debentures from time to time endorsed thereon and may also provide
that the aggregate amount of Outstanding Debentures represented thereby may
from time to time be reduced to reflect exchanges. Any endorsement of a
Debenture in global form to reflect the amount, or any increase or decrease in
the amount, or changes in the rights of Holders, of Outstanding Debentures
represented thereby, shall be made in such manner and by such Person or Persons
as shall be specified therein or in the Company Order to be delivered to the
Trustee pursuant to Section 3.3 or 3.4. Subject to the provisions of Section
3.3 and, if applicable, Section 3.4, the Trustee shall deliver and redeliver
any security in permanent global form in the manner and upon instructions given
by the Person or Persons specified therein or in the applicable Company Order.
Any instructions by the Company with respect to endorsement or delivery or
redelivery of a Debenture in global form shall be in writing but need not
comply with Section 1.2 hereof and need not be accompanied by an Opinion of
Counsel.
The provisions of the last paragraph of Section 3.3 shall
apply to any Debenture in global form if such Debenture was never issued and
sold by the Company and the Company delivers to the Trustee the Debenture in
global form together with written instructions (which need not comply with
Section 1.2 and need not be accompanied by an Opinion of Counsel) with regard
to the reduction in the principal amount of Debentures represented thereby,
together with the written statement contemplated by the last paragraph of
Section 3.3.
Notwithstanding the provisions of Sections 2.1 and 3.7,
payment of principal of, premium, if any, and interest on any Debenture in
permanent global form shall be made to the Person or Persons specified therein.
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Section 2.3. Form of Legend for Debentures in Global Form.
Any Debenture in global form authenticated and delivered hereunder shall bear a
legend in substantially the following form, or such other form as deemed
necessary or desirable by the Company and specified in a Company Order
delivered to the Trustee:
This Debenture is in global form within the meaning of the
Indenture hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. Unless and until it is
exchanged in whole or in part for Debentures in certificated form,
this Debenture may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or
by the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary.
ARTICLE III
The Debentures
Section 3.1. Title and Terms. (a) The aggregate principal
amount of Debentures which may be authenticated and delivered under this
Indenture is limited to the lesser of (i) the aggregate principal amount of
Debentures issued by the Company pursuant to the exchange offer described in
the Company's Prospectus, dated October 14, 1994, as amended or supplemented,
relating to the Debentures and (ii) $1,100,000,000, except in each case for
Debentures authenticated and delivered upon registration and transfer of, or in
exchange for, or in lieu of, other Debentures pursuant to Section 3.4, 3.5,
3.6, 8.6, 10.8 or 12.2.
(b) The Debentures shall be known and designated as the
"6 1/8% Convertible Subordinated Quarterly Income Capital Securities due 2024"
of the Company. Their Stated Maturity shall be November 1, 2024, and they
shall bear interest as set forth below at the rate per annum of 6.0% from and
including November 1, 1994 to but excluding __________* and at the rate per
annum of 6 1/8% from ____________* or from the most recent Interest Payment
Date to
____________________
* Insert first day after Expiration Date of Exchange Offer.
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which interest has been paid or duly provided for, until the principal thereof
becomes due and payable, and at such rate on any overdue principal and premium
and (to the extent that the payment of such interest shall be legally
enforceable) on any overdue installment of interest.
(c) Every Debenture shall be dated the date of its
authentication and, except as otherwise provided in this Section, shall bear
interest, payable (subject to paragraph (d) below) quarterly in arrears on
February 1, May 1, August 1 and November 1 of each year, commencing February 1,
1995, from the February 1, May 1, August 1 or November 1, as the case may be,
next preceding the date of such Debenture to which interest on the Debentures
has been paid or duly provided for, unless the date of such Debenture is a
February 1, May 1, August 1 or November 1 to which interest has been paid or
duly provided for, in which case from such date, or unless no interest has been
paid or duly provided for on the Debentures, in which case from November 1,
1994. Notwithstanding the foregoing, when there is no existing default in the
payment of interest on the Debentures, each Debenture authenticated after the
Regular Record Date for any Interest Payment Date, but prior to such Interest
Payment Date shall be dated the date of its authentication but shall bear
interest from such Interest Payment Date; provided, however, that if and to the
extent that the Company shall default in the payment of the interest due on
such Interest Payment Date, then all such Debentures shall bear interest from
the February 1, May 1, August 1 or November 1, as the case may be, to which
interest has been paid or duly provided for next preceding such Interest
Payment Date, unless no interest has been paid or duly provided for on the
Debentures, in which case from November 1, 1994.
(d) Notwithstanding anything contained in this Indenture
to the contrary, the Company shall have the right at any time during the term
of the Debentures, so long as the Company is not in default in the payment of
interest on the Debentures, to extend the interest payment period for an
Extension Period. Except as provided in the next succeeding sentence, no
interest shall be due and payable during an Extension Period, but at the end of
each Extension Period the Company shall pay all interest then accrued and
unpaid on the Debentures, together with interest thereon, compounded quarterly,
at the rate specified for the Debentures to the extent permitted by applicable
law. Prior to the termination of any Extension Period, the Company may (i) on
any Interest Payment Date pay all or any portion of the
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interest accrued on the Debentures as provided in Section 3.1(c) to holders of
record on the Record Date for such Interest Payment Date or (ii) from time to
time further extend the interest payment period as provided in the last
sentence of this paragraph, provided that any such Extension Period, together
with all such previous and further extensions thereof, may not exceed 20
consecutive calendar quarters from the last date to which interest on the
Debentures was paid in full; and provided, further, that in no event shall any
Extension Period exceed the final Stated Maturity of the Debentures. If the
Company shall elect to pay all of the interest accrued on the Debentures on an
Interest Payment Date during any Extension Period, such Extension Period shall
automatically terminate on such Interest Payment Date. Upon the termination of
any Extension Period and the payment of all amounts of interest then due, the
Company may select a new Extension Period, subject to the above requirements.
The Company shall cause the Trustee to give notice to the Holders, by public
announcement, which notice shall be given in accordance with New York Stock
Exchange rules, not less than five Business Days prior to the January 15, April
15, July 15 or October 15 next preceding the applicable Interest Payment Date
of
(1) the Company's election to initiate an Extension
Period, and the duration thereof,
(2) the Company's election to extend any Extension Period
beyond the Interest Payment Date on which such Extension Period is
then scheduled to terminate, and the duration of such extension, and
(3) the Company's election to make a full or partial
payment of interest accrued on the Debentures on any Interest Payment
Date during any Extension Period and the amount of such payment.
(e) The principal and the Redemption Price of, and
interest on, the Debentures shall be payable at the office or agency of the
Company in the Borough of Manhattan, The City of New York; provided, however,
that at the option of the Company, interest on any Debentures may be paid (i)
by check mailed to the address of the Person entitled thereto as it shall
appear on the Register or (ii) by wire transfer to an account maintained by the
Person entitled thereto as specified on the Register.
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(f) The Debentures shall be redeemable as provided in
Article X.
(g) The Debentures shall be subordinated in right of
payment to certain other indebtedness of the Company as provided in Article XI.
(h) The Debentures shall be convertible into Common Stock
as provided in Article XII.
(i) One or more Debentures representing all or any
portion of the authorized principal amount of the Debentures may be issued in
global form. The Company hereby designates The Depository Trust Company as the
initial Depositary for any such Debentures issued in global form.
(j) Each Debenture issued hereunder shall provide that
the Company and, by its acceptance of a Debenture or a beneficial interest
therein, the Holder of, and any Person that acquires a beneficial interest in,
such Debenture agree that for United States federal, state and local tax
purposes it is intended that such Debenture constitute indebtedness.
Section 3.2. Denominations. The Debentures shall be issuable
in denominations of $1,000 and any integral multiple thereof.
Section 3.3. Execution, Authentication and Delivery.
Debentures shall be executed on behalf of the Company by the Chairman of the
Board, the President, any Executive Vice President, any Senior Vice President
or any Vice President. The Company's seal shall be reproduced on the
Debentures and shall be attested by the Corporate Secretary or any Assistant
Secretary. The signatures of any of these officers on the Debentures may be
manual or facsimile.
Debentures bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Debentures or did not hold such offices at the date of such Debentures.
The definitive Debentures shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities ex-
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change, all as determined by the officers executing such Debentures, as
evidenced by their execution of such Debentures.
At any time and from time to time, the Company may deliver
Debentures executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such Debentures and
the Trustee in accordance with the Company Order shall authenticate and deliver
such Debentures.
The Company may execute and the Trustee shall, in accordance
with this Section and the Company Order with respect to the Debentures,
authenticate and deliver one or more Debentures in global form that (i) shall
represent and shall be denominated in an amount equal to the aggregate
principal amount of the Outstanding Debentures to be represented by such
Debenture or Debentures in global form, (ii) shall be registered in the name of
the Depositary for such Debenture or Debentures in global form or the nominee
of such Depositary, (iii) shall be delivered by the Trustee to such Depositary
or pursuant to such Depositary's instruction and (iv) shall bear the legend set
forth in Section 2.3.
Each Depositary for a Debenture in global form must, at the
time of its designation and at all times while it serves as Depositary, be a
clearing agency registered under the Securities Exchange Act of 1934 and any
other applicable statute or regulation. The Trustee shall have no
responsibility to determine if the Depositary is so registered. Each
Depositary shall enter into an agreement with the Trustee governing the
respective duties and rights of such Depositary and the Trustee with regard to
Debentures issued in global form.
No Debenture shall be entitled to any benefits under this
Indenture or be valid or obligatory for any purpose until authenticated by the
manual signature of one of the authorized officers of the Trustee or an
Authenticating Agent. Such signature upon any Debenture shall be conclusive
evidence, and the only evidence, that such Debenture has been duly
authenticated and delivered under this Indenture and is entitled to the
benefits of this Indenture.
Notwithstanding the foregoing, if any Debenture shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall
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deliver such Debenture to the Trustee for cancellation as provided in Section
3.9 together with a written statement (which need not comply with Section 1.2
and need not be accompanied by an Opinion of Counsel) stating that such
Debenture has never been issued and sold by the Company, for all purposes of
this Indenture such Debenture shall be deemed never to have been authenticated
and delivered hereunder and shall not be entitled to the benefits of this
Indenture.
Section 3.4. Temporary Debentures. Pending the preparation
of definitive Debentures, the Company may execute and, upon Company Order, the
Trustee shall authenticate and deliver temporary Debentures which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor and form of the definitive
Debentures in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Debentures may determine, as conclusively evidenced by their
execution of such Debentures.
If temporary Debentures are issued, the Company will cause
definitive Debentures to be prepared without unreasonable delay. After
preparation of definitive Debentures, the temporary Debentures shall be
exchangeable for definitive Debentures upon surrender of the temporary
Debentures at the office or agency of the Company in the borough of Manhattan,
The City of New York, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Debentures, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Debentures of authorized denominations. Until
so exchanged, the temporary Debentures shall in all respects be entitled to the
same benefits under this Indenture as definitive Debentures.
Section 3.5. Registration, Transfer and Exchange. The
Company shall cause to be kept at the Corporate Trust Office of the Trustee a
register (the "Register") in which, subject to such reasonable regulations as
it may prescribe, the Company shall provide for the registration of Debentures
and the registration of transfers of Debentures and which shall be made
available to the Company by the Trustee upon written request of the Company
delivered to the Trustee. The Register shall be in written form or any other
form capable of being converted into written form within a reasonable time.
The Trustee is hereby appointed "Registrar"
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for the purpose of registering Debentures and transfers of Debentures as herein
provided.
Upon surrender for registration of transfer of any Debenture
at the office or agency maintained pursuant to Section 9.2, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Debentures, of any
authorized denominations and of a like aggregate principal amount.
At the option of the Holder, Debentures may be exchanged for
other Debentures, of any authorized denominations and of a like aggregate
principal amount containing identical terms and provisions, upon surrender of
the Debentures to be exchanged at such office or agency. Whenever any
Debentures are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Debentures which the Holder making
the exchange is entitled to receive.
Notwithstanding any other provision of this Section, unless
and until it is exchanged in whole or in part for Debentures in certificated
form, a Debenture in global form representing all or a portion of the
Debentures may not be transferred except as a whole by the Depositary to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.
If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for the Debentures or if at any
time the Depositary shall no longer be eligible under Section 3.3, the Company
shall appoint a successor Depositary. If a successor Depositary is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such ineligibility, Section 3.1(i) shall no longer be
effective and the Company shall execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of certificated Debentures,
shall authenticate and deliver, Debentures in certificated form, in authorized
denominations and in an aggregate principal amount equal to the principal
amount of the Debenture or Debentures in global form in exchange for such
Debenture or Debentures in global form.
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The Company may at any time in its sole discretion determine
that Debentures issued in global form shall no longer be represented by such a
Debenture or Debentures in global form. In such event the Company shall
execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of certificated Debentures, shall authenticate and
deliver, Debentures in certificated form, in authorized denominations and in an
aggregate principal amount equal to the principal amount of the Debenture or
Debentures in global form in exchange for such Debenture or Debentures in
global form.
The Depositary may surrender a Debenture in global form in
exchange in whole or in part for Debentures in certificated form on such terms
as are acceptable to the Company and such Depositary. Thereupon, the Company
shall execute, and the Trustee shall authenticate and deliver, without service
charge,
(i) to each Person specified by such Depositary a new
certificated Debenture or Debentures, of any authorized denomination
as requested by such Person in aggregate principal amount equal to and
in exchange for such Person's beneficial interest in the Debenture in
global form; and
(ii) to such Depositary a new Debenture in global form in
a denomination equal to the difference, if any, between the principal
amount of the surrendered Debenture in global form and the aggregate
principal amount of certificated Debentures delivered to Holders
thereof.
Upon the exchange of a Debenture in global form for Debentures
in certificated form, such Debenture in global form shall be cancelled by the
Trustee. Debentures in certificated form issued in exchange for a Debenture in
global form pursuant to this Section shall be registered in such names and in
such authorized denominations as the Depositary, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Debentures to the Persons in whose names such
Debentures are so registered.
Whenever any Debentures are surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Debentures which the Holder making the exchange is entitled to receive.
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All Debentures issued upon any registration of transfer or
upon any exchange of Debentures shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Debentures surrendered upon such registration of transfer or
exchange.
Every Debenture presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company, the Registrar or
the Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company, the Registrar and the Trustee
duly executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or for any exchange of Debentures, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration or transfer or exchange of
Debentures, other than exchanges pursuant to Section 3.4 or 10.7 not involving
any transfer.
The Company shall not be required (i) to issue, register the
transfer of, or exchange any Debentures for a period beginning at the opening
of business 15 days before any selection for redemption of Debentures and
ending at the close of business on the date of mailing of a notice of
redemption of Debentures; or (ii) to register the transfer of or exchange any
Debenture so selected for redemption, in whole or in part, except the
unredeemed portion of any Debenture being redeemed in part; provided, that
nothing herein contained shall be deemed to restrict the right to convert any
Debentures or portion thereof at any time in accordance with Article XII.
Section 3.6. Replacement Debentures. If there shall be
delivered to the Company and the Trustee (i) any mutilated Debenture or
evidence to their satisfaction of the destruction, loss or theft of any
Debenture and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Debenture has been
acquired by a bona fide purchaser, the Company shall execute and the Trustee
shall authenticate and deliver in lieu of any such destroyed, lost or stolen
Debenture, a replacement Debenture of like terms and principal amount, bearing
a number not contemporaneously outstand-
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ing; provided, however, that if any such mutilated, destroyed, lost or stolen
Debenture shall have matured or shall be about to mature, or shall have been
selected or called for redemption, or if the applicant shall desire to convert
such Debenture pursuant to the provisions of Article XII hereof, instead of
issuing a substitute Debenture, the Company may, with the consent of the
Holder, pay or convert the same, as the case may be, without surrender thereof,
except that such mutilated Debenture shall be surrendered.
Upon the issuance of any new Debenture under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Debenture issued pursuant to this Section in lieu of
any destroyed, lost or stolen Debenture shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Debentures duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Debentures.
Section 3.7. Payment of Interest; Interest Rights Preserved.
(a) Interest on any Debenture which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Debenture (or one or more Predecessor Debentures) is registered at
the close of business on the Regular Record Date for such interest at the
office or agency of the Company maintained for such purpose pursuant to Section
9.2; provided, however, that at the option of the Company, interest on any
Debentures may be paid (i) by check mailed to the address of the Person
entitled thereto as it shall appear on the Register or (ii) by wire transfer to
an account maintained by the Person entitled thereto as specified in the
Register.
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(b) Any interest on any Debenture which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date other
than an Interest Payment Date during an Extension Period on which the Company
has not elected to make a full or partial payment of interest accrued on the
Debentures (herein called "Defaulted Interest") shall forthwith cease to be
payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names such Debentures (or
their respective Predecessor Debentures) are registered at the close
of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause (1) provided.
Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and
not less than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of the notice
of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first- class postage prepaid, to each Holder at his address as
it appears in the Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names
the Debentures (or their respective Predecessor Debentures) are
registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (2).
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(2) The Company may make payment of any Defaulted
Interest to the Persons in whose names such Debentures (or their
respective Predecessor Debentures) are registered at the close of
business on a specified date in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Debentures may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause (2), such manner of
payment shall be deemed practicable by the Trustee.
(c) Subject to the foregoing provisions of this Section
and Section 3.1, each Debenture delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of any other
Debenture shall carry the rights to interest accrued and unpaid, and to accrue,
which were carried by such other Debenture.
(d) In the case of any Debenture which is converted after
any Regular Record Date and on or prior to the next succeeding Interest Payment
Date, interest whose Stated Maturity is such Interest Payment Date shall be
payable on such Interest Payment Date notwithstanding such conversion, and such
interest (whether or not punctually paid or duly provided for) shall be paid to
the Person in whose name that Debenture (or one or more Predecessor Debentures)
is registered at the close of business on such Regular Record Date.
Section 3.8. Persons Deemed Owners. Prior to due presentment
of any Debenture for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name such
Debenture is registered as the owner of such Debenture for the purpose of
receiving payment of principal of, premium, if any, and (subject to Section
3.7) interest on such Debenture and for all other purposes whatsoever, whether
or not such Debenture be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice to the
contrary.
None of the Company, the Trustee or any agent of the Company
or the Trustee shall have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Debenture in global form, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership
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interests. Notwithstanding the foregoing, with respect to any Debenture in
global form, nothing herein shall prevent the Company or the Trustee, or any
agent of the Company or the Trustee, from giving effect to any written
certification, proxy or other authorization furnished by any Depositary (or its
nominee), as a Holder, with respect to such Debenture in global form or impair,
as between such Depositary and owners of beneficial interests in such Debenture
in global form, the operation of customary practices governing the exercise of
the rights of such Depositary (or its nominee) as Holder of such Debenture in
global form.
Section 3.9. Cancellation. The Company at any time may
deliver Debentures to the Trustee for cancellation. The Registrar and any
Paying Agent shall forward to the Trustee any Debentures surrendered to them
for replacement, for registration of transfer, or for exchange, conversion or
payment. The Trustee shall cancel all Debentures surrendered for replacement,
for registration of transfer, or for exchange, payment, redemption, conversion
or cancellation and may destroy cancelled Debentures and, if so destroyed,
shall issue a certificate of destruction to the Company. The Company may not
issue new Debentures to replace Debentures that it has paid or delivered to the
Trustee for cancellation.
Section 3.10. Computation of Interest. Interest on the
Debentures shall be computed on the basis of a 360-day year of twelve 30-day
months and in the case of any installment of interest based on a period of less
than one full calendar month, on the basis of the actual number of days elapsed
in such period.
