<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 1997.
SUBJECT TO AMENDMENT. REGISTRATION NOS. 333-20469
333-20469-01
333-20469-02
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
<TABLE>
<C> <C> <C>
MISSISSIPPI POWER COMPANY MISSISSIPPI 64-0205820
MISSISSIPPI POWER CAPITAL TRUST I DELAWARE APPLIED FOR
MISSISSIPPI POWER CAPITAL TRUST II DELAWARE APPLIED FOR
(Exact name of registrant as specified in its (State or other jurisdiction of (I.R.S. Employer Identification
charter) incorporation or organization) No.)
</TABLE>
2992 WEST BEACH
GULFPORT, MISSISSIPPI 39501
(601) 864-1211
(Address, including zip code, and telephone number, including area code, of each
registrant's principal executive offices)
---------------------
MICHAEL W. SOUTHERN
VICE PRESIDENT, SECRETARY,
TREASURER AND CHIEF FINANCIAL OFFICER
MISSISSIPPI POWER COMPANY
2992 WEST BEACH
GULFPORT, MISSISSIPPI 39501
(601) 864-1211
(Name, address, including zip code, and telephone number, including area code,
of agent for service of each registrant)
---------------------
THE COMMISSION IS REQUESTED TO MAIL SIGNED COPIES OF ALL ORDERS, NOTICES AND
COMMUNICATIONS TO:
<TABLE>
<C> <C>
W . L . WESTBROOK JOHN D. MCLANAHAN, ESQ.
FINANCIAL VICE PRESIDENT TROUTMAN SANDERS LLP
THE SOUTHERN COMPANY 600 PEACHTREE STREET, N.E.
270 PEACHTREE STREET, N.W. SUITE 5200
ATLANTA, GEORGIA 30303 ATLANTA, GEORGIA 30308-2216
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
TITLE OF AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER UNIT(1)(2)(3) PRICE(1)(2)(3) FEE(1)(6)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mississippi Power Capital Trust I Preferred Securities...
- ---------------------------------------------------------------------------------------------------------------------------------
Mississippi Power Capital Trust II Preferred
Securities...............................................
- ---------------------------------------------------------------------------------------------------------------------------------
Mississippi Power Capital Trust I Capital Securities.....
- ---------------------------------------------------------------------------------------------------------------------------------
Mississippi Power Capital Trust II Capital Securities....
- ---------------------------------------------------------------------------------------------------------------------------------
Mississippi Power Company Junior Subordinated Notes......
- ---------------------------------------------------------------------------------------------------------------------------------
Mississippi Power Company Guarantees with respect to
Preferred Securities and Capital Securities of
Mississippi Power Capital Trust I and Mississippi Power
Capital Trust II(4)(5)...................................
- ---------------------------------------------------------------------------------------------------------------------------------
Total.................................................... $55,000,000 100% $55,000,000 $16,667
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) There are being registered hereunder such presently indeterminate number of
Preferred Securities and Capital Securities of Mississippi Power Capital
Trust I and Mississippi Power Capital Trust II and such presently
indeterminate principal amount of Junior Subordinated Notes of Mississippi
Power Company with an aggregate initial offering price not to exceed
$55,000,000. Junior Subordinated Notes also may be issued to Mississippi
Power Capital Trust I or Mississippi Power Capital Trust II and later
distributed upon dissolution and distribution of the assets thereof, which
would include such Junior Subordinated Notes for which no separate
consideration will be received. Pursuant to Rule 457(o) under the Securities
Act of 1933, which permits the registration fee to be calculated on the
basis of the maximum offering price of all the securities listed, the table
does not specify by each class information as to the amount to be
registered, proposed maximum offering price per unit or proposed maximum
aggregate offering price.
(2) Estimated solely for the purpose of determining the registration fee.
(3) Exclusive of accrued interest and distributions, if any.
(4) No separate consideration will be received for the Mississippi Power Company
Guarantees. Pursuant to Rule 457(n) no separate fee is payable in respect of
the Mississippi Power Company Guarantees.