ARTICLE IV
Satisfaction and Discharge
Section 4.1. Termination of Company's Obligations Under the
Indenture. This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange or conversion of Debentures and replacement of Debentures which may
have been lost, stolen or mutilated as herein expressly provided for) and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture when
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(1) either
(A) all Debentures previously authenticated and delivered
(other than (i) Debentures which have been destroyed, lost or stolen
and which have been replaced, paid or converted as provided in Section
3.6 and (ii) Debentures for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 9.3) have been delivered to the Trustee for
cancellation; or
(B) all Debentures not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on Debentures not theretofore
delivered to the Trustee for cancellation, for principal, premium, if
any, and interest, with respect thereto, to the date of such deposit
(in the case of Debentures which have become due and payable) or to
the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) the Company delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligation of the Company to the Trustee and
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any predecessor Trustee under Section 6.8, the obligations of the Company to
any Authenticating Agent under Section 6.13, the obligations of the Company to
the Holders under Article XII and, if money shall have been deposited with the
Trustee pursuant to subclause (B) of clause (1) of this Section, the
obligations of the Trustee under Section 4.2 and the last paragraph of Section
9.3 shall survive.
Section 4.2. Application of Trust Funds. Subject to the
provisions of the last paragraph of Section 9.3, all money deposited with the
Trustee pursuant to Section 4.1 shall be held in trust and applied by it, in
accordance with the provisions of the Debentures and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal, premium, if any and any interest for whose
payment such money has been deposited with or received by the Trustee, but such
money need not be segregated from other funds except to the extent required by
law.
ARTICLE V
Defaults and Remedies
Section 5.1. Events of Default. An "Event of Default" occurs
if (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) the Company defaults in the payment of interest on
any Debenture when the same becomes due and payable and such default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal
of or any premium on any Debenture when the same becomes due and
payable at its Maturity or on redemption or otherwise and in each case
such default continues for a period of ten days;
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(3) the Company defaults in the performance of, or
breaches, any covenant or warranty of the Company in this Indenture
(other than a covenant or warranty a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with),
and such default or breach continues for a period of 60 days after
there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Debentures, a written
notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder;
(4) the Company defaults under the terms of any agreement
or instrument evidencing or under which the Company has at the date of
this Indenture or hereafter outstanding any indebtedness for borrowed
money and such indebtedness shall be accelerated so that the same
shall be or become due and payable prior to the date on which the same
would otherwise become due and payable and the aggregate principal
amount thereof so accelerated exceeds $150,000,000 and such
acceleration is not rescinded or annulled within ten days after there
has been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least
25% in aggregate principal amount of the Outstanding Debentures a
written notice specifying such default and stating that such notice is
a "Notice of Default" hereunder (it being understood, however, that,
subject to the provisions of Section 6.1, the Trustee shall not be
deemed to have knowledge of such default under such agreement or
instrument unless either (A) a Responsible Officer of the Trustee
shall have actual knowledge of such default or (B) a Responsible
Officer of the Trustee shall have received written notice thereof from
the Company, from any Holder, from the holder of any such indebtedness
or from the trustee under any such agreement or other instrument);
provided, however, that if such default under such agreement or
instrument is remedied or cured by the Company or waived by the
holders of such indebtedness, then the Event of Default hereunder by
reason thereof shall be deemed likewise to have been thereupon
remedied, cured or waived without further action upon the part of
either the Trustee or any of such Holders;
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(5) the Company pursuant to or within the meaning of any
Bankruptcy Law (A) commences a voluntary case, (B) consents to the
entry of an order for relief against it in an involuntary case, (C)
consents to the appointment of a Custodian of it or for all or
substantially all of its property, or (D) makes a general assignment
for the benefit of its creditors; or
(6) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (A) is for relief against the
Company in an involuntary case, (B) appoints a Custodian of the
Company or for all or substantially all of its property, or (C) orders
the liquidation of the Company; and the order or decree remains
unstayed and in effect for 90 days.
The term "Bankruptcy Law" means Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
Section 5.2. Acceleration; Rescission and Annulment. If an
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in aggregate principal amount of all of the Outstanding Debentures,
by written notice to the Company (and, if given by the Holders, to the
Trustee), may declare the principal of all the Debentures to be due and payable
and upon any such declaration such principal shall be immediately due and
payable.
At any time after such a declaration of acceleration has been
made and before a judgement or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
a majority in aggregate principal amount of the Outstanding Debentures, by
written notice to the Trustee, may rescind and annul such declaration and its
consequences if all existing Defaults and Events of Default, other than the
non-payment of the principal of Debentures which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section
5.7. No such rescission shall affect any subsequent default or impair any
right consequent thereon.
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Section 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee. The Company covenants that if
(1) default is made in the payment of any interest on any
Debenture when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of
(or premium, if any, on) any Debenture at the Maturity thereof and
such default continues for a period of 10 days,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Debentures, the whole amount then due and payable on such
Debentures for principal, premium, if any, and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal, premium, if any, and on any overdue interest, at the rate or rates
prescribed therefor in such Debentures and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel. If the Company fails to pay such amounts
forthwith upon such demand, the Trustee, in its own name as trustee of an
express trust, may institute a judicial proceeding for the collection of the
sums so due and unpaid, may prosecute such proceeding to judgment or final
decree and may enforce the same against the Company or any other obligor upon
the Debentures and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Debentures, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
Section 5.4. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Holders of
Debentures
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allowed in any judicial proceedings relating to the Company, its creditors or
its property.
Section 5.5. Trustee May Enforce Claims Without Possession of
Debentures. All rights of action and claims under this Indenture or the
Debentures may be prosecuted and enforced by the Trustee without the possession
of any of the Debentures or the production thereof in any proceeding relating
thereto.
Section 5.6. Delay or Omission Not Waiver. No delay or
omission by the Trustee or any Holder of any Debentures to exercise any right
or remedy accruing upon an Event of Default shall impair any such right or
remedy or constitute a waiver of or acquiescence in any such Event of Default.
Section 5.7. Waiver of Past Defaults. The Holders of a
majority in aggregate principal amount of Outstanding Debentures by notice to
the Trustee may waive on behalf of the Holders of all Debentures a past Default
or Event of Default and its consequences except (i) a Default or Event of
Default in the payment of the principal of, premium, if any, or interest on any
Debenture or (ii) in respect of a covenant or provision hereof which pursuant
to Section 8.2 cannot be amended or modified without the consent of the Holder
of each Outstanding Debenture adversely affected. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Indenture.
Section 5.8. Control by Majority. The Holders of a majority
in aggregate principal amount of the Outstanding Debentures shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
it; provided, however, that (i) the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, (ii) the Trustee may refuse to
follow any direction that is unduly prejudicial to the rights of the Holders of
Debentures not consenting, or that would in the good faith judgment of the
Trustee have a substantial likelihood of involving the Trustee in personal
liability and (iii) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
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Section 5.9. Limitation on Suits by Holders. No Holder of
any Debenture shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:
(1) the Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal
amount of the Outstanding Debentures have made a written request to
the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or
expense to be, or which may be, incurred by the Trustee in pursuing
the remedy;
(4) the Trustee for 60 days after its receipt of such
notice, request and the offer of indemnity has failed to institute any
such proceedings; and
(5) during such 60 day period, the Holders of a majority
in aggregate principal amount of the Outstanding Debentures have not
given to the Trustee a direction inconsistent with such written
request.
No one or more Holders shall have any right in any manner
whatever by virtue of, or by availing of, any provision of this Indenture to
affect, disturb or prejudice the rights of any other Holders of Debentures, or
to obtain or to seek to obtain priority or preference over any other Holders of
Debentures or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all Holders of
Debentures.
Section 5.10. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, but subject to Section
9.2, the right of any Holder of a Debenture to receive payment of principal of,
premium, if any, and, subject to Sections 3.5 and 3.7, interest on the
Debenture, on or after the respective due dates expressed in the Debenture (or,
in case of redemption, on the redemption dates) or, subject to Section 5.9, to
bring suit for the enforcement of any such payment on or after such respective
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dates, shall not be impaired or affected without the consent of such Holder.
Section 5.11. Application of Money Collected. If the Trustee
collects any money pursuant to this Article, it shall pay out the money in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal, premium, if any, or
interest, upon presentation of the Debentures and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
First: to the Trustee for amounts due under Section 6.8;
Second: to Holders of Debentures in respect of which or for
the benefit of which such money has been collected for amounts due and
unpaid on such Debentures for principal of, premium, if any, and
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Debentures for
principal, premium, if any, and interest, respectively; and
Third: to the Company.
Section 5.12. Restoration of Rights and Remedies. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 5.13. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Debentures in the last paragraph of Section 3.6, no
right or remedy herein conferred upon or reserved to the Trustee or the Holders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or
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employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or remedy.
ARTICLE VI
The Trustee
Section 6.1. Rights of Trustee. Subject to the provisions of
the Trust Indenture Act:
(a) The Trustee may rely and shall be protected in acting
or refraining from acting upon any document believed by it to be
genuine and to have been signed or presented by the proper party or
parties. The Trustee need not investigate any fact or matter stated
in the document.
(b) Any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company
Order (other than delivery of any Debenture to the Trustee for
authentication and delivery pursuant to Section 3.3, which shall be
sufficiently evidenced as provided therein) and any resolution of the
Board of Directors may be sufficiently evidenced by a Board
Resolution.
(c) Before the Trustee acts or refrains from acting, it
may consult with counsel or require an Officers' Certificate. The
Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on a Board Resolution, the written advice of
counsel acceptable to the Company and the Trustee, a certificate of an
Officer or Officers delivered pursuant to Section 1.2, an Officers'
Certificate or an Opinion of Counsel.
(d) The Trustee may act through agents or attorneys and
shall not be responsible for the misconduct or negligence of any agent
or attorney appointed with due care.
(e) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be
authorized or within its rights or powers.
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(f) The Trustee shall not be required to expend or risk
its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of its
rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
Section 6.2. Trustee May Hold Debentures. The Trustee, any
Paying Agent, any Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Debentures
and, subject to Sections 310(b) and 311 of the Trust Indenture Act, may
otherwise deal with the Company, an Affiliate or Subsidiary with the same
rights it would have if it were not Trustee, Paying Agent, Registrar or such
other agent.
Section 6.3. Money Held in Trust. Money held by the Trustee
in trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
Section 6.4. Trustee's Disclaimer. The recitals contained
herein and in the Debentures, except the Trustee's certificate of
authentication, shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Debentures. The Trustee shall not be accountable for the Company's use of the
proceeds from the Debentures or for monies paid over to the Company pursuant to
the Indenture.
Section 6.5. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall, within 90 days
after it occurs, transmit, in the manner and to the extent provided in Section
313(c) of the Trust Indenture Act, notice of all uncured Defaults known to it;
provided, however, that, except in the case of a Default in payment on the
Debentures, the Trustee may withhold the notice if and so long as a Responsible
Officer in good faith determines that withholding such notice is in the
interests of Holders of Debentures; provided, further, that in the case of any
default or breach of the character specified in Section 5.1(3), no such notice
to Holders shall be given until at least 60 days after the occurrence thereof.
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Section 6.6. Reports by Trustee to Holders. Within 60 days
after each May 15 of each year commencing with the first May 15 after the first
issuance of Debentures pursuant to this Indenture, the Trustee shall transmit
by mail to all Holders of Debentures as provided in Section 313(c) of the Trust
Indenture Act a brief report dated as of such May 15 if required by and in
compliance with Section 313(a) of the Trust Indenture Act.
Section 6.7. Debentureholder Lists. The Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Holders of Debentures. If the
Trustee is not the Registrar, the Company shall furnish to the Trustee
semiannually on or before the last day of June and December in each year, and
at such other times as the Trustee may request in writing, a list, in such form
and as of such date as the Trustee may reasonably require, containing all the
information in the possession or control of the Registrar, the Company or any
of its Paying Agents other than the Trustee as to the names and addresses of
Holders of Debentures.
Section 6.8. Compensation and Indemnity. (a) The Company
shall pay to the Trustee from time to time reasonable compensation for its
services. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred by it
in connection with the performance of its duties under this Indenture, except
any such expense as may be attributable to its negligence or bad faith. Such
expenses shall include the reasonable compensation and expenses of the
Trustee's agents and counsel.
(b) The Company shall indemnify the Trustee for, and hold
it harmless against, any loss or liability incurred by it arising out of or in
connection with its acceptance or administration (including the exercise or
performance of any of its powers or duties) of the trust or trusts hereunder.
The Trustee shall notify the Company promptly of any claim for which it may
seek indemnity. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent.
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(c) The Company need not reimburse any expense or
indemnify against any loss or liability incurred by the Trustee through
negligence, bad faith or breach or noncompliance with any of its duties
hereunder.
(d) To secure the payment obligations of the Company
pursuant to this Section, the Trustee shall have a lien prior to the Debentures
on all money or property held or collected by the Trustee, except that held in
trust to pay principal, premium, if any, and interest on particular Debentures.
Section 6.9. Replacement of Trustee. (a) The resignation or
removal of the Trustee and the appointment of a successor Trustee shall become
effective only upon the successor Trustee's acceptance of appointment as
provided in Section 6.10.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If the instrument of acceptance by a successor
Trustee required by Section 6.10 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(c) The Holders of a majority in aggregate principal
amount of the Outstanding Debentures may remove the Trustee by so notifying the
Trustee and the Company and may appoint a successor Trustee with the Company's
consent.
(d) If at any time:
(1) the Trustee fails to comply with Section 310(b) of
the Trust Indenture Act after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a Debenture for at
least six months, or
(2) the Trustee shall cease to be eligible under Section
310(a) of the Trust Indenture Act and shall fail to resign after
written request therefor by the Company or by any Holder of a
Debenture who has been a bona fide Holder of a Debenture for at least
six months; or
(3) the Trustee becomes incapable of acting, is adjudged a
bankrupt or an insolvent or a receiver or
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public officer takes charge of the Trustee or its property or affairs
for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company may remove the Trustee, or (ii) subject
to Section 315(e) of the Trust Indenture Act, any Holder who has been a bona
fide Holder of a Debenture for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee and shall comply with the applicable requirements
of Section 6.10. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Debentures delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 6.10,
become the successor Trustee and supersede the successor Trustee appointed by
the Company. If no successor Trustee shall have been so appointed by the
Company or the Holders and accepted appointment in the manner required by
Section 6.10, any Holder who has been a bona fide Holder of a Debenture for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
Section 6.10. Acceptance of Appointment by Successor. (a)
In case of the appointment hereunder of a successor Trustee, every such
successor Trustee shall execute, acknowledge and deliver to the Company and to
the retiring Trustee an instrument accepting such appointment. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee, without further act, deed or conveyance, shall become vested
with all the rights, powers and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and
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deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder.
(b) Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts referred to in paragraph (a) of this Section.
(c) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee shall be qualified
and eligible under the Trust Indenture Act.
(d) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee in the
manner provided for notices to the Holders of Debentures in Section 1.6. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust office.
Section 6.11. Eligibility; Disqualification. There shall at
all times be a Trustee hereunder which shall be eligible to act as Trustee
under Section 310(a)(1) of the Trust Indenture Act and shall have a combined
capital and surplus of at least $75,000,000, which Trustee may be organized
under the law of any government or government subdivision. If such corporation
publishes reports of condition at least annually, pursuant to law or the
requirements of Federal, State, Territorial, District of Columbia, foreign or
other governmental supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
Section 6.12. Merger, Conversion, Consolidation or Succession
to Business. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corpo-
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ration shall be otherwise qualified and eligible under this Article, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto. In case any Debentures shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Debentures so authenticated with the same effect
as if such successor Trustee had itself authenticated such Debentures.
Section 6.13. Appointment of Authenticating Agent. The
Trustee may appoint an Authenticating Agent or Agents which shall be authorized
to act on behalf of the Trustee to authenticate Debentures issued upon original
issue exchange, registration of transfer or partial redemption thereof, and
Debentures so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposed as if authenticated by the
Trustee hereunder. Any such appointment shall be evidenced by an instrument in
writing signed by a Responsible Officer of the Trustee, a copy of which
instrument shall be promptly furnished to the Company. Wherever reference is
made in this Indenture to the authentication and delivery of Debentures by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a bank or trust company or
corporation organized and doing business and in good standing under the laws of
the United States of America or of any State or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $1,500,000 and subject to supervision or
examination by Federal or State authorities. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
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Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving
written notice of termination to such Authenticating Agent and to the Company.
Upon receiving such a notice of resignation or upon such a termination, or in
case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and
shall give notice of such appointment to all Holders of Debentures in the
manner set forth in Section 1.6. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent herein. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation including reimbursement of its reasonable
expenses for its services under this Section.
If an appointment is made pursuant to this Section, the
Debentures may have endorsed thereon, in addition to or in lieu of the
Trustee's certificate of authentication, an alternate certificate of
authentication substantially in the following form:
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This is one of the Debentures issued under the within-mentioned
Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By___________________________________
as Authenticating Agent
By___________________________________
Authorized Officer
ARTICLE VII
Consolidation, Merger or Sale by the Company
Section 7.1. Consolidation, Merger or Sale of Assets
Permitted. The Company may merge or consolidate with or into any other
corporation or sell, convey, transfer or otherwise dispose of all or
substantially all of its assets to any person, firm or corporation, if (i) (A)
in the case of a merger or consolidation, the Company is the surviving
corporation or (B) in the case of a merger or consolidation where the Company
is not the surviving corporation and in the case of any sale, conveyance or
other disposition, the successor corporation is a corporation organized and
existing under the laws of the United States or a State thereof and such
corporation expressly assumes by supplemental indenture all the obligations of
the Company under the Debentures and under this Indenture, (ii) immediately
after giving effect to such merger or consolidation, or such sale, conveyance,
transfer or other disposition, no Default or Event of Default shall have
occurred and be continuing and (iii) the Company has delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that such
merger, consolidation, sale, conveyance, transfer or other disposition comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with. In the event of the
assumption by a successor corporation of the obligations of the Company as
provided in clause (i)(B) of the immediately preceding sentence, such successor
corporation shall succeed to and be substituted for the Company hereunder and
under the Debent-
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ures and all such obligations of the Company shall terminate.
ARTICLE VIII
Supplemental Indentures
Section 8.1. Supplemental Indentures Without Consent of
Holders. Without the consent of any Holders, the Company and the Trustee, at
any time and from time to time, may enter into indentures supplemental hereto,
in form reasonably satisfactory to the Trustee, for any of the following
purposes:
(1) to evidence the succession of another corporation to
the Company and the assumption by any such successor of the covenants
and obligations of the Company herein and in the Debentures; or
(2) to add to the covenants of the Company for the
benefit of the Holders or to surrender any right or power herein
conferred upon the Company; or
(3) to add any additional Events of Default; or
(4) to secure the Debentures; or
(5) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee pursuant to the
requirements of Section 6.10; or
(6) to provide for uncertificated Debentures in addition
to or in place of certificated Debentures so long as such
uncertificated Debentures are in registered form for United States
federal income tax purposes; or
(7) to correct or supplement any provision herein which
may be inconsistent with any other provision herein or to make any
other provisions with respect to matters or questions arising under
this Indenture, provided such action shall not adversely affect the
interests of the Holders of Debentures; or
(8) to cure any ambiguity or correct any mistake; or
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(9) to comply with any requirement of the Commission in
connection with the qualification of this Indenture under the Trust
Indenture Act.
Section 8.2. With Consent of Holders. With the written
consent of the Holders of a majority of the aggregate principal amount of the
Outstanding Debentures, the Company and the Trustee may enter into an indenture
or indentures supplemental hereto to add any provisions to or to change or
eliminate any provisions of this Indenture or of any other indenture
supplemental hereto or to modify the rights of the Holders of Debentures;
provided, however, that without the consent of the Holder of each Outstanding
Debenture affected thereby, an amendment under this Section may not:
(1) change the Stated Maturity of the principal of, or
any installment of principal of or interest on, any Debenture, or
reduce the principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof, or change the coin or
currency in which any Debentures or any premium or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date); or
(2) reduce the percentage in principal amount of the
Outstanding Debentures, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture; or
(3) modify any of the provisions of this Indenture
relating to the subordination of the Debentures in a manner adverse to
the Holders thereof; or
(4) change any obligation of the Company to maintain an
office or agency in the places and for the purposes specified in
Section 9.2; or
(5) make any change in Section 5.7 or this 8.2 except to
increase any percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived except with the consent of
the
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Holders of each Outstanding Debenture affected thereby; or
(6) adversely affect the right to convert Debentures as
provided in Article XII hereof.
It is not necessary under this Section 8.2 for the Holders to
consent to the particular form of any proposed supplemental indenture, but it
is sufficient if they consent to the substance thereof.
Section 8.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Debentures shall be set forth in a
supplemental indenture that complies with the Trust Indenture Act as then in
effect.
Section 8.4. Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modification thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 8.5. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture
shall be modified in accordance therewith, and such supplemental indenture
shall form a part of this Indenture for all purposes; and every Holder of
Debentures theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 8.6. Reference in Debentures to Supplemental
Indentures. Debentures authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Debentures so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Debentures.
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ARTICLE IX
Covenants
Section 9.1. Payment of Principal, Premium, if any, and
Interest. The Company will duly and punctually pay the principal of, premium,
if any, and interest on the Debentures in accordance with the terms of the
Debentures and this Indenture. An installment of principal, premium, if any,
or interest shall be considered paid on the date it is due if the Trustee or
Paying Agent holds on that date money designated for and sufficient to pay the
installment.
Section 9.2. Maintenance of Office or Agency. The Company
will maintain one or more offices or agencies in the Borough of Manhattan, The
City of New York, New York, where Debentures may be presented or surrendered
for payment, and one or more offices or agencies in the Borough of Manhattan,
The City of New York, New York, where Debentures may be surrendered for
registration of transfer or exchange or for conversion and where notices and
demands to or upon the Company in respect of the Debentures and this Indenture
may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of any such office or agency. If
at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Trustee shall initially serve as Paying Agent.
Section 9.3. Money for Debentures to Be Held in Trust;
Unclaimed Money. If the Company shall at any time act as its own Paying Agent,
it will, on or before each due date of the principal of, premium, if any, or
interest on any of the Debentures, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal, premium,
if any, or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify
the Trustee in writing of its action or failure so to act.
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The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of, premium, if any, or interest on Debentures in trust for
the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company
(or any other obligor upon the Debentures) in the making of any
payment of principal, premium, if any, or interest on the Debentures;
and
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of any principal, premium or
interest on any Debenture and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Debenture shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a
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newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York or cause to be
mailed to such Holder, notice that such money remains unclaimed and that, after
a date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
Section 9.4. Corporate Existence. Subject to Article VII,
the Company will at all times do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and its
rights and franchises; provided that nothing in this Section 9.4 shall prevent
the abandonment or termination of any right or franchise of the Company if, in
the opinion of the Company, such abandonment or termination is in the best
interests of the Company.
Section 9.5. Reports by the Company. The Company covenants:
(a) to file with the Trustee, within 30 days after the
Company is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission
may from time to time by rules and regulations prescribe) which the
Company may be required to file with the Commission pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934, as
amended; or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then to file
with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of
the supplementary and periodic information, documents and reports
which may be required pursuant to section 13 of the Securities
Exchange Act of 1934, as amended, in respect of a security listed and
registered on a national securities exchange as may be prescribed from
time to time in such rules and regulations;
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(b) to file with the Trustee and the Commission, in
accordance with the rules and regulations prescribed from time to time
by the Commission, such additional information, documents and reports
with respect to compliance by the Company with the conditions and
covenants provided for in this Indenture, as may be required from time
to time by such rules and regulations; and
(c) to transmit to all Holders of Debentures, within 30
days after the filing thereof with the Trustee, in the manner and to
the extent provided in section 313(c) of the Trust Indenture Act, such
summaries of any information, documents and reports required to be
filed by the Company pursuant to subsections (a) and (b) of this
Section 9.5, as may be required by rules and regulations prescribed
from time to time by the Commission.
Section 9.6. Annual Review Certificate. The Company
covenants and agrees to deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company, a brief certificate from the principal
executive officer, principal financial officer, or principal accounting officer
as to his or her knowledge of the Company's compliance with all conditions and
covenants under this Indenture. For purposes of this Section 9.6, such
compliance shall be determined without regard to any period of grace or
requirement of notice provided under this Indenture.
Section 9.7. Limitation on Dividends and Capital Stock
Acquisitions. The Company covenants and agrees that, if at any time it has
failed to make any payment of interest, principal or premium on the Debentures
when due (after giving effect to any grace period for payment thereof as
provided in Section 5.1) or the Company has exercised its right to extend the
interest payment period for an Extension Period as provided in Section 3.1(d),
the Company will not, until all defaulted interest on the Debentures and all
interest accrued on the Debentures during an Extension Period and all principal
and premium, if any, then due and payable on the Debentures shall have been
paid in full, (i) declare, set aside or pay any dividend or distribution on any
capital stock of the Company, except for dividends or distributions in shares
of its capital stock or in rights to acquire shares of its capital stock, or
(ii) repurchase, redeem or otherwise acquire, or make any sinking fund pay-
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ment for the purchase or redemption of, any shares of its capital stock (except
by conversion into or exchange for shares of its capital stock and except for a
redemption, purchase or other acquisition of shares of its capital stock made
for the purpose of an employee incentive plan or benefit plan of the Company or
any of its subsidiaries); provided, however, that any moneys theretofore
deposited in any sinking fund with respect to any preferred stock of the
Company in compliance with the provisions of such sinking fund and not in
violation of this Section 9.7 may thereafter be applied to the purchase or
redemption of such preferred stock in accordance with the terms of such sinking
fund without regard to the restrictions contained in this Section 9.7. The
term "capital stock" as used in this Section 9.7 shall include the Company's
Common Stock, its Series A Cumulative Convertible Preferred Stock and any other
issue of preferred stock from time to time outstanding but shall not include
any indebtedness of any kind, whether or not convertible or exchangeable for
shares of Common Stock or preferred stock.
ARTICLE X
Redemption
Section 10.1. Right of Redemption. The Company may, at its
option, redeem all, or from time to time any part of the Debentures on any date
on or after February 1, 1996 and prior to Maturity by payment of the Redemption
Price specified in the form of Debenture attached hereto as Exhibit A, together
with accrued interest to the Redemption Date.
Section 10.2. Applicability of Article. Redemption of
Debentures at the election of the Company, or permitted by any provision of
this Indenture, shall be made in accordance with this Article.
Section 10.3. Election to Redeem; Notice to Trustee. The
election of the Company to redeem any Debentures shall be evidenced by or
pursuant to a Board Resolution. In the case of any redemption at the election
of the Company of less than all the Debentures, the Company shall, at least 60
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date, of the principal amount of Debentures to be redeemed.
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Section 10.4. Selection of Debentures to Be Redeemed. If
less than all the Debentures are to be redeemed, the Company, not more than 45
days prior to the redemption date, shall select the Debentures to be redeemed
by lot or pro rata or in such other manner permitted by the rules of the New
York Stock Exchange as the Board of Directors may determine. The Company shall
make the selection from Debentures that are Outstanding and that have not
previously been called for redemption and may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Debentures or any integral multiple thereof) of the principal amount of
Debentures of a denomination larger than the minimum authorized denomination
for Debentures.
For purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Debentures shall relate,
in the case of any Debentures redeemed or to be redeemed only in part, to the
portion of the principal amount of such Debentures which has been or is to be
redeemed.
Section 10.5. Notice of Redemption. Notice of redemption
shall be given in the manner provided in Section 1.6 not less than 30 days nor
more than 60 days prior to the Redemption Date to the Holders of the Debentures
to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Debentures are to be
redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Debenture or Debentures to be
redeemed;
(4) in case any Debenture is to be redeemed in part only,
the notice which relates to such Debenture shall state that on and
after the Redemption Date, upon surrender of such Debenture, the
holder will receive, without a charge, a new Debenture or Debentures
of authorized denominations for the principal amount thereof remaining
unredeemed;
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(5) the place where such Debentures are to be surrendered
for payment for the Redemption Price, which shall be the office or
agency of the Company to be maintained as provided in Section 9.2;
(6) that Debentures must be surrendered to the Paying
Agent to collect the Redemption Price;
(7) that, on the Redemption Date, the Redemption Price
will become due and payable upon each such Debenture, or the portion
thereof, to be redeemed and, if applicable, that interest thereon will
cease to accrue on and after said date; and
(8) the current conversion price of the Debentures, the
place or places where such Debentures may be surrendered for
conversion, and the time at which the right to convert the Debentures
or portions thereof to be redeemed will terminate in accordance with
this Indenture.
Notice of redemption of Debentures to be redeemed shall be
given by the Company or, at the Company's request, by the Trustee in the name
and at the expense of the Company.
Section 10.6. Deposit of Redemption Price. On or prior to
any Redemption Date, the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 9.3) an amount of money sufficient to
pay on the Redemption Date the Redemption Price of, and (unless the Redemption
Date shall be an Interest Payment Date) interest accrued to the Redemption Date
on, all Debentures or portions thereof which are to be redeemed on that date.
Section 10.7. Debentures Payable on Redemption Date. Notice
of redemption having been given as aforesaid, the Debentures so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Debentures shall cease to bear interest. Except as provided in the next
succeeding paragraph, upon surrender of any such Debenture for redemption in
accordance with said notice, such Debenture shall be paid by the Company at the
Redemption Price, together with accrued
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interest to the Redemption Date; provided, however, that installments of
interest on Debentures whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Debentures, or one or more
Predecessor Debentures, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
3.7.
If any Debenture called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Debenture.
Section 10.8. Debentures Redeemed in Part. Upon surrender of
a Debenture that is redeemed in part (with, if the Company or the Trustee so
require, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), the Company shall execute
and the Trustee shall authenticate and deliver to the Holder of that Debenture,
without service charge a new Debenture or Debentures in any authorized
denomination equal in aggregate principal amount to the unredeemed portion of
the principal amount of the Debenture surrendered.
ARTICLE XI
Subordination of Debentures
Section 11.1. Agreement to Subordinate. The Company
covenants and agrees and each holder of Debentures issued hereunder by
acceptance thereof likewise covenants and agrees, that all Debentures shall be
issued subject to the provisions of this Article; and each Person holding any
Debenture, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
All Debentures shall, for all purposes and in all respects
without limitation, including those hereinafter in this Article set forth, be
subordinated and subject in right of payment to the prior payment in full of
all Senior Indebtedness; provided, however, that principal and interest may be
paid from time to time upon the Debentures subject to the specific limitations
in this Article set forth. The
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indebtedness evidenced by the Debentures is equal in rank to the Company's
obligations in respect of the 5 1/4% Subordinated Debentures Due 1998 issued by
American Airlines, Inc.
Section 11.2. No Payment on Debentures if Senior Indebtedness
in Default. No payments or distributions, whether in cash, securities or other
property (other than securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which
is subordinated, at least to the extent provided in this Article XI with
respect to the Debentures, to the payment of all Senior Indebtedness at the
time outstanding and to any securities issued in respect thereof under any such
plan of reorganization or readjustment), on account of principal of, premium,
if any, or interest on, the Debentures shall be made by the Company unless full
payment of all amounts then due on all Senior Indebtedness has been made or
duly provided for in money or money's worth.
Section 11.3. Priority of Senior Indebtedness Upon
Distribution of Assets. Upon any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities
(other than securities of the Company or any other corporation provided for by
a plan of reorganization or readjustment the payment of which is subordinated,
at least to the extent provided in this Article XI with respect to the
Debentures, to the payment of all Senior Indebtedness at the time outstanding
and to any securities issued in respect thereof under such plan of
reorganization or readjustment) to creditors upon any dissolution or winding-up
or total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
proceedings, all amounts due upon all Senior Indebtedness shall first be paid
in full, or payment thereof provided for in money or money's worth, before the
Holders of the indebtedness evidenced by the Debentures or the Trustee shall be
entitled to retain any assets so paid or distributed (other than securities
described in the first parenthetical of this sentence) in respect of the
Debentures (for principal or interest) or of this Indenture; and upon any such
dissolution or winding-up or liquidation or reorganization any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities (other than securities described in the first
parenthetical of this sentence), to which the Holders of the Debentures or the
Trustee would be entitled, except for the provisions of this Article XI, shall
be paid by the Company or by any receiver,
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trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the Holders of the Debentures or by the Trustee
if received by them or it, directly to the holders of Senior Indebtedness (pro
rata to such holders on the basis of the respective amounts of Senior
Indebtedness held by such holders) or their representatives, to the extent
necessary to pay all Senior Indebtedness in full, in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness, before any such payment or distribution is made
to the Holders of the indebtedness evidenced by the Debentures or to the
Trustee.
Nothing in this Section 11.3 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.8.
Section 11.4. Trustee May Rely on Certificate of Liquidating
Agent. The Company shall give prompt written notice to the Trustee of any
dissolution, winding-up, liquidation or reorganization of the Company within
the meaning of this Article XI. The Trustee shall be entitled to assume that
no such event has occurred unless the Company or any one or more holders of
Senior Indebtedness or any trustee therefor has given such notice. Upon any
payment or distribution of assets of the Company referred to in this Article
XI, the Trustee shall be entitled to rely upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to the Trustee or to the holders of
Debentures, for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article XI.
Section 11.5. Subrogation of Debentures. Upon the payment in
full of all Senior Indebtedness, the Holders of the Debentures shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets of the Company made on the Senior
Indebtedness until the principal of and interest on the Debentures shall be
paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash, property or
securities to which the Holders of the Debentures or the
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Trustee would be entitled except for the provisions of this Article XI shall,
as between the Company, its creditors other than the holders of Senior
Indebtedness, on the one hand, and the Holders of Debentures, on the other, be
deemed to be a payment by the Company to or on account of Senior Indebtedness,
it being understood that the provisions of this Article XI are and are intended
solely for the purpose of defining the relative rights of the Holders of the
Debentures, on the one hand, and the holders of Senior Indebtedness, on the
other.
Section 11.6. Company Obligation to Pay Unconditional.
Nothing contained in this Article XI or elsewhere in this Indenture, or in the
Debentures, is intended to or shall impair as between the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders of the
Debentures, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Debentures the principal of and interest on the
Debentures, as and when the same shall become due and payable in accordance
with their terms, or to affect the relative rights of the Holders of the
Debentures and creditors of the Company other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
Holder of any Debenture from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if
any, under this Article XI of the holders of Senior Indebtedness in respect of
cash, property or securities of the Company received upon exercise of any such
remedy.
Section 11.7. Authorization of Debentureholders to Trustee to
Effect Subordination. Each Holder of Debentures by his acceptance thereof
authorizes the Trustee in his behalf to take such action as may be necessary
or appropriate to effectuate the subordination as provided in this Article XI
and appoints the Trustee his attorney-in-fact for any and all such purposes.
Section 11.8. Notice to Trustee of Effectuation of
Subordination. Notwithstanding any of the provisions of this Article XI or any
other provision of this Indenture, neither the Trustee nor any Paying Agent
shall at any time be charged with knowledge of the existence of any facts which
would prohibit the making of any payment of money to or by the Trustee or such
Paying Agent, unless and until the Trustee at its Corporate Trust Office or
such Paying Agent, as the case may be, shall have received written notice
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thereof from the Company or from one or more holders of Senior Indebtedness or
from any trustee therefor; and, prior to the receipt of any such written
notice, the Trustee and such Paying Agent shall be entitled in all respects to
assume that no such facts exist; provided that, if three Business Days prior to
the date upon which under the provisions hereof such moneys become payable for
any purpose (including, without limitation, payment of the principal or
interest on any Debenture called for redemption) the Trustee shall not have
received with respect to such moneys the notice provided for in this Section
11.8, then, anything herein contained to the contrary notwithstanding, the
Trustee and such Paying Agent shall have full power and authority to receive
such moneys and to apply the same to the purpose for which they were received,
and shall not be affected by any notice to the contrary which may be received
by them or either of them during or after such three-Business-Day period.
Section 11.9. Relationship of Other Indenture Provisions to
Article XI. Notwithstanding anything herein contained to the contrary, all the
provisions of this Indenture shall be subject to the provisions of this Article
XI, so far as the same may be applicable thereto; provided that a deposit of
funds with the Trustee pursuant to Article IV shall be deemed for the purposes
of this Article XI to be a payment or distribution on the Debentures at the
time such deposit is made, irrespective of when such funds are applied by the
Trustee to the payment of principal of or interest on the Debentures.
Section 11.10. Trustee's Relationship to Holders of Senior
Indebtedness. The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee
subject to Sections 310(b) and 311 of the Trustee Indenture Act. Any Agent may
do the same with like rights.
ARTICLE XII
Conversion of Debentures
Section 12.1. Conversion Privilege. Subject to and upon
compliance with the provisions of this Article XII, at the option of the
Holder, any Debenture may, at any time up to and including November 1, 2024, or
in case such Debenture or some portion thereof shall be called for redemption
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prior to such date, then, with respect to such Debenture or portion thereof as
is so called, until and including, but (if no default is made in making due
provision for the payment or payments of the Redemption Price thereof, together
with accrued interest) not after, the close of business on the Business Day
preceding the Redemption Date, be converted in whole, or in part in integral
multiples of $1,000 principal amount, at 100% of the principal amount of such
Debenture into shares of Common Stock at the actual conversion price in effect
at the Date of Conversion (as hereinafter defined).
Section 12.2. Exercise of Conversion Privilege. In order to
exercise the conversion privilege, the Holder of any Debenture to be converted
shall surrender such Debenture to the Company at any time during usual business
hours at its office or agency in the Borough of Manhattan, The City of New
York, and shall give written notice to the Company (which notice shall be
irrevocable) at such office or agency that the Holder elects to convert such
Debenture or a stated portion thereof constituting an integral multiple of
$1,000 principal amount. Such notice shall also state the name or names (with
addresses and taxpayer identification number) in which the certificate or
certificates for Common Stock shall be issued. All Debentures shall be
accompanied, if required by the Company or the Trustee, by proper assignments
thereof in blank. Holders that convert their Debentures will not be entitled
to payment of any accrued interest on such Debentures, including interest that
accrues during an Extension Period. Any Debentures so surrendered during any
period beginning on a Regular Record Date and ending at the opening of business
on the Interest Payment Date next following such Regular Record Date shall also
be accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of such Debentures then being
converted. As promptly as practicable after the receipt of such notice and the
surrender of such Debenture as aforesaid, the Company shall, subject to the
provisions of Section 12.7, issue and deliver at such office or agency to such
Holder, or on his written order, a certificate or certificates for the number
of full shares of Common Stock issuable on such conversion in accordance with
the provisions of this Article XII and cash, as provided in Section 12.3, in
respect of any fraction of a share otherwise issuable upon such conversion.
Such conversion shall be deemed to have been effected immediately prior to the
close of business on the date (herein called the
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"Date of Conversion") on which such notice shall have been received by the
Company and such Debentures shall have been surrendered as aforesaid, and the
Person or Persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed
to have become on the Date of Conversion the holder or holders of record of the
shares of Common Stock represented thereby; provided, however, that any such
surrender on any date when the stock transfer books of the Company shall be
closed shall constitute the Person or Persons, in whose name or names the
certificate or certificates for such shares of Common Stock are to be issued,
as the record holder or holders thereof for all purposes at the opening of
business on the next succeeding day on which such stock transfer books are open
and the Debentures surrendered shall not be deemed to have been converted, in
whole or in part, as the case may be, until such date for the purpose of
determining whether any interest is payable thereon, and such conversion shall
be at the actual conversion price in effect at such date. In the case of
conversion of a portion, but less than all, of a Debenture, the Company shall
execute, and the Trustee shall authenticate and deliver to such Holder, a
Debenture or Debentures in the aggregate principal amount of the unconverted
portion of the Debentures surrendered. Except as provided above, no adjustment
shall be made for interest accrued on any Debenture that shall be converted or
for dividends on any shares of Common Stock that shall be issued upon the
conversion of any Debenture.