(5) Includes the obligations of Mississippi Power Company under the respective
Trust Agreements, the Subordinated Note Indenture, the related series of
Junior Subordinated Notes, the respective Guarantees and the respective
Agreements as to Expenses and Liabilities, which include the Company's
covenant to pay any indebtedness, expenses or liabilities of the Trusts
(other than obligations pursuant to the terms of the Securities or other
similar interests), all as described in this registration statement.
(6) Previously paid.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 31, 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY , 1997)
1,400,000 PREFERRED SECURITIES
MISSISSIPPI POWER CAPITAL TRUST I
% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPRS(SM)")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS SET FORTH HEREIN, BY
MISSISSIPPI POWER COMPANY
A SUBSIDIARY OF THE SOUTHERN COMPANY
---------------------------
The % Trust Originated Preferred Securities (the "Preferred Securities")
offered hereby evidence preferred undivided beneficial interests, representing
97% undivided beneficial interests in the assets of Mississippi Power Capital
Trust I, a statutory business trust created under the laws of the State of
Delaware (the "Trust"). Mississippi Power Company, a Mississippi corporation
(the "Company"), will own all the common securities (the "Common Securities"
and, together with the Preferred Securities, the "Trust Securities")
representing the remaining 3% undivided beneficial interests in the assets of
the Trust. The Trust exists for the sole purpose of issuing the Preferred
Securities and Common Securities and investing the proceeds thereof in an
equivalent amount of the Company's Series A % junior subordinated deferrable
interest notes due December 31, 2036 (the "Series A Junior Subordinated Notes").
---------------------------
The Series A Junior Subordinated Notes will be unsecured obligations of the
Company and will be subordinate and junior in right of payment to Senior
Indebtedness of the Company, as described herein. See "Description of the Junior
Subordinated Notes -- Subordination" in the accompanying Prospectus. Holders of
the Preferred Securities are entitled to receive cumulative cash distributions
at the rate of % per annum (the "Securities Rate"), accruing from the date
of original issuance and payable, unless deferred, quarterly in arrears on March
31, June 30, September 30 and December 31 of each year (each, a "Distribution
Date").
--------------------------- (continued on page S-2)
SEE "RISK FACTORS" BEGINNING ON PAGE S-7 FOR CERTAIN INFORMATION RELEVANT TO
AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED
SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF SUCH DEFERRAL.
---------------------------
Application has been made to list the Preferred Securities on the New York
Stock Exchange, Inc. (the "NYSE"). If approved, trading of the Preferred
Securities on the NYSE is expected to commence within a 30-day period after the
initial delivery of the Preferred Securities. See "Underwriting."
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Price to Underwriting Proceeds to
Public(1) Discount(2)(3) Trust(2)(3)(4)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security.......................... $ $ $
- ---------------------------------------------------------------------------------------------------------------------------
Total........................................... $ $ $
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued distributions, if any, from the Issue Date.
(2) The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."
(3) Because the proceeds of the sale of the Preferred Securities will be
invested in Series A Junior Subordinated Notes, the Company has agreed to
pay to the Underwriters, as compensation (the "Underwriters' Compensation")
for arranging the investment therein of such proceeds, $ per Preferred
Security, except for Preferred Securities sold to certain institutions, for
which the Underwriters' Compensation will be $ per Preferred Security.
Therefore, to the extent that Preferred Securities are sold to such
institutions, the actual amount of Underwriters' Compensation will be less
than and the Proceeds to Trust will be greater than the aggregate amounts
specified above. See "Underwriting."
(4) Expenses of the offering to be paid by the Company are estimated to be
approximately $ .
---------------------------
The Preferred Securities are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that delivery of
the Preferred Securities will be made in book-entry only form through the
facilities of The Depository Trust Company on or about February , 1997 (the
"Issue Date").
---------------------------
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
THE ROBINSON-HUMPHREY COMPANY, INC.
SMITH BARNEY INC.
---------------------------
The date of this Prospectus Supplement is February , 1997.