Section 12.3. No Fractional Shares. No fractional shares or
scrip representing fractional shares of Common Stock shall be issued upon
conversions of Debentures. If more than one Debenture shall be surrendered for
conversion at one time by the same Holder, including any Depositary, the number
of full shares of Common Stock which shall be issuable upon conversion thereof
shall be computed on the basis of the aggregate principal amount of the
Debentures so surrendered. Instead of any fractional share of Common Stock
that would otherwise be issuable upon the conversion of any Debenture or
Debentures, the Company shall pay a cash adjustment in respect of such
fractional interest in an amount equal to the same fraction of the market price
per share of Common Stock (as determined or prescribed by the Board, whose
determination shall be conclusive, but which, so long as the Common Stock is
listed on the New York Stock Exchange, shall be the Closing Price on the New
York Stock Exchange) at the close of business on the Trading Day imme-
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diately preceding the Date of Conversion. Any such cash adjustment may be in
the form of a check drawn on an account of the Trustee.
Section 12.4. Conversion Price. The initial conversion price
at which shares of Common Stock shall be issuable upon conversion of Debentures
shall be $79.00 principal amount of Debentures for each share of Common Stock.
Section 12.5. Adjustment of Conversion Price. The conversion
price (hereinafter called the "Conversion Price") shall be subject to
adjustment from time to time as follows:
(i) In case the Company shall hereafter pay a dividend or
make a distribution to all holders of the outstanding Common Stock in
shares of Common Stock, the Conversion Price in effect at the opening
of business on the date following the date fixed for the determination
of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by
a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such
number of shares and the total number of shares constituting such
dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the
date fixed for such determination. The Company will not pay any
dividend or make any distribution on shares of Common Stock held in
the treasury of the Company.
(ii) In case the Company shall hereafter issue rights or
warrants to all holders of its outstanding shares of Common Stock
entitling them (for a period expiring within 45 days after the date
fixed for determination of stockholders entitled to receive such
rights or warrants) to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Market Price on the
date fixed for determination of stockholders entitled to receive such
rights or warrants, the Conversion Price shall be adjusted so that the
same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the date fixed for determination
of stockholders entitled to receive such rights or warrants by a
fraction of which the numerator shall be the number
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of shares of Common Stock outstanding at the close of business on the
date fixed for determination of stockholders entitled to receive such
rights or warrants plus the number of shares which the aggregate
offering price of the total number of shares so offered would purchase
at such Current Market Price, and of which the denominator shall be
the number of shares of Common Stock outstanding on the date fixed for
determination of stockholders entitled to receive such rights or
warrants plus the total number of additional shares of Common Stock
offered for subscription or purchase. Such adjustment shall become
effective immediately after the opening of business on the day
following the date fixed for determination of stockholders entitled to
receive such rights or warrants. To the extent that shares of Common
Stock are not delivered after the expiration of such rights or
warrants, the Conversion Price shall be readjusted to the Conversion
Price which would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made on the basis of delivery
of only the number of shares of Common Stock actually delivered. In
the event that such rights or warrants are not so issued, the
Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such date fixed for the determination
of stockholders entitled to receive such rights or warrants had not
been fixed.
(iii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and conversely, in case outstanding shares
of Common Stock shall be combined into a smaller number of shares of
Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction
or increase, as the case may be, to become effective immediately after
the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(iv) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of
capital stock (other than a dividend or distribution to which
subparagraph (i) of
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this Section 12.5 applies) or evidences of its indebtedness or assets
(including securities, but excluding any rights or warrants referred
to in subparagraph (ii) of this Section 12.5, and excluding any
dividend or distribution (x) in connection with the liquidation,
dissolution or winding up of the Company, whether voluntary or
involuntary or (y) paid exclusively in cash (any of the foregoing
being hereinafter in this subparagraph (iv) called the "Securities"),
then, in each such case, unless the Company elects to reserve such
Securities for distribution to the Holders of the Debentures upon the
conversion of the Debentures so that any such Holder converting
Debentures will receive upon such conversion, in addition to the
shares of the Common Stock to which such Holder is entitled, the
amount and kind of such Securities which such Holder would have
received if such Holder had, immediately prior to the record date for
such distribution of the Securities, converted his Debentures into
Common Stock, the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying the Conversion Price
in effect on such record date by a fraction of which the numerator
shall be the Current Market Price of the Common Stock on such record
date less the fair market value (as determined by the Board, whose
determination shall be conclusive, and described in a Board
Resolution), on such record date, of the portion of the Securities so
distributed applicable to one share of Common Stock and the
denominator shall be such Current Market Price per share of the Common
Stock, such reduction to become effective immediately prior to the
opening of business on the day following such record date; provided,
however, that in the event the then fair market value (as so
determined) of the portion of the Securities so distributed applicable
to one share of Common Stock is equal to or greater than the Current
Market Price of the Common Stock on such record date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each
Holder of a Debenture shall have the right to receive upon conversion
the amount and kind of Securities such Holder would have received had
such Holder converted each such Debenture on such record date. In the
event that such dividend or distribution is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such dividend or distribution had not
been declared. If the Board determines the fair market
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value of any distribution for purposes of this subparagraph (iv) by
reference to the actual or when issued trading market for any
securities comprising such distribution, it must in doing so consider
the prices in such market over the same period used in computing the
Current Market Price of the Common Stock.
For purposes of this subparagraph (iv) and subparagraphs (i)
and (ii) of this Section 12.5, any dividend or distribution that
includes shares of Common Stock, or rights or warrants to subscribe
for or purchase shares of common Stock, shall be deemed instead to be
(1) a dividend or distribution of the evidences of indebtedness,
assets or shares of capital stock other than such shares of Common
Stock or rights or warrants (and any Conversion Price reduction
required by this subparagraph (iv) with respect to such dividend or
distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights
or warrants (and any further Conversion Price reduction required by
subparagraph (i) or (ii) of this Section 12.5 with respect to such
dividend or distribution shall then be made, except (A) the record
date of such dividend or distribution as defined in this subparagraph
(iv) shall be substituted as "the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution"
and "the date fixed for such determination" within the meaning of
subparagraphs (i) and (ii) of this Section 12.5 and (B) any shares of
Common Stock included in such dividend or distribution shall not be
deemed "outstanding at the close of business on the date fixed for
such determination" within the meaning of subparagraph (i) of this
Section 12.5).
In lieu of making any adjustment to the Conversion Price under
this Section 12.5 in the event that the rights (the "Rights") issued
pursuant to the Rights Agreement, dated as of February 13, 1986, as
amended, between the Company and First Chicago Trust Company of New
York (as successor Rights Agent to J. Henry Schroder Bank and Trust
Company) as may be amended from time to time (the "Rights Agreement"),
are separately distributed to the holders of Common Stock upon the
occurrence of certain events specified in the Rights Agreement, the
Company has the option of amending such Rights Agreement to provide
that Rights shall be issuable upon conversion of the Debentures
without regard
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to whether the shares of Common Stock issuable upon conversion of the
Debentures were issued before or after the Distribution Date (as
defined in the Rights Agreement).
(v) In case the Company shall, by dividend or otherwise,
at any time distribute to all holders of its Common Stock cash
(excluding (x) any quarterly cash dividend on the Common Stock to the
extent the aggregate cash dividend per share of Common Stock in any
fiscal quarter does not exceed the greater of (A) the amount per share
of Common Stock of the next preceding quarterly cash dividend on the
Common Stock to the extent that such preceding quarterly dividend did
not require an adjustment of the Conversion Price pursuant to this
subparagraph (v) (as adjusted to reflect subdivisions or combinations
of the Common Stock), and (B) 3.75% of the Current Market Price of the
Common Stock on the Trading Day next preceding the date of declaration
of such dividend and (y) any dividend or distribution in connection
with the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary), then, in such case, unless the
Company elects to reserve such cash for distribution to the Holders of
the Debentures upon the conversion of the Debentures so that any such
Holder converting Debentures will receive upon such conversion, in
addition to the shares of the Common Stock to which such Holder is
entitled, the amount of cash which such Holder would have received if
such Holder had, immediately prior to the record date for such
distribution of cash, converted its Debentures into Common Stock, the
Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the Record Date by a fraction of which the
numerator shall be the Current Market Price of the Common Stock on
such record date less the amount of cash so distributed (and not
excluded as provided above) applicable to one share of Common Stock
and the denominator shall be such Current Market Price of the Common
Stock, such reduction to become effective immediately prior to the
opening of business on the day following such record date; provided,
however, that in the event the portion of the cash so distributed
applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on such record date, in
lieu of the foregoing adjustment, adequate provision shall be made so
that
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each Holder of Debentures shall thereafter have the right to receive
upon conversion the amount of cash such Holder would have received had
he converted each Debenture on such record date. In the event that
such dividend or distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price which would
then be in effect if such dividend or distribution had not been
declared.
(vi) In case a tender or exchange offer made by the
Company or any Subsidiary for all or any portion of the Common Stock
shall expire and such tender or exchange offer shall involve the
payment by the Company or such Subsidiary of consideration per share
of Common Stock having a fair market value (as determined by the
Board, whose determination shall be conclusive, and described in a
Board Resolution) at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it
shall have been amended) that exceeds the Current Market Price of the
Common Stock on the Trading Day next succeeding the Expiration Time,
the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) on the Expiration Time
multiplied by the Current Market Price of the Common Stock on the
Trading Day next succeeding the Expiration Time and the denominator
shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders
based on the acceptance (up to any maximum specified in the terms of
the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the product of the number of shares of
Common Stock outstanding (less any Purchased Shares) on the Expiration
Time and the Current Market Price of the Common Stock on the Trading
Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day
following the Expiration Time. In the event that the Company is
obligated to purchase shares pursuant to any such tender or exchange
offer, but the Corporation is permanently prevented by applicable law
from effecting
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any such purchases or all such purchases are rescinded, the Conversion
Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender or exchange offer had not been made.
(vii) The Company may make such reductions in the
Conversion Price, in addition to those required by subparagraphs (i),
(ii), (iii), (iv), (v) and (vi) of this Section 12.5, as the Board
considers to be advisable to avoid or diminish any income tax to
holders of Common Stock or rights to purchase Common Stock resulting
from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. To
the extent permitted by applicable law, the Company from time to time
may reduce the Conversion Price by any amount for any period of time
if the period is at least 20 days, the reduction is irrevocable during
the period and the Board shall have made a determination that such
reduction would be in the best interests of the Company, which
determination shall be conclusive. Whenever the Conversion Price is
reduced pursuant to the preceding sentence, the Company shall mail to
Holders of the Debentures a notice of the reduction at least 15 days
prior to the date the reduced Conversion Price takes effect, and such
notice shall state the reduced Conversion Price and the period it will
be in effect.
(viii) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or decrease
of at least 1% in the Conversion Price; provided, however, that any
adjustments which by reason of this subparagraph (viii) are not
required to be made shall be carried forward and taken into account in
determining whether any subsequent adjustment shall be required.
(ix) Notwithstanding any other provision of this Article
XII, no adjustment to the Conversion Price shall reduce the Conversion
Price below the then par value per share of the Common Stock, and any
such purported adjustment shall instead reduce the Conversion Price to
such par value. The Company hereby covenants not to take any action
(1) to increase the par value per share of the Common Stock or (2)
that would or does result in any adjustment in the Conversion Price
that, if made without giving effect to the previous sentence, would
cause the Conversion Price to be less than the
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then par value per share of the Common Stock, provided, however, that
the covenant in this sentence shall be suspended if within 10 days of
determining in good faith that such action would result in such
adjustment (but not later than the business day next following the
effectiveness of such adjustment), the Company gives notice of
redemption of all Outstanding Debentures, and effects the redemption
referred to in such notice on the Redemption Date referred to therein
in compliance with Article X hereof, but the covenant in this sentence
shall be retroactively reinstated if such notice is not given or such
redemption does not occur.
(x) Whenever the Conversion Price is adjusted as herein
provided:
(1) the Company shall compute the adjusted
Conversion Price and shall prepare a certificate signed by an
Officer of the Company setting forth the adjusted Conversion
Price and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall forthwith
be filed with the Trustee; and
(2) a notice stating that the Conversion Price
has been adjusted and setting forth the adjusted Conversion
Price shall as soon as practicable be mailed by the Company to
all Holders of Debentures at their last addresses as they
shall appear on the Register.
(xi) In any case in which this Section 12.5 provides that
an adjustment shall become effective immediately after a record date
for an event, the Company may defer until the occurrence of such event
(y) issuing to the Holder of any Debenture converted after such record
date and before the occurrence of such event the additional shares of
Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock issuable upon
such conversion before giving effect to such adjustment and (z) paying
to such Holder any amount in cash in lieu of any fractional share of
Common Stock pursuant to Section 12.4.
Section 12.6. Reclassification, Consolidation, Merger or Sale
of Assets. In the event that the Company shall be a party to any transaction
(including without limi-
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<PAGE> 82
tation (i) any recapitalization or reclassification of the Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination of the
Common Stock), (ii) any consolidation or merger of the Company with or into any
other person or any merger of another Person into the Company (other than a
merger which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock), (iii) any sale or transfer
of all or substantially all of the assets of the Company, or (iv) any
compulsory share exchange) pursuant to which either shares of Common Stock
shall be converted into the right to receive other securities, cash or other
property, or, in the case of a sale or transfer of all or substantially all of
the assets of the Company, the holders of Common Stock shall be entitled to
receive other securities, cash or other property, then appropriate provision
shall be made as part of the terms of such transaction whereby (1) in the case
of any such transaction not constituting a Common Stock Fundamental Change (as
defined in Section 12.11) and subject to funds being legally available for such
purpose under applicable law at the time of such conversion, the Holder of each
Debenture then Outstanding shall have the right thereafter to convert such
Debenture only into the kind and amount of securities, cash and other property
that would have been receivable upon such transaction by a holder of the number
of shares of Common Stock into which such Debenture might have been converted
immediately prior to such transaction, after giving effect, in the case of any
Non-Stock Fundamental Change (as defined in Section 12.11), to any adjustment
in the Conversion Price required by the provisions of clause (i) of Section
12.10, and (2) in the case of any such transaction constituting a Common Stock
Fundamental Change, the Holder of each Debenture then Outstanding shall have
the right thereafter to convert such Debenture only into common stock of the
kind received by holders of Common Stock as a result of such Common Stock
Fundamental Change in an amount determined pursuant to the provisions of clause
(ii) of Section 12.10. The company or the Person formed by such consolidation
or resulting from such merger or which acquired such assets or which acquired
the Company's shares, as the case may be, execute with the Trustee a
supplemental indenture to establish such right. Such supplemental indenture
shall provide for adjustments which, for events subsequent to the effective
date of such supplemental indenture, shall be as nearly equivalent as may be
practicable to the relevant adjustments provided for in this Article XII. The
above provisions shall similarly
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<PAGE> 83
apply to successive transactions of the type described in this Section 12.6.
Section 12.7. Taxes on Conversions. The issue of
certificates for shares of Common Stock on conversions of Debentures shall be
made without charge to the converting Debentureholder for any tax in respect of
the issue thereof. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in any name other than that of the Holder of
any Debenture converted, and the Company shall not be required to issue or
deliver any certificate unless and until the Person or Persons requesting the
issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been
paid.
Section 12.8. Reservation of Shares. The Company shall at
all times reserve and keep available, out of its authorized and unissued stock,
solely for the purpose of effecting the conversion of the Debentures, such
number of shares of its Common Stock free of preemptive rights as shall from
time to time be sufficient to effect the conversion of all Debentures from time
to time outstanding. The Company shall from time to time, in accordance with
the laws of the State of Delaware, use all reasonable efforts to increase the
authorized number of shares of Common Stock if at any time the number of shares
of authorized and unissued Common Stock shall not be sufficient to permit the
conversion of all the then Outstanding Debentures.
If any shares of Common Stock required to be reserved for
purposes of conversion of the Debentures hereunder require registration with or
approval of any governmental authority under any Federal or State laws before
such shares may be issued upon conversion, the Corporation will in good faith
and as expeditiously as possible endeavor to cause such shares to be duly
registered or approved, as the case may be. If the Common Stock is listed on
the New York Stock Exchange or any other national securities exchange, the
Company will, in good faith and as expeditiously as possible, endeavor, if
permitted by the rules of such exchange, to list and keep listed on such
exchange, upon official notice of issuance, all shares of common Stock issuable
upon conversion of the Debentures.
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<PAGE> 84
Section 12.9. Prior Notice of Certain Events. In case:
(i) the Company shall (1) declare any dividend (or any
other distributions) on its Common Stock, other than (A) a dividend
payable in shares of Common Stock or (B) a dividend payable in cash
(other than any special or nonrecurring or other extraordinary
dividend) or (2) declare or authorize a redemption or repurchase of in
excess of 10% of the then outstanding shares of Common Stock; or
(ii) the Company shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights or
warrants (other than Rights or rights granted pursuant to a rights
agreement described in the second sentence of Section 12.12); or
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no par
value to par value), or of any consolidation or merger to which the
Company is a party and for which the Company is a party and for which
approval of any stockholders of the Company shall be required, or of
the sale or transfer of all or substantially all of the assets of the
Company or of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed with the Trustee, and shall cause to
be mailed to the Holders of the Debentures, at their last addresses as they
shall appear on the Register, at least 15 days prior to the applicable record
date hereinafter specified, a notice stating (x) the date on which a record (if
any) is to be taken for the purpose of such dividend, distribution, redemption,
repurchase or granting of rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liqui-
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<PAGE> 85
dation or winding up is expected to become effective, and the date as of which
it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up. No failure to mail
such notice or any defect therein or in the mailing thereof shall affect the
validity of the corporate action required to be specified in such notice.
Section 12.10. Adjustments in Case of Fundamental Changes.
Notwithstanding any other provision in this Article XII to the contrary, if any
Fundamental Change (as defined in Section 12.11) occurs, then the Conversion
Price in effect will be adjusted immediately after such Fundamental Change as
described below. In addition, in the event of a Common Stock Fundamental
Change, Debentures shall thereafter be convertible solely into common stock of
the kind received by holders of Common Stock as the result of such Common Stock
Fundamental Change.
For purposes of calculating any adjustment to be made pursuant
to this Section 12.10 in the event of a Fundamental Change, immediately after
such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change, the
Conversion Price immediately following such Non-Stock Fundamental
Change shall be the lower of (A) the Conversion Price in effect
immediately prior to such Non- Stock Fundamental Change, but after
giving effect to any other prior adjustments pursuant to this Article
XII, and (B) the product of (1) the greater of the Applicable Price
(as defined in Section 12.11) and the then applicable Reference Market
Price (as defined in Section 12.11) and (2) a fraction, the numerator
of which is $1,000 and the denominator of which is the sum of (x) the
amount of the Redemption Price for $1,000 principal amount of
Debentures if the Redemption Date were the date of such Non-Stock
Fundamental Change (or, for the period commencing on ______,* and
ending on January 31, 1995 and the twelve-month period commencing on
February 1, 1995, the product of 105.4% and 104.8%, respectively,
times $1,000) plus (y) an amount equal to
____________________
* Insert first day after Expiration Date of Exchange Offer.
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<PAGE> 86
interest thereon accrued and unpaid through but excluding the date of
such Non-Stock Fundamental Change; and
(ii) in the case of a Common Stock Fundamental Change, the
Conversion Price immediately following such Common Stock Fundamental
Change shall be the Conversion Price in effect immediately prior to
such Common Stock Fundamental Change, but after giving effect to any
other prior adjustments effected pursuant to this Article XII,
multiplied by a fraction, the numerator of which is the Purchaser
Stock Price (as defined in Section 12.11) and the denominator of which
is the Applicable Price; provided, however, that in the event of a
Common Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of Common Stock is common stock of
the successor, acquiror or other third party (and cash, if any, paid
with respect to fractional interests in such common stock resulting
from such Common Stock Fundamental Change) and (B) all of the Common
Stock of the Company shall have been exchanged for, converted into, or
acquired for common stock of the successor, acquiror or other third
party (and any cash paid with respect to fractional interests), the
Conversion Price immediately following such Common Stock Fundamental
Change shall be the Conversion Price in effect immediately prior to
such Common Stock Fundamental Change multiplied by a fraction, the
numerator of which is one and the denominator of which is the number
of shares of common stock of the successor, acquiror or other third
party received by a holder of one share of Common Stock as a result of
such Common Stock Fundamental Change.
Section 12.11. Definitions. The following definitions shall
apply to terms used in this Article XII:
(1) "Applicable Price" shall mean (i) in the event of a
Non-Stock Fundamental Change in which the holders of the Common Stock
receive only cash, the amount of cash received by the holder of one
share of Common Stock and (ii) in the event of any other Non-Stock
Fundamental Change or any Common Stock Fundamental Change, the Current
Market Price immediately prior to the record date fixed for the
determination of the holders of Common Stock entitled to receive cash,
securities, property or other assets in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change, or, if there is
no such record date,
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<PAGE> 87
prior to the date upon which the holders of the Common Stock shall
have the right to receive such cash, securities, property or other
assets.
(2) "Common Stock Fundamental Change" shall mean any
Fundamental Change in which more than 50% by value (as determined in
good faith by the Board, which determination shall be conclusive) of
the consideration received by the holders of Common Stock pursuant to
such transaction consists of common stock that, for the consecutive 10
Trading Days immediately prior to such Fundamental Change, has been
admitted for listing or admitted for listing subject to notice of
issuance on a national securities exchange or quoted on the Nasdaq
National Market; provided, however, that a Fundamental Change shall
not be a Common Stock Fundamental Change unless either (i) the Company
continues to exist after the occurrence of such Fundamental Change and
the Outstanding Debentures continue to exist as Outstanding
Debentures, or (ii) not later than the occurrence of such Fundamental
Change, a corporation succeeding directly or indirectly to the
business of the Company, complies with the provisions of Article VII
hereof.
(3) "Fundamental Change" shall mean the occurrence of any
transaction or event or series of transactions or events pursuant to
which all or substantially all of the Common Stock shall be exchanged
for, converted into, acquired for or shall constitute solely the right
to receive cash, securities, property or other assets (whether by
means of an exchange offer, liquidation, tender offer, consolidation,
merger, combination, reclassification, recapitalization or otherwise);
provided, however, in the case of any series of transactions or
events, for purposes of adjustment of the Conversion Price, such
Fundamental Change shall be deemed to have occurred when substantially
all of the Common Stock of the Company shall be exchanged for,
converted into, or acquired for or shall constitute solely the right
to receive such cash, securities, property or other assets, but the
adjustment shall be based upon the consideration which the holders of
Common Stock received in such transactions or event as a result of
which more than 50% of the Common Stock of the Company shall have been
exchanged for, converted into, or acquired for or constitute solely
the right to receive cash, securities, property or other assets; and
provided, further, that such term does not include
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<PAGE> 88
(i) any such transactions or event in which the Company and/or any of
its Subsidiaries are the issuers of all the cash, securities, property
or other assets exchanged, acquired or otherwise issued in such
transaction or event or (ii) any such transaction or event in which
the holders of Common Stock receive securities of an issuer other than
the Company or any of its Subsidiaries if, immediately following such
transaction or event, such holders hold a majority of the securities
having the power to vote normally in the election of directors of such
other issuer outstanding immediately following such transaction or
other event.
(4) "Non-Stock Fundamental Change" shall mean any
Fundamental Change other than a Common Stock Fundamental Change.
(5) "Purchaser Stock Price" shall mean, with respect to
any Common Stock Fundamental Change, the average of the Closing Prices
for one share of the common stock received by holders of Common Stock
in such Common Stock Fundamental Change during the 10 consecutive
Trading Days immediately prior to the date fixed for the determination
of the holders of Common Stock entitled to receive such common stock,
or if there is no such date, prior to the date upon which the holders
of the Common Stock shall have the right to receive such common stock.
(6) "Reference Market Price" shall initially mean
$42.3333, and in the event of any adjustment to the Conversion Price
other than as a result of a Fundamental Change, the Reference Market
Price shall also be adjusted so that the ratio of the Reference Market
Price to the Conversion Price after giving effect to any such
adjustment shall always be the same as the ratio of the initial
Reference Market Price to the initial Conversion Price set forth in
Section 12.4 above.
Section 12.12. Dividend or Interest Reinvestment Plans;
Other. Notwithstanding the foregoing provisions, the issuance of any shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends
or interest payable on securities of the Company and the investment of
additional optional amounts in shares of Common Stock under any such plan, and
the issuance of any shares of Common Stock or options or rights to purchase
such shares pursuant
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<PAGE> 89
to any employee benefit plan or program of the Company, or pursuant to any
option, warrant, right or exercisable, exchangeable or convertible debenture
outstanding as of the date hereof (except as expressly provided in Section
12.5(iv) with respect to certain events under the Rights Agreement), shall not
be deemed to constitute an issuance of Common Stock or exercisable,
exchangeable or convertible securities by the Company to which any of the
adjustment provisions described above apply. In addition, there shall be no
adjustment of the Conversion Price in the event that, upon termination of the
Rights Agreement, the Company enters into a new agreement which is comparable
in purpose and in effect to the Rights Agreement (as determined by the Board,
whose determination shall be conclusive). There shall be no adjustment of the
Conversion Price in case of the issuance of any stock (or securities
convertible into or exchangeable for stock) of the Company except as described
in this Section 12.12. Except as expressly set forth above, if any action
would require adjustment of the Conversion Price pursuant to more than one of
the provisions described above, only one adjustment shall be made and such
adjustment shall be the amount of adjustment which has the highest absolute
value.
Section 12.13. Treasury Stock Not Included. For purposes of
this Article XII, the number of shares of Common Stock at any time outstanding
shall not include any shares of Common Stock then owned or held by or for the
account of the Company.
Section 12.14. Return of Money Deposited for Converted
Debentures. Notwithstanding anything elsewhere contained in this Indenture,
any funds which at any time shall have been deposited by the Company or on its
behalf with the Trustee or any other depositary for the purpose of paying
(other than in any transaction pursuant to Section 12.3), redeeming or
defeasing any Debentures which shall have been converted into shares of Common
Stock, pursuant to the provisions of this Article XII, shall, as soon as
practicable after such conversion, be repaid to the Company by the Trustee or
such other depositary.
Section 12.15. Responsibility of Trustee. Neither the
Trustee nor any conversion agent shall at any time be under any duty or
responsibility to any Debentureholder to determine whether any facts exist
which may require any adjustment of the Conversion Price, or with respect to
the nature or extent of any such adjustment when
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<PAGE> 90
made, or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. Neither the Trustee nor
any conversion agent shall be accountable with respect to the registration,
listing, validity or value (or the kind or amount) of any shares of Common
Stock or of any securities or property which may at any time be issued or
delivered upon the conversion of any Debenture; and neither the Trustee nor any
conversion agent makes any representation with respect thereto. Neither the
Trustee nor any conversion agent shall be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
Common Stock or certificates or other securities or property upon the surrender
of any Debenture for the purpose of conversion or, subject to Section 6.1, to
comply with any of the covenants of the Company contained in this Article XII.
___________________________
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<PAGE> 91
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
AMR CORPORATION
By___________________________________
Title:
(Seal)
Attest:
_______________________
Secretary
THE FIRST NATIONAL BANK OF
CHICAGO
By___________________________________
Title:
(Seal)
Attest:
_______________________
Title:
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<PAGE> 92
EXHIBIT A
(FORM OF FACE OF DEBENTURE)
$______________ No. ______________
AMR CORPORATION
6 1/8% CONVERTIBLE SUBORDINATED
QUARTERLY INCOME CAPITAL SECURITY DUE 2024
AMR Corporation, a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company"), which
term includes any successor under the Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to , or
registered assigns, the principal sum of Dollars, on November
1, 2024 upon presentation and surrender of this Debenture, and, subject to the
right of the Company to extend the interest payment period on the Debentures as
provided on the reverse hereof, to pay interest on said principal sum,
quarterly on February 1, May 1, August 1 and November 1 of each year,
commencing February 1, 1995, at the rate of 6.0% per annum from and including
November 1, 1994 to but excluding ____________* and from and after ___________*
at the rate of 6 1/8% per annum, from the February 1, May 1, August 1 or
November 1, as the case may be, next preceding the date of this Debenture to
which interest on the Debentures has been paid or duly provided for, unless the
date hereof is an Interest Payment Date to which interest has been paid or duly
provided for, in which case from the date of this Debenture, or unless no
interest has been paid or duly provided for on the Debentures, in which case
from November 1, 1994, until payment of said principal sum has been made or
duly provided for. Notwithstanding the foregoing, when there is no existing
default in the payment of interest on the Debentures, each Debenture
authenticated after the Regular Record Date for any Interest Payment Date, but
prior to such Interest Payment Date shall be dated the date of its
authentication but shall bear interest from such Interest Payment Date;
provided, however, that if and to the extent that the Company shall default in
the payment of the interest due on such Interest Payment Date, then all such
Debentures shall bear interest from the February 1, May 1, August 1 or November
1, as the case may
____________________
* Insert first day after Expiration Date of Exchange Offer.
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<PAGE> 93
be, to which interest has been paid or duly provided for next preceding such
Interest Payment Date, unless no interest has been paid or duly provided for on
the Debentures, in which case from November 1, 1994. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in said Indenture, be paid to the Person in whose name this Debenture
(or one or more Predecessor Debentures) is registered on the Regular Record
Date for such Interest Payment Date.
The principal of (and premium, if any) and interest on this
Debenture are payable in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts at the office or agency of the Company in the Borough of Manhattan, The
City of New York; provided, that, at the option of the Company, interest may be
paid (i) by check mailed to the address of the Person entitled thereto as it
shall appear on the Register or (ii) by wire transfer to an account maintained
by the Person entitled thereto as specified in the Register. Any interest not
punctually paid or duly provided for shall be payable as provided in the
Indenture.
Reference is made to the further provisions of this Debenture
set forth on the reverse hereof, which shall have the same effect as though
fully set forth at this place.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee by manual
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<PAGE> 94
signature, this Debenture shall not be entitled to any benefit under the
Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Debenture to
be duly executed in its corporate name by the facsimile signature of its
Chairman of the Board, its President, one of its Executive Vice Presidents, one
of its Senior Vice Presidents or one of its Vice Presidents and impressed or
imprinted with its corporate seal or facsimile thereof, attested by the manual
or facsimile signature of its Secretary or an Assistant Secretary.
Dated:
AMR CORPORATION
(Seal)
By_______________________
Attest: (Title)
_______________________
Secretary
3
<PAGE> 95
(FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This is one of the Debentures referred to in the
within-mentioned Indenture.
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
By____________________________
Authorized Signature
(FORM OF REVERSE OF DEBENTURE)
6 1/8% CONVERTIBLE SUBORDINATED
QUARTERLY INCOME CAPITAL SECURITY DUE 2024
This Debenture is one of a duly authorized issue of Debentures
of the Company designated as its 6 1/8% Convertible Subordinated Quarterly
Income Capital Securities due 2024 (herein called the "Debentures") issued and
to be issued under an Indenture dated as of November 1, 1994 (herein called the
"Indenture"), between the Company and The First National Bank of Chicago,
Trustee (herein called the "Trustee", which term includes any successor Trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights
thereunder of the Company, the Trustee and the Holders of the Debentures, and
the terms upon which the Debentures are, and are to be, authenticated and
delivered. The Debentures are limited in aggregate principal amount as
provided in the Indenture.
Notwithstanding anything contained in the Indenture to the
contrary, the Company shall have the right at any time during the term of the
Debentures, so long as the Company is not in default in the payment of interest
on the Debentures, to extend the interest payment period for an Extension
Period (as defined below). Except as provided in the next succeeding sentence,
no interest shall be due and payable during an Extension Period, but at the end
of each Extension Period the Company shall pay all interest then
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<PAGE> 96
accrued and unpaid on the Debentures, together with interest thereon,
compounded quarterly, at the rate of 6 1/8% per annum, to the extent permitted
by applicable law. Prior to the termination of any Extension Period, the
Company may (a) on any Interest Payment Date pay all or any portion of the
interest accrued on the Debentures as provided on the face hereof to holders of
record on the Record Date for such Interest Payment Date or (b) from time to
time further extend the interest payment period as provided in the last
sentence of this paragraph, provided that any such Extension Period, together
with all such previous and further extensions thereof, may not exceed 20
calendar quarters from the last date to which interest on the Debentures was
paid in full; and provided, further, that in no event shall any Extension
Period exceed the final Stated Maturity of the Debentures. If the Company
shall elect to pay all of the interest accrued on the Debentures on an Interest
Payment Date during any Extension Period, such Extension Period shall
automatically terminate on such Interest Payment Date. Upon the termination of
any Extension Period and the payment of all amounts of interest then due, the
Company may select a new Extension Period, subject to the above requirements.
The Company shall cause the Trustee to give notice to the holder of this
Debenture by public announcement, which notice shall be given in accordance
with New York Stock Exchange rules, not less than five Business Days prior to
the January 15, April 15, July 15 or October 15 next preceding the applicable
Interest Payment Date, of
(x) the Company's election to initiate an Extension
Period, and the duration thereof,
(y) the Company's election to extend any Extension Period
beyond the Interest Payment Date on which such Extension Period is
then scheduled to terminate, and the duration of such extension, and
(z) the Company's election to make a full or partial
payment of interest accrued on the Debentures on any Interest Payment
Date during any Extension Period and the amount of such payment.
The term "Extension Period" means the period from and
including the Interest Payment Date next following the date of any notice of
extension of the interest payment period on the Debentures given pursuant to
clause (x) of the last sentence of the preceding paragraph to but excluding the
Interest Payment Date to which payment of interest on
5
<PAGE> 97
the Debentures is so extended, after giving effect to any further extensions of
the interest payment period on the Debentures pursuant to the third sentence of
the preceding paragraph; provided that no Extension Period shall exceed 20
consecutive quarters from the last date to which interest on the Debentures was
paid in full; and provided, further, that any Extension Period shall end on an
Interest Payment Date. Notwithstanding the foregoing, in no event shall any
Extension Period exceed the final Stated Maturity of the Debentures.
The Debentures may be redeemed, at the option of the Company,
as a whole or from time to time in part, on any date on or after February 1,
1996 and prior to Maturity, upon not less than 30 nor more than 60 days' prior
notice given as provided in the Indenture, at the following Redemption Prices
(expressed as percentages of the principal amount thereof redeemed), plus
accrued and unpaid interest, if any, up to but excluding the Redemption Date,
if redeemed during the twelve-month period commencing February 1 of the years
indicated:
<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
- ------------- ---------- ------------ ----------
<S> <C> <C> <C>
1996 . . . . . . 104.2% 2000 . . . . . . 101.8%
1997 . . . . . . 103.6% 2001 . . . . . . 101.2%
1998 . . . . . . 103.0% 2002 . . . . . . 100.6%
1999 . . . . . . 102.4% 2003 and 100.0%
thereafter
</TABLE>
(except that interest installments whose Stated Maturity is the Redemption Date
will be payable to the Holders of such Debentures, or one or more Predecessor
Debentures, of record on the relevant Regular Record Date referred to on the
face hereof).
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Debenture may be registered
on the Register of the Company, upon surrender of this Debenture for
registration of transfer at the office or agency of the Company in the Borough
of Manhattan, The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the
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<PAGE> 98
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Debentures, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Debentures are issuable only as registered Debentures
without coupons in the denominations of $1,000 and any integral multiple
thereof. As provided in the Indenture, and subject to certain limitations
therein set forth, Debentures are exchangeable for a like aggregate principal
amount of Debentures of different authorized denominations as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee and any agency of the Company or the
Trustee may treat the Person in whose name this Debenture is registered as the
owner hereof for the purpose of receiving payment as herein provided and for
all other purposes, whether or not this Debenture be overdue, and neither the
Company, the Indenture Trustee nor any such agent shall be affected by notice
to the contrary.
If an Event of Default as defined in the Indenture shall
occur, the principal of all Debentures may be declared due and payable in the
manner and with the effect provided in the Indenture.
The indebtedness evidenced by the Debentures is, to the extent
and in the manner provided in the Indenture, subordinate and subject in right
of payment to the prior payment in full of Senior Indebtedness as defined in
the Indenture and this Debenture is issued subject to the provisions of the
Indenture with respect thereto. Each Holder of this Debenture, by accepting
the same, agrees to and shall be bound by such provisions and authorizes the
Trustee in his behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and appoints the Trustee his
attorney-in-fact for such purpose.
Subject to the provisions of the Indenture, the Holder of this
Debenture is entitled, at his option, at any time up to and including November
1, 2024 (or, if this
7
<PAGE> 99
Debenture or some portion hereof shall be called for redemption on a Redemption
Date which is prior to such date and the Company shall not thereafter default
in making payment of the Redemption Price hereof, together with accrued
interest hereon, then, with respect to this Debenture or such portion hereof,
until and including, but not after, the close of business on the Business Day
preceding the Redemption Date), to convert this Debenture, or a portion hereof
in integral multiples of $1,000 principal amount, at 100% of the principal
amount hereof being converted into fully paid and nonassessable shares of
Common Stock of the Company, as said shares shall be constituted at the date of
conversion, at a conversion price equal to $79.00 aggregate principal amount of
Debentures for each share (or at the current adjusted conversion price if an
adjustment has been made as provided in the Indenture), by surrender of this
Debenture to the Company at its office or agency in said Borough of Manhattan,
accompanied, if required by the Company or Indenture, by a proper assignment
hereof in blank together with written notice of his election to convert (which
election shall be irrevocable). This Debenture shall, if so surrendered during
any period beginning on a Regular Record Date and ending at the opening of
business on the Interest Payment Date next following such Regular Record Date,
also be accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of this Debenture then being
converted. As provided in the Indenture, the conversion price is subject to
adjustment in certain events. Except as aforesaid, no adjustment is to be made
on conversion for interest accrued hereon or for dividends on shares of Common
Stock issued on conversion. No fractional shares of Common Stock or scrip
representing fractional shares will be issued on conversion, but an adjustment
in cash will be made for any fractional interest as provided in the Indenture.
The Company and, by its acceptance of this Debenture or a
beneficial interest herein, the Holder of, and any Person that acquires a
beneficial interest in, this Debenture agree that for United States federal,
state and local tax purposes it is intended that this Debenture constitute
indebtedness.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modifications of the rights and
obligations of the Company and the rights of the Holders of the Debentures
under the Indenture
8
<PAGE> 100
at any time by the Trust with the consent of the Holders of a majority of the
aggregate principal amount of the Debentures at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Debentures at the time
Outstanding, on behalf of the Holders of all the Debentures, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Debenture shall be conclusive and binding upon
such Holder and upon all future Holders of this Debenture and of any Debenture
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Debenture at the times, place and rate,
and in the coin or currency, herein prescribed.