(SM)"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE> 3
(CONTINUED FROM PAGE S-1)
The Securities Rate and the Distribution Dates for the Preferred Securities
will correspond to the interest rate and interest and other payment dates on the
Series A Junior Subordinated Notes, which will constitute substantially all the
assets of the Trust. As a result, if principal or interest is not paid on the
Series A Junior Subordinated Notes, no amounts will be paid on the Preferred
Securities. THE COMPANY HAS THE RIGHT TO DEFER PAYMENTS OF INTEREST ON THE
SERIES A JUNIOR SUBORDINATED NOTES BY EXTENDING THE INTEREST PAYMENT PERIOD ON
THE SERIES A JUNIOR SUBORDINATED NOTES, AT ANY TIME AND FROM TIME TO TIME, FOR
UP TO 20 CONSECUTIVE QUARTERS (EACH, AN "EXTENSION PERIOD"). If interest
payments are so deferred, distributions on the Preferred Securities also will be
deferred and the Company will not be permitted to declare or pay any dividend or
distribution on any of its capital stock or make any guarantee payments with
respect to the foregoing, or make any payment on any debt securities issued by
the Company which rank pari passu with or junior to the Series A Junior
Subordinated Notes. During any Extension Period, holders of Preferred Securities
will be required to include income in the form of original issue discount
("OID") in their gross income for United States federal income tax purposes in
advance of the receipt of the cash payments attributable to such deferred
interest. See "Description of the Series A Junior Subordinated Notes -- Option
to Extend Interest Payment Period," "Risk Factors -- Option to Extend Interest
Payment Period" and "Certain Federal Income Tax Considerations -- Original Issue
Discount" and "-- Market Discount." Deferred installments of interest on the
Series A Junior Subordinated Notes will bear interest, compounded quarterly, at
a rate per annum equal to the Securities Rate. The payment of such deferred
interest, together with interest thereon to the extent permitted by applicable
law, will be distributed to the holders of the Preferred Securities as received
at the end of any Extension Period.
The Trust Securities are subject to mandatory redemption upon repayment of
the Series A Junior Subordinated Notes at maturity or their earlier redemption.
The Series A Junior Subordinated Notes are redeemable at the option of the
Company (in whole or in part), from time to time, on or after February , 2002,
or at any time in whole upon the occurrence of a Tax Event or Investment Company
Act Event (either, a "Special Event"). The Company will have the right at any
time to terminate the Trust and cause the Series A Junior Subordinated Notes to
be distributed to the holders of the Trust Securities in liquidation of the
Trust. See "Description of the Preferred Securities -- Special Event Redemption;
Distribution of Series A Junior Subordinated Notes." The Series A Junior
Subordinated Notes are subordinated and junior in right of payment to all Senior
Indebtedness (as defined herein) of the Company. See "Description of the Junior
Subordinated Notes -- Subordination" in the accompanying Prospectus. As of
September 30, 1996, Senior Indebtedness of the Company aggregated approximately
$330,000,000. If the Series A Junior Subordinated Notes are distributed to the
holders of the Preferred Securities, the Company will use its best efforts to
have the Series A Junior Subordinated Notes listed on the NYSE or on such other
exchange as the Preferred Securities are then listed. See "Description of the
Preferred Securities -- Special Event Redemption; Distribution of Series A
Junior Subordinated Notes" and "Description of the Series A Junior Subordinated
Notes."
The payment of distributions on the Preferred Securities is guaranteed by
the Company under the Guarantee Agreement, but only to the extent that the Trust
has funds legally and immediately available therefor (the "Guarantee"). If the
Company fails to make required payments on the Series A Junior Subordinated
Notes, the Trust will not have sufficient funds to pay such distributions, and
the Guarantee does not cover the payment of distributions when the Trust does
not have sufficient funds legally available therefor. In such event, the remedy
of a holder of Preferred Securities is to enforce the Series A Junior
Subordinated Notes. See "Description of the Series A Junior Subordinated Notes"
herein and "Description of the Junior Subordinated Notes" in the accompanying
Prospectus. The Company's obligations under the Guarantee are subordinate and
junior in right of payment to all of its other liabilities and will rank pari
passu (equal in priority) with the most senior preferred stock of the Company.
See "Description of the Guarantees" in the accompanying Prospectus. The Company
has, through the Guarantee, the Subordinated Note Indenture, the Series A Junior
Subordinated Notes, the Trust Agreement and the Agreement as to Expenses and
Liabilities, fully and unconditionally guaranteed, subject to certain
subordination provisions, all the Trust's obligations with respect to the
Preferred Securities.