No recourse for the payment of the principal of or interest on
this Debenture, or for any claim based hereon or otherwise in respect hereof,
and no recourse under or upon any obligation, covenant or agreement of the
Company in the Indenture or any indenture supplemental thereto or in any
Debenture, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
All terms used in this Debenture which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
9
<PAGE> 1
EXHIBIT 5
October 14, 1994
AMR Corporation
P.O. Box 619616
Dallas/Fort Worth Airport
Texas 75261-9616
Registration Statement
on Form S-4 (Registration No. 33-55191)
---------------------------------------
Dear Sirs:
We have acted as counsel for AMR Corporation, a Delaware
corporation (the "Company"), in connection with the preparation and filing
under the Securities Act of 1933, as amended (the "Act"), of a Registration
Statement (No. 33-55191) on Form S-4, as amended by Amendments No. 1, No. 2 and
No. 3 thereto (the "Registration Statement"), relating to the proposed offer of
an aggregate maximum of $1,100,000,000 principal amount of the Company's
debentures designated as its 6 1/8% Convertible Subordinated Quarterly Income
Capital Securities due 2024 (the "Debentures"), to be issued under an Indenture
(the "Indenture"), dated as of November 1, 1994, between the Company and The
First National Bank of Chicago, as trustee, in exchange for the Company's
Series A Cumulative Convertible Preferred Stock (the "Preferred Stock").
<PAGE> 2
AMR Corporation -2- October 14, 1994
In so acting, we have examined and relied upon the originals,
or copies certified or otherwise identified to our satisfaction, of such
records, documents and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below:
We are of the following opinion:
1. The Company is validly existing as a corporation in good
standing under the laws of the State of Delaware.
2. The Indenture has been duly authorized by the Company and,
when duly executed and delivered, will constitute a valid and legally
binding obligation of the Company enforceable against the Company in
accordance with its terms.
3. The Debentures have been duly authorized by the Company
and, when executed, authenticated, issued and delivered in exchange
for the Preferred Stock as contemplated by the Registration Statement,
will be duly executed and issued and will constitute valid and legally
binding obligations of the Company enforceable against the Company in
accordance with their terms.
4. The shares of the Company's Common Stock, $1.00 par
value per share, issuable upon conversion of the Debentures at the
initial conversion rate have been duly authorized by the Company and
validly reserved for issuance upon conversion of the Debentures and,
when issued upon such conversion in accordance with the terms of the
Indenture, will be validly issued, fully paid and non-assessable.
The opinions expressed in paragraphs 2 and 3 above as to the
enforceability of the Indenture and the Debentures are subject to the
qualifications that enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and by general principles of equity
and that acceleration of the Debentures may affect the collectibility of that
portion of the stated principal amount thereof which might be determined to
constitute unearned interest thereon.
<PAGE> 3
AMR Corporation -3- October 14, 1994
Our opinion expressed above is limited to the federal laws of
the United States of America, the laws of the State of New York and the
corporate laws of the State of Delaware.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name under the heading
"Legal Opinions" in the Prospectus forming a part of the Registration
Statement. In giving such consent, we do not thereby concede that we are
within the category of persons whose consent is required under Section 7 of the
Act or the Rules and Regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ DEBEVOISE & PLIMPTON
<PAGE> 1
October 14, 1994
AMR Corporation
P.O. Box 619616
Dallas/Fort Worth Airport, Texas 753261-9616
Registration Statement
on Form S-4 (Registration No. 33-55191)
Dear Sirs:
We have acted as counsel for AMR Corporation, a Delaware
corporation (the "Company"), in connection with the preparation and filing
under the Securities Act of 1933, as amended (the "Act"), of a Registration
Statement (No. 33-55191) on Form S-4, as amended by Amendments No. 1, No. 2 and
No. 3 thereto (the "Registration Statement"), relating to the proposed offer of
an aggregate maximum of $1,100,000,000 principal amount of the Company's
debentures designated as its 6 1/8% Convertible Subordinated Quarterly Income
Capital Securities due 2024 (the "Debentures"), to be issued under an Indenture
(the "Indenture"), dated as of November 1, 1994, between the Company and The
First National Bank of Chicago, as trustee, in exchange for the Company's
Series A Cumulative Convertible Preferred Stock (the "Preferred Stock").
<PAGE> 2
AMR Corporation 2 October 14, 1994
In connection with the foregoing, you have requested that we
render the opinion set forth below. In rendering such opinion, we have
examined and relied upon the representations and warranties as to factual
matters made in or pursuant to the documents referred to above and upon the
originals, or copies certified or otherwise identified to our satisfaction, of
such records, documents, certificates or other instruments as in our judgment
are necessary or appropriate to enable us to render the opinion expressed
below. We have not, however, undertaken any independent investigation of any
factual matter set forth in any of the foregoing.
Subject to the foregoing and the qualifications and
limitations set forth herein and in the Prospectus, the statements set forth in
the Prospectus under the captions "Certain Federal Income Tax Considerations"
and "Certain Federal Tax Considerations for Non-United States Persons", to the
extent that such statements relate to matters of law or legal conclusion,
constitute the opinion of Debevoise & Plimpton.
This opinion is based on the relevant law in effect (or, in
the case of Proposed Treasury Regulations, proposed) and the relevant facts
that exist as of the date hereof. No assurance can be given that the law or
facts will not change, and we have not undertaken to advise you or any other
person with respect to any event subsequent to the date hereof.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name under the captions
"Certain Federal Income Tax Considerations" and "Certain Federal Tax
Considerations for Non-United States Persons" in the Prospectus. In giving
such consent, we do not thereby concede that we are within the category of
persons whose consent is required under Section 7 of the 1933 Act or the Rules
and Regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ DEBEVOISE & PLIMPTON
<PAGE> 1
Exhibit 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the capiton "Experts" in the
Registration Statement (Form S-4) and related Prospectus of AMR Corporation for
the registration of $1,100,000,000 of its convertible subordinated debentures
and to the incorporation by reference of our report dated February 15, 1994,
with respect to the consolidated financial statements and schedules of AMR
Corporation included in its Annual Report (Form 10-K) for the year ended
December 31, 1993, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Dallas, Texas
October 11, 1994
<PAGE> 1
LETTER OF TRANSMITTAL
FOR
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
(INCLUDING SERIES A CUMULATIVE
CONVERTIBLE PREFERRED STOCK REPRESENTED BY
$3.00 DEPOSITARY SHARES)
OF
AMR CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON NOVEMBER 15, 1994 (THE "EXPIRATION DATE") UNLESS EXTENDED
BY AMR CORPORATION
Exchange Agent:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Hand or Overnight Courier: By Mail:
Tenders & Exchanges Tenders & Exchanges
Suite 4680 -- AMR P.O. Box 2565, Mail Suite 4660
14 Wall Street, 8th Floor Jersey City, NJ 07303-2565
New York, NY 10005
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated October 14,
1994 (the "Prospectus") of AMR Corporation (the "Company") which, together with
this Letter of Transmittal (the "Letter of Transmittal"), describes the
Company's offer (the "Exchange Offer") to exchange up to $1,100,000,000 of its
6 1/8% Convertible Subordinated Quarterly Income Capital Securities due 2024
(the "Debentures") for shares of its Series A Cumulative Convertible Preferred
Stock (the "Preferred Stock") with a like aggregate liquidation preference.
Exchanges will be made on a basis of $1,000 principal amount of Debentures (the
minimum permitted denomination) for every two (2) shares of Preferred Stock
(liquidation preference $500 per share) validly tendered and accepted for
exchange in the Exchange Offer. The Company will pay amounts of less than $1,000
due to any exchanging shareholder in cash, in lieu of issuing Debentures with a
principal amount of less than $1,000. Tenders may also be made of Preferred
Stock represented by $3.00 Depositary Shares (the "Depositary Shares") issued
pursuant to a Deposit Agreement, dated February 4, 1993 (the "Deposit
Agreement"), between the Company, First Chicago Trust Company of New York (in
such capacity, the "Depositary") and holders from time to time of depositary
receipts (the "Depositary Receipts") representing Depositary Shares issued
thereunder. Each Depositary Share represents 1/10 of a share of Preferred Stock
and entitles the owner, proportionately, to all the rights and preferences of
the Preferred Stock represented thereby.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
<PAGE> 2
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND
THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE INFORMATION AGENT.
List below the Preferred Stock or Depositary Shares to which this Letter of
Transmittal relates. If the space provided below is inadequate, the Certificate
or Depositary Receipt Numbers and Numbers of Shares or Depositary Shares should
be listed on a separate signed schedule affixed hereto.
DESCRIPTION OF DEPOSITARY SHARES TENDERED HEREWITH
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
NUMBER OF
DEPOSITARY SHARES NUMBER OF
DEPOSITARY REPRESENTED BY DEPOSITARY
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) RECEIPT DEPOSITARY SHARES
(PLEASE FILL IN) NUMBER(S)* RECEIPT(S)* TENDERED**
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full number of Depositary Shares represented by the tendered Depositary
Receipts. See Instruction 2.
DESCRIPTION OF PREFERRED STOCK TENDERED HEREWITH
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE REPRESENTED BY SHARES
(PLEASE FILL IN) NUMBER(S)* CERTIFICATE(S)* TENDERED**
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full number of shares of Preferred Stock represented by the tendered
certificates. See Instruction 2.
This Letter of Transmittal is to be used either if certificates for
Preferred Stock or Depositary Receipts representing Depositary Shares are to be
forwarded herewith or if delivery of Preferred Stock or Depositary Shares is to
be made by book-entry transfer to an account maintained by the Exchange Agent at
The Depository Trust Company ("DTC"), pursuant to the procedures set forth in
"The Exchange Offer -- Procedures for Tendering" in the Prospectus. If delivery
of Preferred Stock or Depositary Shares are to be made through book-entry
transfer into the Exchange Agent's account at DTC, this Letter of Transmittal
need not be delivered; provided, however that tenders of Preferred Stock or
Depositary Shares must be effected in accordance with DTC's Automated Tender
Offer Program ("ATOP") procedures and the procedures set forth in the Prospectus
under the caption "The Exchange Offer -- Procedures for Tendering -- Book Entry
Transfer."
Unless the context requires otherwise, the term "Holder" for purposes of
this Letter of Transmittal means any person in whose name Preferred Stock or
Depositary Shares are registered on the books of the Company or any other person
who has obtained a properly completed stock power from the registered holder or
any person whose Preferred Stock or Depositary Shares are held of record by DTC
who desires to deliver such Preferred Stock or Depositary Shares by book-entry
transfer at DTC.
2
<PAGE> 3
Holders whose Preferred Stock or Depositary Shares are not immediately
available or who cannot deliver their Preferred Stock or Depositary Shares and
all other documents required hereby to the Exchange Agent prior to the
Expiration Date may tender their Preferred Stock or Depositary Shares according
to the guaranteed delivery procedure set forth in the Prospectus under the
caption "The Exchange Offer -- Procedures for Tendering -- Guaranteed Delivery."
/ / CHECK HERE IF TENDERED PREFERRED STOCK OR DEPOSITARY SHARES ARE BEING
DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE
AGENT WITH THE DEPOSITORY TRUST COMPANY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ___________________________________________
The Depository Trust Company
Account Number: ________________ Transaction Code Number: _______________
/ / CHECK HERE IF TENDERED PREFERRED STOCK OR DEPOSITARY SHARES ARE BEING
DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s): _________________________________________
Name of Eligible Institution
that Guaranteed Delivery: ______________________________________________
IF DELIVERED BY BOOK-ENTRY TRANSFER:
Account Number: __________________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the above-described Preferred Stock or
Depositary Shares. Subject to, and effective upon, the acceptance for exchange
of the Preferred Stock or Depositary Shares tendered herewith, the undersigned
hereby exchanges, assigns and transfers to, or upon the order of, the Company
all right, title and interest in and to such Preferred Stock or Depositary
Shares. The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney-in-fact of the undersigned (with
full knowledge that said Exchange Agent acts as the agent of the undersigned in
connection with the Exchange Offer) to cause the Preferred Stock or Depositary
Shares to be assigned, transferred and exchanged. In particular, the undersigned
specifically authorizes the Exchange Agent to withdraw under the Deposit
Agreement the Preferred Stock underlying any Depositary Shares tendered
herewith, and to tender such underlying Preferred Stock in the Exchange Offer.
However, the Exchange Agent shall not withdraw Preferred Stock underlying
Depositary Shares tendered herewith unless such Preferred Stock is to be
accepted for exchange by the Company. The undersigned represents and warrants
that it has full power and authority to tender, exchange, assign and transfer
the Preferred Stock or Depositary Shares and to acquire Debentures issuable upon
the exchange of such tendered Preferred Stock or Depositary Shares, and that,
when the same are accepted for exchange, the Company will acquire good and
unencumbered title to the tendered Preferred Stock or Depositary Shares, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim. The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Preferred Stock or Depositary Shares or transfer ownership
of such Preferred Stock or Depositary Shares on the account books maintained by
DTC. All authority herein conferred or agreed to be conferred shall survive the
death, bankruptcy or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
3
<PAGE> 4
The Company has expressly reserved the right to amend or modify the terms
of the Exchange Offer in any manner, or to withdraw or terminate the Exchange
Offer, at any time for any reason. The undersigned recognizes that as a result
of the foregoing, the Company may not be required to exchange any of the
Preferred Stock or Depositary Shares tendered hereby and, in such event, the
Preferred Stock or Depositary Shares not exchanged will be returned to the
undersigned at the address shown below the signature of the undersigned.
Tendered Preferred Stock or Depositary Shares may be withdrawn at any time prior
to the Expiration Date and, unless accepted for exchange by the Company, may be
withdrawn at any time after 40 business days after the date of the Prospectus.
Certificates for all Debentures delivered in exchange for tendered
Preferred Stock or Depositary Shares and any Preferred Stock or Depositary
Shares delivered herewith but not exchanged, in each case registered in the name
of the undersigned, shall be delivered to the undersigned at the address shown
below the signature of the undersigned.
TENDERING HOLDER(S) SIGN HERE
(Complete Accompanying Substitute Form W-9)
________________________________________________________________________________
________________________________________________________________________________
Signature of Holder(s)
Dated:_____________, 1994
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Preferred Stock or Depositary Receipts representing
Depositary Shares or by any person(s) authorized to become registered holder(s)
by endorsements and documents transmitted herewith or, if the Preferred Stock or
Depositary Shares are held of record by DTC, the person in whose name such
Preferred Stock or Depositary Shares are registered on the books of DTC. If
signature is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, please set forth the full title of such person.) See Instruction 3.
Name(s):________________________________________________________________________
________________________________________________________________________
(Please Print)
Capacity (full title):__________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
(Including Zip Code)
Area Code and Telephone No._____________________________________________________
Taxpayer Identification No._____________________________________________________
GUARANTEE OF SIGNATURE(S)
(If Required -- See Instruction 3)
Authorized Signature:___________________________________________________________
Name:___________________________________________________________________________
Title:__________________________________________________________________________
Address:________________________________________________________________________
Name of Firm:___________________________________________________________________
Area Code and Telephone No._____________________________________________________
Dated:_____________, 1994
4
<PAGE> 5
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 3, 4 and 11)
To be completed ONLY if the Debentures for the certificates of Preferred Shares
or Depositary Receipts representing Depositary Shares are to be issued in the
name of someone other than the tendering holder.
Issue the Debentures to:
Name(s): _____________________________________________________________________
(Please Print)
Address: _____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(Including Zip Code)
Taxpayer Identification No.: _________________________________________________
5
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. Certificates or
Depositary Receipts for all physically delivered Preferred Stock or Depositary
Shares, respectively, as well as a properly completed and duly executed copy of
this Letter of Transmittal or facsimile thereof, and any other documents
required by this Letter of Transmittal, or confirmation of any book-entry
transfer to the Exchange Agent's account at DTC of Preferred Stock or Depositary
Shares tendered by book-entry transfer, must be received by the Exchange Agent
at either of its addresses set forth herein prior to the Expiration Date (as
defined in the Prospectus).
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE PREFERRED STOCK
OR DEPOSITARY SHARES AND ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND
RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY
IS BY MAIL, IT IS SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, BE USED.
Holders whose Preferred Stock or Depositary Shares are not immediately
available or who cannot deliver their Preferred Stock or Depositary Shares and
all other required documents to the Exchange Agent prior to the Expiration Date
or comply with book-entry transfer procedures on a timely basis may tender their
Preferred Stock or Depositary Shares pursuant to the guaranteed delivery
procedure set forth in the Prospectus under "The Exchange Offer -- Procedures
for Tendering -- Guaranteed Delivery." Pursuant to such procedure: (i) such
tender must be made by or through an Eligible Institution (as defined in
Instruction 3); (ii) on or prior to the Expiration Date the Exchange Agent must
have received from such Eligible Institution a letter, telegram or facsimile
transmission setting forth the name and address of the tendering holder, the
names in which such Preferred Stock or Depositary Shares are registered, and, if
possible, the certificate or Depositary Receipt numbers of the Preferred Stock
or Depositary Shares, respectively, to be tendered; and (iii) all tendered
Preferred Stock or Depositary Shares as well as this Letter of Transmittal and
all other documents required by this Letter of Transmittal, or a confirmation of
any book-entry transfer of such Preferred Stock or Depositary Shares into the
Exchange Agent's account at DTC, must be received by the Exchange Agent within
five New York Stock Exchange trading days after the date of execution of such
letter, telegram or facsimile transmission, all as provided in the Prospectus
under the caption "The Exchange Offer -- Procedures for Tendering -- Guaranteed
Delivery."
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Preferred Stock or Depositary Shares for exchange.
2. PARTIAL TENDERS; WITHDRAWALS. If less than the entire number of shares
of Preferred Stock or Depositary Shares evidenced by a submitted certificate or
Depositary Receipt, respectively, is tendered, the tendering holder must fill in
the number of shares of Preferred Stock or Depositary Shares tendered in the box
entitled "Number of Shares (Depositary Shares) Tendered." A newly issued
certificate for Preferred Stock or Depositary Receipt for Depositary Shares
submitted but not tendered will be sent to such holder as soon as practicable
after the Expiration Date. All Preferred Stock or Depositary Shares delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
Tenders of Preferred Stock or Depositary Shares pursuant to the Exchange
Offer may be withdrawn at any time prior to the Expiration Date and, unless
accepted for exchange by the Company, may be withdrawn at any time after 40
business days after the date of the Prospectus. To be effective, a written
notice of withdrawal delivered by hand, mail delivery or facsimile transmission
must be timely received by the Exchange Agent. Any such notice of withdrawal
must specify the person named in the Letter of Transmittal as having tendered
Preferred Stock or Depositary Shares to be withdrawn, the certificate or
Depositary Receipt numbers of the Preferred Stock or Depositary Shares,
respectively, to be withdrawn, the number of shares of Preferred Stock or
Depositary Shares delivered for exchange, a statement that such a holder is
withdrawing its election to have such Preferred Stock or Depositary Shares
exchanged, and the name of the registered holder of such Preferred Stock or
Depositary Shares, and must be signed by the holder in the same manner as the
original signature on this Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Preferred Stock or Depositary Shares being withdrawn. The Exchange Agent
will return properly withdrawn Preferred Stock or Depositary Shares promptly
following receipt of notice of withdrawal. All questions as to the validity of
notice of withdrawal, including time of receipt, will be determined by the
Company, and such determination will be final and binding on all parties.
Withdrawals of tenders of Preferred Stock or Depositary Shares may not be
rescinded and any Preferred Stock or Depositary Shares withdrawn will thereafter
be deemed not validly tendered for purposes of the Exchange Offer. Properly
withdrawn Preferred Stock or Depositary Shares, however, may be retendered by
following the procedures therefor at any time prior to the Expiration Date.
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered holder(s) of the Preferred Stock or Depositary Shares tendered
hereby, the signature must correspond with the name(s) as written on the face of
the certificates for Preferred Stock or
6
<PAGE> 7
Depositary Receipts representing Depositary Shares, respectively, without
alteration, enlargement or any change whatsoever.
If any of the Preferred Stock or Depositary Shares tendered hereby are
owned of record by two or more joint owners, all such owners must sign this
Letter of Transmittal.
If a number of shares of Preferred Stock or Depositary Shares registered in
different names are tendered, it will be necessary to complete, sign and submit
as many separate copies of this Letter of Transmittal as there are different
registrations of Preferred Stock or Depositary Shares.