In the event of the redemption of the Series A Junior Subordinated Notes or
the voluntary or involuntary dissolution, winding-up or termination of the
Trust, the holders of the Preferred Securities will be entitled to receive, for
each Preferred Security, a liquidation amount of $25 plus accrued and unpaid
distributions thereon (including interest thereon) to the date of payment (the
"Redemption Price"), unless in connection with such dissolution, winding-up or
termination, the Series A Junior Subordinated Notes are distributed to the
holders of the Preferred Securities. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Dissolution."
The Preferred Securities initially will be represented by a global
certificate or certificates registered in the name of The Depository Trust
Company ("DTC") or its nominee. Beneficial interests in the Preferred Securities
will be shown on, and transfers thereof will be effected only through, records
maintained by Participants (as defined herein) in DTC. Except as described
herein, Preferred Securities in certificated form will not be issued in exchange
for the global certificates. See "Description of the Preferred
Securities -- Book-Entry Only Issuance -- The Depository Trust Company."
---------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NYSE, IN THE OVER THE COUNTER
MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
S-2
<PAGE> 4
SUMMARY OF OFFERING
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Capitalized terms not otherwise defined shall have
the meanings assigned in the Glossary.
The Company................ The Company was incorporated under the laws of the
State of Mississippi on July 12, 1972, was
admitted to do business in Alabama on November
28, 1972, and, effective December 21, 1972, by
the merger into it of the predecessor Mississippi
Power Company, succeeded to the business and
properties of the latter company. The predecessor
Mississippi Power Company was incorporated under
the laws of the State of Maine on November 24,
1924, and was admitted to do business in
Mississippi on December 23, 1924, and in Alabama
on December 7, 1962. The Company has its
principal office at 2992 West Beach, Gulfport,
Mississippi 39501, telephone (601) 864-1211. The
Company is a wholly owned subsidiary of The
Southern Company.
The Company is a regulated public utility engaged
in the generation, transmission, distribution and
sale of electric energy within an approximately
1,200 square mile service area within the 23
counties of southeastern Mississippi.
The Trust.................. Mississippi Power Capital Trust I is a statutory
business trust created under Delaware law solely
for the purpose of holding the Company's Series A
Junior Subordinated Notes and issuing Preferred
Securities and Common Securities evidencing the
entire beneficial interest therein (and engaging
in activities necessary, appropriate, convenient
or incidental thereto).
The Trustees............... Bankers Trust Company will act as property trustee
(the "Property Trustee") of the Trust. Two
officers of the Company also will act as trustees
(the "Administrative Trustees") of the Trust.
Bankers Trust (Delaware) will be an additional
trustee (the "Delaware Trustee") of the Trust.
Bankers Trust Company also will act as trustee
(the "Indenture Trustee") under the Subordinated
Note Indenture pursuant to which the Series A
Junior Subordinated Notes will be issued and will
act as trustee under the Guarantee (the
"Guarantee Trustee").
The Property Trustee, Delaware Trustee and
Administrative Trustees are sometimes referred to
as the "Securities Trustees."
Preferred Securities
Offered.................... The Trust will offer 1,400,000 Preferred Securities
evidencing preferred undivided beneficial
interests in the assets of the Trust. Holders of
the Preferred Securities are entitled to receive
cumulative cash distributions at the Securities
Rate, accruing from the date of original issuance
and payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each
year, commencing on March 31, 1997 (each, a
"Distribution Date"). The Securities Rate and the
Distribution Dates for the Preferred Securities
will correspond to the interest rate and payment
dates on the Series A Junior Subordinated Notes,
which will constitute substantially all the
assets of the Trust. As a result, if principal or
interest is not paid on the Series A Junior
Subordinated Notes, no amounts will be paid on
the
S-3
<PAGE> 5
Preferred Securities. See "Description of the
Preferred Securities" herein.
Record Date................ The record date for each Distribution Date will be
the close of business on the 15th calendar day
prior to such Distribution Date.