When this Letter of Transmittal is signed by the registered holder or
holders of Preferred Stock or Depositary Shares listed and tendered hereby, no
endorsements of certificates or Depositary Receipts or separate written
instruments of transfer or exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered holder or holders of the Preferred Stock or Depositary Shares listed,
such Preferred Stock or Depositary Shares must be endorsed or accompanied by
separate written instruments of transfer or exchange in form satisfactory to the
Company and duly executed by the registered holder, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the Preferred Stock or Depositary Shares.
If this Letter of Transmittal, any certificates or Depositary Receipts or
separate written instruments of transfer or exchange are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority so to act must be
submitted.
Endorsements on certificates or Depositary Receipts or signatures on
separate written instruments of transfer or exchange required by this
Instruction 3 must be guaranteed by a financial institution (including most
banks, savings and loans associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program or The New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (any of the foregoing hereinafter referred to as an "Eligible
Institution").
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Preferred Stock or Depositary Shares are
tendered: (i) by a registered holder of such Preferred Stock or Depositary
Shares; or (ii) for the account of an Eligible Institution.
4. TRANSFER TAXES. The Company shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Preferred Stock or Depositary Shares
to it or its order pursuant to the Exchange Offer. If, however, Debentures are
to be delivered to, or are to be registered or issued in the name of, any person
other than the registered holder of the Preferred Stock or Depositary Shares
tendered hereby, or if a transfer tax is imposed for any reason other than the
transfer of Preferred Stock or Depositary Shares to the Company or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered holder or any other person) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exception
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed directly to such tendering holder.
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the certificates for Preferred Stock or
Depositary Receipts representing Depositary Shares, respectively, listed in this
Letter of Transmittal.
5. EXTENSIONS, AMENDMENTS AND TERMINATION. The Company expressly reserves
the right to extend, amend or modify the terms of the Exchange Offer in any
manner and withdraw or terminate the Exchange Offer and not accept for exchange
any Preferred Stock, at any time for any reason, including (without limitation)
if fewer than 400,000 shares of Preferred Stock are tendered (which condition
may be waived by the Company).
6. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any holder whose Preferred
Stock or Depositary Shares have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated below for further
instructions.
7. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the addresses and telephone number set forth above. In addition, all
questions relating to the Exchange Offer, as well as requests for assistance or
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to D.F. King & Co., Inc., the Information Agent for the Exchange Offer,
at 77 Water Street, New York, New York 10005, telephone (800) 347-7869.
8. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or
Preferred Stock or Depositary Shares will be resolved by the Company, and such
determination will be final and binding on all parties. The Company reserves the
absolute right to reject any or all Letters of Transmittal or tenders that are
not in proper form or the acceptance of which would, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the right to waive any
irregularities or conditions of tender as to the particular Preferred Stock or
Depositary Shares covered by any Letter of Transmittal or tendered pursuant to
such letter. None of the Company, the Exchange Agent or any other person will be
under any duty to give notification of any defects or
7
<PAGE> 8
irregularities in tenders or incur any liability for failure to give any such
notification. The Company's interpretation of the terms and conditions of the
Exchange Offer shall be final and binding on all parties.
9. SUBSTITUTE FORM W-9. Except as described below under "Important Tax
Information", Federal income tax laws require each tendering holder to provide
the Company with a correct taxpayer identification number ("TIN") on the
Substitute Form W-9 which is provided below, and to indicate whether or not the
holder is not subject to backup withholding by crossing out Part 2 on the
Substitute Form W-9 if the holder is currently subject to backup withholding.
Failure to provide the information on the Form or to cross out Part 2 of the
Form (if applicable) may subject the tendering holder to 31% federal income tax
withholding on payments made to the holder. The box in Part 3 of the Form may be
checked if the tendering holder has not been issued a TIN and has applied for a
TIN or intends to apply for a TIN in the near future. If the box in Part 3 is
checked and the holder is not provided with a TIN within sixty (60) days, the
Company will withhold 31% on all such payments thereafter until a TIN is
provided to the Company.
10. WITHHOLDING ON FOREIGN HOLDERS IN CONNECTION WITH THE EXCHANGE
OFFER. United States Federal income tax generally will be withheld from the
gross proceeds payable to a holder that is a non-United States person (a
"foreign holder") (including Debentures that such foreign holder would otherwise
be entitled to receive) unless such foreign holder provides the Exchange Agent
with a Foreign Holder Certification, in form and substance satisfactory to the
Company, in which such holder certifies that such holder's exchange of Preferred
Stock for Debentures pursuant to the Exchange Offer qualifies as a sale or
exchange, rather than as a dividend, for Federal income tax purposes (as
described in "Certain Federal Tax Considerations for Foreign Holders -- Exchange
of Preferred Stock for Debentures" in the Prospectus) and such holder agrees
that it will provide additional information to the Company if necessary to
demonstrate such qualification and that it will reimburse the Company if it is
determined that Federal withholding tax was due. The withholding rate is
ordinarily 30% unless the foreign holder is eligible for a reduced tax treaty
rate with respect to dividend income, in which case withholding will be made at
the reduced treaty rate, or the foreign holder otherwise establishes to the
satisfaction of the withholding agent that such holder is exempt from tax on
such exchange (e.g., by certifying to the withholding agent on IRS Form 8709 as
to such holder's status as a foreign government). For this purpose, a non-United
States person is any person that is not (i) an individual citizen or resident of
the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof or (iii) any estate or trust the income of which is subject to United
States Federal income taxation regardless of the source of such income. Copies
of the Foreign Holder Certification are available from the Exchange Agent. A
shareholder's status as a foreign holder and eligibility for a tax treaty
reduced rate of withholding will be determined by reference to the shareholder's
address and to any outstanding certificates (i.e., Form W-8 or substitute) or
statements concerning eligibility for a reduced rate of withholding, unless
facts and circumstances indicate that reliance is not warranted. EACH FOREIGN
HOLDER SHOULD CONSULT WITH ITS TAX ADVISOR REGARDING THE FOREGOING.
A holder that exchanges Preferred Stock for Debentures on behalf of a
beneficial owner that is a non-United States person will be responsible for
determining whether and what rate of withholding is required on such exchange
and for obtaining any required forms or certifications from such beneficial
owner.
A foreign holder may be eligible to obtain from the U.S. Internal Revenue
Service a refund of any tax withheld if such shareholder meets one of the three
tests for sale or exchange treatment described in "Certain Federal Tax
Considerations for Foreign Holders -- Exchange of Preferred Stock for
Debentures" in the Prospectus or otherwise is able to establish that no tax (or
a reduced amount of tax) was due.
11. SPECIAL ISSUANCE INSTRUCTIONS. If the Debentures for the certificates
of Preferred Shares or Depositary Receipts representing Depositary Shares are to
be issued in the name of someone other than the tendering holder, the tendering
holder must fill in the information in the box entitled "Special Issuance
Instructions."
12. DEFINITIONS. Capitalized terms used in this Letter of Transmittal and
not otherwise defined have the meanings given in the Prospectus.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
CERTIFICATES FOR PREFERRED STOCK OR DEPOSITARY RECEIPTS REPRESENTING DEPOSITARY
SHARES AND ALL OTHER REQUIRED DOCUMENTS) OR CONFIRMATION OF BOOK-ENTRY TRANSFER
OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR
TO THE EXPIRATION DATE.
8
<PAGE> 9
IMPORTANT TAX INFORMATION
Under federal income tax law, a holder whose tendered Preferred Stock or
Depositary Shares are accepted for exchange is required to provide the Company
with such holder's correct taxpayer identification number ("TIN") on Substitute
Form W-9. If a holder is an individual, the TIN is the holder's social security
number. If the Company is not provided with the correct TIN, the holder may be
subject to a penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such holder with respect to Debentures acquired
pursuant to the Exchange Offer may be subject to backup withholding.
If backup withholding applies, the Company is required to withhold 31% of
all payments made to the holder. Backup withholding is not an additional tax.
Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
To prevent backup withholding on payments that are made to a holder with
respect to Debentures, the holder is required to notify the Company of his or
its correct TIN by completing the Form below, certifying that the TIN provided
on Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and
whether or not (i) the holder has not been notified by the Internal Revenue
Service that the holder is subject to backup withholding as a result of a
failure to report all interest or dividends or (ii) the Internal Revenue Service
has notified the holder that the holder is no longer subject to backup
withholding.
Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding requirements. A
corporation must, however, complete the Substitute Form W-9, including providing
its TIN (unless it is a foreign corporation that does not have a TIN) and
indicating that it is exempt from backup withholding, in order to establish its
exemption from backup withholding. A foreign corporation or individual, or other
foreign person, must submit a statement (i.e., Form W-8 or substitute), signed
under penalties of perjury, attesting to such person's status as a non-United
States person. Such statements can be obtained from the Exchange Agent.
See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional instructions.
9
<PAGE> 10
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------
PART 1 -- PLEASE PROVIDE YOUR TIN SOCIAL SECURITY NUMBER
SUBSTITUTE IN THE BOX AT RIGHT AND CERTIFY OR ___________________________________________
BY SIGNING AND DATING BELOW EMPLOYER IDENTIFICATION NUMBER
------------------------------------------------------------------------------------------------
FORM W-9 PART 2 -- I am not subject to backup withholding because (i) I am FOR PAYEES EXEMPT FROM
DEPARTMENT OF THE TREASURY exempt from backup withholding, or (ii) I have not been notified by BACKUP WITHHOLDING
INTERNAL REVENUE SERVICE the IRS that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup withholding. (YOU Write "EXEMPT" if you are
MUST CROSS OUT THIS PART 2 IF YOU ARE CURRENTLY SUBJECT TO BACKUP exempt from backup
WITHHOLDING BECAUSE OF UNDERREPORTING OF INTEREST OR DIVIDENDS ON withholding.
YOUR TAX RETURN.)
------------------------------------------------------------------------------------------------
PAYER'S REQUEST FOR CERTIFICATION -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT THE PART 3 --
TAXPAYER IDENTIFICATION INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
NUMBER (TIN)
SIGNATURE ___________________________________ DATE ____________ Awaiting TIN / /
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
- --------------------------------------------------------------------------------
CERTIFICATE OF TAXPAYER AWAITING TIN
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to appropriate Internal
Revenue Service Center or Social Security Administration Office, or (b) I intend
to mail or deliver an application in the near future. I understand that if I do
not provide a taxpayer identification number within 60 days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
_______________________________________ _____________________________
Signature Date
- --------------------------------------------------------------------------------
10
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
(INCLUDING SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
REPRESENTED BY $3.00 DEPOSITARY SHARES)
IN EXCHANGE FOR
6 1/8% CONVERTIBLE SUBORDINATED QUARTERLY INCOME CAPITAL SECURITIES DUE 2024
OF
AMR CORPORATION
Registered holders of outstanding Series A Cumulative Convertible Preferred
Stock, of AMR Corporation (the "Preferred Stock"), including registered holders
of $3.00 Depositary Shares (the "Depositary Shares") (each of which represents
1/10 of a share of Preferred Stock), who wish to tender Preferred Stock or
Depositary Shares in exchange for AMR Corporation's 6 1/8% Convertible
Subordinated Quarterly Income Capital Securities due 2024 (the "Debentures") on
a basis of $1,000 principal amount of Debentures for every two (2) shares of
Preferred Stock (liquidation preference $500 per share) accepted for exchange,
on the terms and subject to the conditions set forth in AMR Corporation's
Prospectus, dated October 14, 1994 and the related Letter of Transmittal and, in
each case, whose Preferred Stock or Depositary Shares are not immediately
available or who cannot deliver their Preferred Stock or Depositary Shares and
Letter of Transmittal (and any other documents required by the Letter of
Transmittal) to First Chicago Trust Company of New York (the "Exchange Agent")
prior to the Expiration Date, may use this Notice of Guaranteed Delivery or one
substantially equivalent hereto. This Notice of Guaranteed Delivery may be
delivered by hand or sent by facsimile transmission (receipt confirmed by
telephone and an original delivered by guaranteed overnight delivery) or mail to
the Exchange Agent. See "The Exchange Offer -- Procedures for Tendering" in the
Prospectus.
The Exchange Agent for the Exchange Offer is:
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Courier:
First Chicago Trust Company of New York Tenders & Exchanges
Tenders & Exchanges Suite 4680 -- AMR
P. O. Box 2565, Mail Suite 4660 14 Wall Street, 8th Floor
Jersey City, NJ 07303-2565 New York, NY 10005
</TABLE>
By Facsimile:
(For Eligible Institutions Only)
(201) 222-4720 or (201) 222-4721
Confirm Receipt of Notice of
Guaranteed Delivery by Telephone:
(201) 222-4707
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via a facsimile transmission to
a number other than as set forth above will not constitute a valid delivery.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN ELIGIBLE INSTITUTION, SUCH SIGNATURE GUARANTEE MUST APPEAR IN
THE APPLICABLE SPACE PROVIDED ON THE LETTER OF TRANSMITTAL FOR GUARANTEE OF
SIGNATURES.
<PAGE> 2
Ladies and Gentlemen:
The Undersigned hereby tenders the number of shares of Preferred Stock or
Depositary Shares indicated below, upon the terms and subject to the conditions
contained in the Prospectus dated October 14, 1994, of AMR Corporation (the
"Prospectus"), receipt of which is hereby acknowledged.
<TABLE>
<CAPTION>
DESCRIPTION OF SECURITIES TENDERED
- ---------------------------------------------------------------------------------------------------------------------------------
DEPOSITARY SHARES
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NAME AND ADDRESS OF REGISTERED HOLDER AS IT
APPEARS ON THE DEPOSITARY RECEIPT
DEPOSITARY RECEIPT(S) FOR NUMBER(S) OF NUMBER OF
DEPOSITARY SHARES DEPOSITARY DEPOSITARY
(PLEASE PRINT) SHARES TENDERED SHARES TENDERED
- ---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NAME AND ADDRESS OF REGISTERED HOLDER AS IT
APPEARS ON THE
CERTIFICATE(S) FOR CERTIFICATE NUMBER(S) OF NUMBER OF SHARES OF
PREFERRED STOCK PREFERRED PREFERRED
(PLEASE PRINT) STOCK TENDERED STOCK TENDERED
- ---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
THE FOLLOWING GUARANTEE MUST BE COMPLETED
- -------------------------------------------------------------------------------
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office, branch,
agency or correspondent in the United States, hereby guarantees to deliver to
the Exchange Agent at one of its addresses set forth above, the certificates
representing the Preferred Stock or Depositary Receipts representing the
Depositary Shares, together with a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees,
and any other documents required by the Letter of Transmittal within five New
York Stock Exchange, Inc. trading days after the date of execution of this
Notice of Guaranteed Delivery.
<TABLE>
<S> <C>
______________________________________ __________________________________
Name of Firm Authorized Signature
______________________________________ __________________________________
Address Title
_____________________________________ Name: ___________________________
Zip Code (Please Type or Print)
Area Code and Telephone Number: _____ Dated: __________________________
- --------------------------------------------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR PREFERRED STOCK OR DEPOSITARY RECEIPTS
REPRESENTING DEPOSITARY SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY.
CERTIFICATES FOR PREFERRED STOCK OR DEPOSITARY RECEIPTS REPRESENTING
DEPOSITARY SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
TENDER FOR ALL OUTSTANDING
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
(INCLUDING SERIES A CUMULATIVE CONVERTIBLE PREFERRED
STOCK REPRESENTED BY $3.00 DEPOSITARY SHARES)
IN EXCHANGE FOR
6 1/8% CONVERTIBLE SUBORDINATED QUARTERLY INCOME CAPITAL SECURITIES DUE 2024
OF
AMR CORPORATION
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We are enclosing herewith the material listed below relating to the offer
by AMR Corporation (the "Company") to exchange $1,000 principal amount of its
6 1/8% Convertible Subordinated Quarterly Income Capital Securities due 2024 for
every two (2) shares of its Series A Cumulative Convertible Preferred Stock
(liquidation preference $500 per share) (the "Preferred Stock") (including
Preferred Stock represented by certain $3.00 Depositary Shares, each of which
represents 1/10 of a share of Preferred Stock), upon the terms and subject to
the conditions set forth in the Company's Prospectus, dated October 14, 1994,
and the related Letter of Transmittal (which together constitute the "Exchange
Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated October 14, 1994;
2. Letter of Transmittal (together with accompanying Substitute Form W-9
Guidelines);
3. Notice of Guaranteed Delivery; and
4. Letter which may be sent to your clients for whose account you hold
Preferred Stock or Depositary Shares in your name or in the name of
your nominee, with space provided for obtaining such client's
instruction with regard to the Exchange Offer.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. Please note that the
Exchange Offer will expire at 5:00 p.m., New York City time, on November 15,
1994, unless extended.
The Company expressly reserves the right to (i) extend, amend or modify
the terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Preferred Stock, at any time for
any reason, including (without limitation) if fewer than 400,000 shares of
Preferred Stock are tendered (which condition may be waived by the Company).
D.F. King & Co., Inc. has been appointed as Information Agent for the
Exchange Offer. All questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus or the Letter of
Transmittal, may be directed to D.F. King & Co., Inc., 77 Water Street, New
York, New York 10005, telephone (800) 347-7869.
<PAGE> 2
The Company will not pay any fee or commission to any broker or dealer or
to any other persons (other than the Dealer Managers, the Information Agent and
the Exchange Agent) in connection with the solicitation of tenders of Preferred
Stock or Depositary Shares pursuant to the Exchange Offer. The Company will pay
or cause to be paid any transfer taxes payable on the transfer of Preferred
Stock or Depositary Shares to it, except as otherwise provided in Instruction 4
of the enclosed Letter of Transmittal.
Very truly yours,
AMR CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU AS
THE AGENT OF AMR CORPORATION OR FIRST CHICAGO TRUST COMPANY OF NEW YORK OR
AUTHORIZE YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN
CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
2
<PAGE> 1
TENDER FOR ALL OUTSTANDING
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
(INCLUDING SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
REPRESENTED BY $3.00 DEPOSITARY SHARES)
IN EXCHANGE FOR
6 1/8% CONVERTIBLE SUBORDINATED QUARTERLY INCOME
CAPITAL SECURITIES DUE 2024
OF
AMR CORPORATION
To Our Clients:
We are enclosing herewith a Prospectus, dated October 14, 1994, of AMR
Corporation (the "Company"), and a related Letter of Transmittal (which together
constitute the "Exchange Offer") relating to the offer by the Company to
exchange $1,000 principal amount of its 6 1/8% Convertible Subordinated
Quarterly Income Capital Securities due 2024 for every two (2) shares of its
Series A Cumulative Convertible Preferred Stock (liquidation preference $500 per
share) (the "Preferred Stock") (including Preferred Stock represented by certain
$3.00 Depositary Shares, each of which represents 1/10 of a share of Preferred
Stock), upon the terms and subject to the conditions set forth in the Exchange
Offer.
Please note that the Offer will expire at 5:00 pm., New York City time, on
November 15, 1994, unless extended.
The Company expressly reserves the right to (i) extend, amend or modify
the terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Preferred Stock, at any time for
any reason, including (without limitation) if fewer than 400,000 shares of
Preferred Stock are tendered (which condition may be waived by the Company).
We are the holder of record of Preferred Stock or Depositary Shares held
by us for your account. A tender of such Preferred Stock or Depositary Shares
can be made only by us as the record holder and pursuant to your instructions.
The Letter of Transmittal is furnished to you for your information only and
cannot be used by you to tender Preferred Stock or Depositary Shares held by us
for your account.
We request instructions on the attached schedule as to whether you wish to
tender any or all of the Preferred Stock or Depositary Shares held by us for
your account pursuant to the terms and conditions of the Exchange Offer.