Series A Junior
Subordinated Notes......... The Trust will invest the proceeds from the
issuance of the Preferred Securities and Common
Securities in an equivalent amount of Series A
% junior subordinated deferrable interest
notes due December 31, 2036. The Series A Junior
Subordinated Notes will be subordinate and junior
in right of payment to all indebtedness for
borrowed money and other obligations of the
Company included in the definition of Senior
Indebtedness. See "Description of the Junior
Subordinated Notes -- Subordination" in the
accompanying Prospectus.
Guarantee.................. The payment of distributions on the Preferred
Securities is guaranteed by the Company under the
Guarantee, but only to the extent the Trust has
funds legally and immediately available to make
such distributions. If the Company does not make
principal or interest payments on the Series A
Junior Subordinated Notes, the Trust will not
have sufficient funds to make distributions on
the Preferred Securities, in which event the
Guarantee will not apply to such distributions
until the Trust has sufficient funds legally
available therefor. The obligations of the
Company under the Guarantee will be subordinate
and junior in right of payment to all other
liabilities of the Company and will rank pari
passu with the most senior preferred stock issued
by the Company. See "Risk Factors -- Ranking of
and Rights Under the Guarantee" herein and
"Description of the Guarantees" in the
accompanying Prospectus. The Company has, through
the Guarantee, the Subordinated Note Indenture,
the Series A Junior Subordinated Notes, the Trust
Agreement and the Agreement as to Expenses and
Liabilities, fully and unconditionally
guaranteed, subject to certain subordination
provisions, all the Trust's obligations with
respect to the Preferred Securities.
Interest Deferral.......... The Company has the right to defer payments of
interest on the Series A Junior Subordinated
Notes by extending the interest payment period on
the Series A Junior Subordinated Notes, at any
time and from time to time, for up to 20
consecutive quarters (each, an "Extension
Period"). The only restrictions on the Company's
ability to defer payments of interest are that
during the Extension Period the Company may not
(i) pay dividends on or redeem any of its capital
stock or (ii) pay principal or interest on any
debt securities ranking pari passu with or
subordinate to the Series A Junior Subordinated
Notes. There could be multiple Extension Periods
of varying lengths throughout the term of the
Series A Junior Subordinated Notes.
If interest payments on the Series A Junior
Subordinated Notes are deferred, distributions on
the Preferred Securities will also be deferred.
During an Extension Period, holders of Preferred
Securities will be required to include income in
the form of OID in their gross income for federal
income tax purposes in advance of the receipt of
the cash payments attributable to such deferred
interest. See "Description of
S-4
<PAGE> 6
the Series A Junior Subordinated Notes -- Option
to Extend Interest Payment Period" and "Certain
Federal Income Tax Considerations -- Original
Issue Discount" and "-- Market Discount."
Deferred interest will bear interest to the
extent permitted by applicable law, compounded
quarterly, at a rate per annum equal to the
Securities Rate from the date of deferral to the
date of payment.
Redemption; Distribution... The Preferred Securities are subject to mandatory
redemption upon repayment of the Series A Junior
Subordinated Notes at maturity or their earlier
redemption. The Series A Junior Subordinated
Notes are redeemable by the Company (in whole or
in part), from time to time on or after February
, 2002, or at any time in whole upon the
occurrence of a Special Event. If a partial
redemption of the Series A Junior Subordinated
Notes would result in the delisting of the
Preferred Securities, the Company may only redeem
the Series A Junior Subordinated Notes in whole.
Any partial redemption of the Series A Junior
Subordinated Notes will be effected by the
redemption of an equivalent amount of Trust
Securities, to be allocated approximately 97% to
the Preferred Securities and 3% to the Common
Securities. See "Description of the Preferred
Securities -- Redemption" and "-- Special Event
Redemption; Distribution of Series A Junior
Subordinated Notes."
The Company will have the right at any time to
terminate the Trust and cause the Series A Junior
Subordinated Notes to be distributed to the
holders of the Preferred Securities in
liquidation of the Trust. This right is optional
and wholly within the discretion of the Company.