Very truly yours,
<PAGE> 2
INSTRUCTIONS WITH RESPECT TO THE
TENDER FOR ALL OUTSTANDING
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
(INCLUDING SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
REPRESENTED BY $3.00 DEPOSITARY SHARES)
IN EXCHANGE FOR
6 1/8% CONVERTIBLE SUBORDINATED QUARTERLY INCOME CAPITAL SECURITIES DUE 2024
OF
AMR CORPORATION
The undersigned acknowledges receipt of your letter enclosing the
Prospectus, dated October 14, 1994, of the Company and a related Letter of
Transmittal relating to the Exchange Offer. This will instruct you to tender the
number of shares of Preferred Stock or Depositary Shares indicated below held by
you for the account of the undersigned, pursuant to the terms and subject to the
conditions of the Exchange Offer and confirm that you may make the
representations contained in the Letter of Transmittal on behalf of the
undersigned.
<TABLE>
<CAPTION>
Preferred Stock to be Tendered
- -------------------------------------------------------------------------
AGGREGATE NUMBER OF
SHARES OF PREFERRED STOCK
HELD BY YOU FOR THE
ACCOUNT OF THE NUMBER OF SHARES OF
UNDERSIGNED PREFERRED STOCK TENDERED*
- --------------------------------------------------------------------------
<S> <C>
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Depositary Shares to be Tendered
- --------------------------------------------------------------------------
AGGREGATE NUMBER OF
DEPOSITARY SHARES HELD BY
YOU FOR THE ACCOUNT OF NUMBER OF DEPOSITARY
THE UNDERSIGNED SHARES TENDERED*
- --------------------------------------------------------------------------
<S> <C>
- --------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------
__________________________________________________________________________
Signature(s)
__________________________________________________________________________
Please print name
__________________________________________________________________________
Date
- --------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all the undersigned's
Preferred Stock or Depositary Shares are to be tendered.
<PAGE> 1
AMR CORPORATION
P.O. Box 619616 Dallas/Fort Worth Airport
Dallas, Texas 75261-9616
October 14, 1994
First Chicago Trust Company of New York
Tenders & Exchanges Department
3rd Floor
P.O. Box 2507 - Suite 4660
Jersey City, New Jersey 07303-2507
Re: AMR Corporation (the "Issuer")
Ladies and Gentlemen:
Pursuant to The Exchange Offer section of the Prospectus dated
October 14, 1994 (the "Prospectus"), we appoint you as Exchange Agent subject
to the terms hereof. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus.
The Issuer has delivered to you or will deliver to you (i) a
copy of the Letter of Transmittal, in the form attached hereto as Exhibit A,
(ii) copies of all other documents or materials to be forwarded to the Holders,
and (iii) a copy of the resolutions adopted by the Issuer's Board of Directors
authorizing the Exchange Offer and your appointment as Exchange Agent. The
Issuer has delivered or will deliver to you (i) a list showing the names and
addresses of the Holders as of the close of business on October 12, 1994, and
the number of Depositary Shares or shares of Preferred Stock held by Holder as
of such date and (ii) a list of Depositary Receipts and certificates (giving
the receipt or certificate numbers, as the case may be) stating which
Depositary Shares or shares of Preferred Stock have been or are, as of such
date, lost, stolen, destroyed or replaced or restricted as to transfer (noting
the text of the restrictive legends applicable thereto) or with respect to
which a stop transfer order has been noted.
<PAGE> 2
1. Appointment of the Exchange Agent.
This will confirm the Issuer's appointment of First Chicago
Trust Company of New York as the Exchange Agent provided for in the Prospectus
and, in that capacity, authorization to act solely as agent for the Issuer
hereunder for the purpose of receiving from the Holders the Depositary Receipts
and Preferred Shares tendered in exchange for the Debentures and cash upon
satisfaction of the conditions set forth herein. You will not owe fiduciary
duties to any other person by reason of this appointment.
2. Duties and Obligations of the Exchange Agent.
As Exchange Agent, you are hereby instructed to perform the
specific exchange agency duties set forth in The Exchange Offer section of the
Prospectus and the related Letter of Transmittal and to perform such duties as
are specifically set forth herein, and no implied covenants or obligations
should be read into your appointment as Exchange Agent against you. Without
limiting and in furtherance of the foregoing, you shall not be liable or
responsible for any of the provisions of the Prospectus except for those
expressly referred to herein above. Further, as Exchange agent you:
(i) will furnish reports showing the number of Depositary Shares
and shares of Preferred Stock surrendered and amount of Debentures issued
therefor (previous, herewith and total), fractional shares adjusted (previous,
herewith and total), and cash- in-lieu of fractional shares paid (previous,
herewith and total);
(ii) will be regarded as making no representations or warranties and
having no responsibilities regarding the validity or adequacy of the Issuer's
power to make this appointment or the Exchange Offer;
(iii) will not be responsible in any manner whatsoever for the
correctness of the statements made in the Prospectus or the Letters of
Transmittal or in any document furnished to you by the Issuer;
(iv) shall not be liable for any action taken, suffered, or omitted
or for any error of judgment made by you in the performance of your duties
hereunder, in the absence of willful misconduct or gross negligence on your
part, nor shall you be liable for any error of judgment made in good faith
unless you shall have been grossly negligent in ascertaining the pertinent
facts;
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<PAGE> 3
(vi) may rely and shall be protected in acting or refraining from
acting upon any communication authorized hereby and upon any oral or written
instruction, notice, request, direction, consent, report, certificate, form of
bond certificate or other instrument, paper or document in good faith believed
by you to be genuine;
(vii) may consult with counsel of your choice, and the advice of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by you hereunder in good faith and in
reliance thereon; and
(viii) may perform your duties and exercise your rights hereunder
directly or by or through agents or attorneys and shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed by
you with due care hereunder.
3. Maintenance of Records.
You will keep and maintain complete and accurate records and
ledgers showing all Depositary Shares and Preferred Stock exchanged by you and
payments made by you. Letters of Transmittal and telegrams, telexes, facsimile
transmissions and other materials submitted to shall be preserved by you until
delivered to, or otherwise disposed of in accordance with the instructions of,
the Issuer.
4. Indemnification, Compensation and Expenses.
(a) In consideration of your acceptance of the foregoing
appointment by the Issuer, the Issuer hereby agrees:
(i) to indemnify you for, and to hold you harmless against, any
loss, liability or expense incurred without gross negligence or willful
misconduct on your part, arising out of or in connection with the acceptance or
administration of the agency created under the foregoing appointment, including
the costs and expenses (including the reasonable fees and expenses of your
counsel) of defending yourself against any claim or liability in connection
with the exercise or performance of any of your duties thereunder and of
enforcing this indemnification provision; and
(ii) to pay to you according to Schedule A attached hereto for all
services rendered by you under the foregoing appointment; and
(iii) to reimburse you upon your request for all reasonable expenses,
disbursements and advances incurred or
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<PAGE> 4
made by you in accordance with any of your agency duties (including the
reasonable compensation and the expenses and disbursements of your agents and
counsel), except any such expenses, disbursement or advance as may be
attributable to your gross negligence or willful misconduct.
(b) You shall not be required to advance, expend or risk your own
funds or otherwise incur or become exposed to financial liability in the
performance of your duties hereunder.
5. IRS Filings
You shall arrange to comply with all requirements under the tax laws
of the United States, including those relating to missing Taxpayer
Identification Numbers, and shall file any appropriate reports with the IRS
(e.g., 1099, 1099B, etc.). You may be required to deduct 31% back up
withholding tax from cash-in-lieu of fractional shares and dividend payments to
any holder that has not supplied its correct Taxpayer Identification Number or
required certification. Such funds will be turned over to the IRS by you in
accordance with applicable law and regulations.
As described in the Prospectus under "Certain "Federal Income Tax
Considerations for Non-United States Persons-- Exchange of Preferred Stock
for Debentures" and in the Letter of Transmittal under "Withholding on Foreign
Holders in Connection with the Exchange Offer", under certain circumstances the
issuance of Debentures and the payment of cash-in-lieu of fractional shares to
a non-United States person surrendering Preferred Stock or Depositary Shares
may be subject to the withholding of United States Federal tax. In order to
enable the Issuer to determine whether such withholding is required, you will
(a) promptly notify the Issurer if any shares of Preferred Stock or Depositary
Shares are surrendered by a Holder with an address outside the United States or
that is known to you to be, or to be acting for, a non-United States person and
(b) promptly furnishing to the Issuer a copy of any Foreign Holder
Certification (as described in the Letter of Transmittal) and any other forms
or certificates (including without limitation IRS Form W-8 or 8079) provided to
you by such Holder.
6. Governing Law.
This agreement shall be construed and enforced in accordance with the
laws of the state of New York.
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<PAGE> 5
Please confirm your acceptance of the arrangements herein provided by
signing and returning to us the enclosed duplicates of this letter.
AMR CORPORATION
By: /s/ MICHAEL DURHAM
Senior Vice President
and Treasurer
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By:/s/ V. GOROSHOLA
Name:
Title:
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<PAGE> 1
D. F. King & Co., Inc.
77 Water Street
New York, N.Y. 10005-4495
October 4, 1994
AMR Corporation
4333 Amon Carter Blvd. - MD 5662
Fort Worth, TX 76155
Ladies and Gentlemen:
This Letter Agreement sets forth the terms and conditions pursuant to
which AMR Corporation (the "Company") has retained D. F. King & Co., Inc.
("King") in connection with a proposed exchange offer.
The Company proposes to offer to exchange its debentures designated as
6 1/8% Convertible Subordinated Quarterly Income Capital Securities for its
outstanding Series A Cumulative Convertible Preferred Stock (the "Stock")
subject to the terms and conditions set forth in the Prospectus referred to
below. Such an offer to exchange is herein referred to as the "Exchange
Offer".
1. The Company hereby retains King as Information Agent for
advisory and consulting services in connection with the Exchange Offer and
requests and authorizes King to contact, and to provide information with
respect to the Exchange Offer to, holders of the Stock. For this purpose, King
is authorized to use, and will be supplied by the Company with as many copies
as King may reasonably request of, the following materials filed with the
Securities and Exchange Commission (the "Commission") or publicly released (or
to be filed or publicly released) by the Company in connection with the
Exchange Offer (collectively, the "Exchange Offer Materials"): (i) a
Prospectus; (ii) a Letter of Transmittal; (iii) press releases and newspaper
advertisements; (iv) letter to securities dealers, banks and trust companies,
and letter from securities dealers, banks and trust companies to their
customers; and (v) any and all amendments or supplements to any of the
foregoing.
<PAGE> 2
2. The Company agrees to pay King as compensation for its
services a fee of $15,000, which is due upon the completion, expiration or
termination, as the case may be, of the Exchange Offer. The Company further
agrees to reimburse King for all out-of- pocket expenses incurred by King in
retention hereunder. The Company further agrees and acknowledges that its
obligation under this paragraph 2 is not in any way conditional upon the
successful consummation of the Exchange Offer or dependent upon the amount of
Stock acquired by the Company pursuant to the Exchange Offer.
3. The Company agrees that King shall have the right to pass upon
and approve any all references to King in the Exchange Offer Materials. The
Company shall not file with the Commission, any other governmental or
regulatory authority or body or any court, or otherwise make public, any
document containing any reference to King unless and until King shall have
approved such reference. King hereby confirms its approval of the references
to King in the Exchange Offer Materials included in the Company's Registration
Statement on Form S-4 filed with the Securities and Exchange Commission on
August 23,1994 and the exhibits thereto and any to any further references in
the Exchange Offer Materials consistent with such references.
4. The Company represents and warrants to King that:
(i) this letter agreement is a valid and binding
agreement on the Company's part;
(ii) all necessary corporate action will be duly
taken by the Company prior to the commencement of the Exchange Offer to
authorize the Exchange Offer;
(iii) all Exchange Offer Materials will comply, in
all material respects, with the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder, and none of the
Exchange Offer Materials, taken as a whole, will contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
were made, not misleading;
(iv) any action by the Company in connection with
the Exchange Offer will comply, in all material respects, with all applicable
requirements of law including the applicable rules or regulations of any
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<PAGE> 3
governmental or regulatory authority or body, and no material consent or
approval of, or filing with, any governmental or regulatory authority or body
is required in connection with any such action (or, if any such material
consent, approval or filing is required it will be duly obtained or made); and
(v) the Exchange Offer and the execution,
delivery and performance of this letter agreement, will not conflict with or
result in a breach of or constitute a default under the Company's certificate
of incorporation or by-laws, or any material agreement, indenture, mortgage,
note or other instrument by which the Company is bound.
5. King represents and warrants that this letter agreement is a
valid and binding agreement on King's part and agrees that all actions taken by
King in connection with the Exchange Offer will comply, in all material
respects, with all applicable requirements of law including the applicable
rules or regulations of any governmental or regulatory authority or body. King
agrees that it will not provide to any person any information in connection
with the Exchange Offer in addition to or inconsistent with the information
contained in the Exchange Offer Materials. In no event will King make any
recommendation to anyone regarding whether to exchange or refrain from
exchanging Stock. If such advice is requested, King will respond that it is
not authorized to give such advice and shall recommend to the person requesting
such advise that such person consult with his or her financial advisor or
broker.
6. The Company will advise King promptly of the occurrence of any
event which causes it not to proceed with, or to withdraw or abandon, the
Exchange Offer. The Company will also advise King promptly of any amendment or
supplement to any of the Exchange Offer Materials.
7. The Company hereby agrees to indemnify and hold harmless King,
King's controlling persons, officers, directors, employees, agents and
representatives (collectively, the "Indemnified Persons") from and against any
and all losses, claims, damages, liabilities and expenses whatsoever (including
but not limited to, all reasonable counsel fees, disbursements and other
out-of-pocket expenses) incurred by such Indemnified Persons in investigating,
preparing to defend or defending (or appearing or preparing for appearance as a
witness in connection with) any claim, litigation, proceeding, investigation,
or governmental or stock exchange inquiry, commenced or threatened arising out
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<PAGE> 4
of or based upon any facts or circumstances constituting violation of, or in
conflict with, any of the representations and warranties set forth in paragraph
4 above, except to the extent such loss, claim, damage, liability or expense
results from any Indemnified Person's willful misconduct or gross negligence or
a violation of any representation, warranty, or covenant set forth in paragraph
5 above. The Company shall reimburse such Indemnified Persons for such counsel
fees and disbursements and other out-of- pocket expenses at such time as they
are paid or incurred by such Indemnified Persons. The foregoing indemnity
shall be in addition to any liability which the Company might otherwise have to
the Indemnified Persons.
8. King agrees to notify the Company promptly of the assertion of
any claim against any of the Indemnified Persons in connection with the
Exchange Offer and in respect of which a claim for indemnity is to be made
hereunder. At the Company's election, unless there is a conflict of interest,
the defense of the Indemnified Persons shall be conducted by the Company's
counsel. Notwithstanding the Company's election to assume the defense of such
action or proceeding, an Indemnified Person may employ separate counsel to
represent it or defend it in such action or proceeding and the Company will pay
the reasonable fees and expenses of such counsel as set forth above if such
Indemnified Person reasonably determines that there are defenses available to
such Indemnified Person which are different from, or in addition to, those
available to the Company, or if a conflict of interest exists which makes
representation by counsel chosen by the Company not advisable; provided
however, unless there are actual or potential conflicts of interest among the
Indemnified Persons, the Company will not be required to pay the fees and
expenses of more than one separate counsel for all Indemnified Persons in any
jurisdiction in any single action or proceeding. In any action or proceeding
the defense of which the Company assumes, the Indemnified Person shall
nevertheless be entitled to participate in such action or proceeding and retain
its own counsel at such Indemnified Person's own expense. The Company shall
not settle or compromise any such action or proceeding without the Indemnified
Person's prior written consent, unless the terms of the settlement or
compromise include an unconditional release of any such Indemnified Person from
all liability or loss arising out of such action or proceeding.
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<PAGE> 5
9. The representations and warranties contained in paragraphs 4
and 5 above and the indemnity agreement contained in paragraphs 7 and 8 above
shall remain operative and in full force and effect regardless of: (i) the
termination or consummation of the Exchange Offer; and (ii) any investigation
made by or on behalf of any party.
10. This agreement shall be construed and enforced in accordance
with the laws of the State of New York. It is agreed that any action, suit or
proceeding arising out of or based upon this agreement may be brought in the
United States District Court for the Southern District of New York or any court
of the State of New York of competent jurisdiction located in such District,
and the parties hereto hereby consent to the in personam jurisdiction and venue
of any such court and to service of process by certified mail, return receipt
requested.
If any provision of this agreement shall be held illegal or invalid by
any court, this agreement shall be construed and enforced as if such provision
had not been contained herein and shall be deemed an agreement between the
parties hereto to the fullest extent permitted by law.
If the foregoing correctly sets forth the understanding between the
Company and King, please indicate acceptance thereof in the space provided
below for the purpose, whereupon this letter and the Company's acceptance shall
constitute a binding agreement between the parties hereto.
D. F. KING & CO., INC.
By: /s/ John L. Bibas
John L. Bibas
Vice President
Accepted as of the date first above written:
AMR Corporation
By: /s/ Charles D. MarLett
Title: Corporate Secretary
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<PAGE> 1
This is neither an offer to exchange or to sell nor a solicitation of an offer
to exchange or buy any of these securities. The Exchange Offer is made only
by the Prospectus and the related Letter of Transmittal, and the Exchange
Offer is not being made to, nor will tenders be accepted from, holders
of these securities in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
NOTICE OF EXCHANGE OFFER TO HOLDERS OF
AMR CORPORATION
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
AMR Corporation ("AMR") is offering, upon the terms and subject to the
conditions contained in its Prospectus dated October 14, 1994 and the related
Letter of Transmittal (collectively, the "Exchange Offer"), to exchange up to
$1,100,000,000 aggregate principal amount of debentures designated as its 6 1/8%
Convertible Subordinated Quarterly Income Capital Securities due 2024 (the
"Debentures") for up to all of AMR's outstanding Series A Cumulative
Convertible Preferred Stock (the "Preferred Stock"). The Exchange Offer will be
effected on a basis of $1,000 principal amount of the Debentures for every two
(2) shares of Preferred Stock validly tendered and accepted for exchange.
Ownership of the Preferred Stock may be evidenced by certain $3.00 Depositary
Shares (the "Depositary Shares"). Each Depositary Share represents 1/10th of a
share of Preferred Stock, and entitles the owner, proportionately, to all of
the rights and preferences of the Preferred Stock represented thereby. Either
Depositary Shares or Preferred Stock may be tendered in the Exchange Offer.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON NOVEMBER 15,
1994, UNLESS EXTENDED.
Upon the terms and subject to the conditions of the Exchange Offer, AMR will
accept for exchange Preferred Stock validly tendered and not withdrawn prior to
5:00 p.m., New York City time on November 15, 1994, or if extended by AMR, in
its sole discretion, the latest date and time to which extended (the
"Expiration Date"). Tenders of Preferred Stock may be withdrawn at any time
prior to the Expiration Date and, unless accepted for exchange by AMR, may be
withdrawn at any time after forty business days after October 14, 1994.
In any jurisdiction where the securities or blue sky laws require the Exchange
Offer to be made by a licensed broker or dealer, the Exchange Offer is being
made on behalf of AMR by one or more brokers or dealers which are licensed under
the laws of such jurisdiction.
The Prospectus and Letter of Transmittal contain important information which
should be read before any action is taken by holders of Preferred Stock. Tenders
may be made only by a properly completed and executed Letter of Transmittal and
in conformance with the terms thereof.
Questions or requests for assistance or for additional copies of the Prospectus
or of the Letter of Transmittal and requests for additional copies of the Notice
of Guaranteed Delivery may be directed to D.F. King & Co., Inc., the
Information Agent, at (800) 347-7869.
Lehman Brothers Goldman, Sachs & Co.
Equity Syndicate Desk (800) 323-5678
(800) 524-4462
The Dealer Managers for the Exchange Offer are:
LEHMAN BROTHERS GOLDMAN, SACHS & CO.
October , 1994