Circumstances under which the Company may
determine to exercise such right could include
the occurrence of an Investment Company Act Event
or a Tax Event, adverse tax consequences to the
Company or the Trust that are not within the
definition of a Tax Event because they do not
result from an amendment or change described in
such definition, and changes in the accounting
requirements applicable to the Preferred
Securities as described under "Accounting
Treatment." See "Description of the Preferred
Securities -- Special Event Redemption;
Distribution of Series A Junior Subordinated
Notes."
Special Event.............. A Special Event means a Tax Event or an Investment
Company Act Event. A "Tax Event" means that the
Administrative Trustees and the Company shall
have received an opinion from independent tax
counsel experienced in such matters (which may be
counsel to the Company) to the effect that, as a
result of (a) any amendment to, or change
(including any announced prospective change) in,
the laws (or any regulations thereunder) of the
United States or any political subdivision or
taxing authority thereof or therein or (b) any
amendment to, or change in, an interpretation or
application of such laws or regulations, there is
more than an insubstantial risk that (i) the
Trust would be subject to United States federal
income tax with respect to income accrued or
received on the Series A Junior Subordinated
Notes, (ii) interest payable to the Trust on the
Series A Junior Subordinated Notes would not be
deductible by the Company for United States
federal income tax purposes, or (iii) the Trust
would be subject to more than a de minimis amount
of other taxes, duties or other governmental
charges, which change or amendment becomes
effective
S-5
<PAGE> 7
on or after the Issue Date. An "Investment
Company Act Event" means that the Administrative
Trustees and the Company shall have received an
opinion of independent counsel (which may be
counsel to the Company) to the effect that, as a
result of a change in law or regulation or a
written change in interpretation or application
of law or regulation by any legislative body,
court, governmental agency or regulatory
authority after the Issue Date, there is more
than an insubstantial risk that the Trust is or
will be considered an investment company under
the Investment Company Act of 1940, as amended
(the "1940 Act").
Redemption Price........... In the event of the redemption of the Trust
Securities or other termination of the Trust
without distribution of the Series A Junior
Subordinated Notes, each Preferred Security shall
be entitled to receive a liquidation amount of
$25 plus accrued and unpaid distributions thereon
(including interest thereon) to the date of
payment.
S-6
<PAGE> 8
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should consider particularly the following matters:
RANKING OF AND RIGHTS UNDER THE SERIES A JUNIOR SUBORDINATED NOTES
No amounts will be available to make payments on the Preferred Securities
except from payments made on the Series A Junior Subordinated Notes. The
obligations of the Company under the Series A Junior Subordinated Notes are
subordinate and junior in right of payment to all present and future Senior
Indebtedness of the Company. At September 30, 1996, Senior Indebtedness of the
Company aggregated approximately $330,000,000. There are no terms in the
Preferred Securities, the Series A Junior Subordinated Notes or the Guarantee
that limit the Company's ability to incur additional indebtedness, including
indebtedness that ranks senior to the Series A Junior Subordinated Notes. See
"Description of the Guarantees" and "Description of the Junior Subordinated
Notes -- Subordination" in the accompanying Prospectus.
RANKING OF AND RIGHTS UNDER THE GUARANTEE
The Company's obligations under the Guarantee are subordinate and junior in
right of payment to all liabilities of the Company and will be pari passu with
the most senior preferred stock issued by the Company. If the Company were to
default in its obligation to pay amounts payable on the Series A Junior
Subordinated Notes, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and in such event holders of the Preferred Securities would not be
able to rely upon the Guarantee for payment of such amounts.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Subordinated Note Indenture, and at any
time, and from time to time, to defer payments of interest on the Series A
Junior Subordinated Notes for a period of up to 20 consecutive quarters (each,
an "Extension Period"), but not beyond the stated maturity of the Series A
Junior Subordinated Notes. Prior to the termination of any Extension Period, the
Company may further defer payments of interest, provided that such Extension
Period, together with all such previous and further extensions thereof, may not
exceed 20 consecutive quarters. Upon the termination of any Extension Period and
the payment of all amounts then due, the Company may select a new Extension
Period, subject to the above requirements. There could be multiple Extension
Periods of varying lengths throughout the term of the Series A Junior
Subordinated Notes. Deferred installments of interest on the Series A Junior
Subordinated Notes will bear interest to the extent permitted by applicable law,
compounded quarterly, at a rate per annum equal to the Securities Rate. The
payment of such deferred interest, together with interest thereon, will be
passed through to the holders of the Preferred Securities as received at the end
of any Extension Period.
The only restrictions on the Company's ability to defer payments of
interest are that during any Extension Period the Company may not (i) pay
dividends on or redeem any of its capital stock or (ii) pay principal or
interest on any debt securities ranking pari passu with or subordinate to the
Series A Junior Subordinated Notes. See "Description of the Preferred
Securities -- Distributions" and "Description of the Series A Junior
Subordinated Notes -- Option to Extend Interest Payment Period."
Should the Company exercise its rights to defer payments of interest, each
holder of Preferred Securities will be required to include income in the form of
OID in their gross income for United States federal income tax purposes in
respect of the deferred interest allocable to its Preferred Securities. As a
result, holders of Preferred Securities will recognize income for United States
federal income tax purposes in advance of the receipt of cash and will not
receive the cash from the Trust related to such income if such holders dispose
of their Preferred Securities prior to the record date for the date on which
distributions of such amounts are made. See "Certain Federal Income Tax
Considerations -- Original Issue Discount" and "-- Sale of
S-7
<PAGE> 9
Preferred Securities." INVESTORS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES OF AN INVESTMENT IN THE PREFERRED SECURITIES.
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series A
Junior Subordinated Notes. However, should the Company determine to exercise
such right in the future, the market price of the Preferred Securities is likely
to be affected. A holder that disposes of its Preferred Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Preferred Securities. In addition, as a
result of the existence of the Company's right to defer interest payments, the
market price of the Preferred Securities (which represent an undivided
beneficial interest in the Series A Junior Subordinated Notes) may be more
volatile than other similar securities that do not have such rights.
SPECIAL EVENT REDEMPTION; DISTRIBUTION OF SERIES A JUNIOR SUBORDINATED NOTES
If a Special Event shall occur and be continuing, the Company will have the
option to redeem the Series A Junior Subordinated Notes in cash (with the result
that the Preferred Securities shall be redeemed). In addition, the Company will
have the right at any time to terminate the Trust and cause the Series A Junior
Subordinated Notes to be distributed to the holders of the Trust Securities in
liquidation of the Trust. See "Description of the Preferred Securities A Special
Event Redemption; Distribution of Series A Junior Subordinated Notes."
There can be no assurance as to the market price for the Series A Junior
Subordinated Notes that may be distributed in exchange for Preferred Securities
if a termination or liquidation of the Trust were to occur. Accordingly, the
Series A Junior Subordinated Notes that the investor may receive on termination
and liquidation of the Trust may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. See
"Description of the Series A Junior Subordinated Notes."
POSSIBLE TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"),
the revenue portion of President Clinton's 1996 budget proposal, was released.
The Bill would, among other things, generally deny interest deductions for
interest on an instrument, issued by a corporation, that has a maximum term of
more than 20 years and that is not shown as indebtedness on the separate balance
sheet of the issuer or, where the instrument is issued to a related party (other
than a corporation), where the holder or some other related party issues a
related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. The above-described provisions of the Bill were
proposed to be effective generally for instruments issued on or after December
7, 1995. If such provisions were to apply to the Series A Junior Subordinated
Notes, the Company would be unable to deduct interest on the Series A Junior
Subordinated Notes. However, on March 29, 1996, the Chairmen of the Senate
Finance and House Ways and Means Committees issued a joint statement to the
effect that it was their intention that the effective date of the President's
legislative proposals, if adopted, will be no earlier than the date of
appropriate Congressional action. The Company believes that, under current law,
it will be able to deduct interest on the Series A Junior Subordinated Notes.
There can be no assurance, however, that current or future legislative proposals
or final legislation will not affect the ability of the Company to deduct
interest on the Series A Junior Subordinated Notes. Such a change could give
rise to a Tax Event, which would permit the Company to cause a redemption of the
Preferred Securities, as described more fully under "Description of the
Preferred Securities -- Special Event Redemption; Distribution of Series A
Junior Subordinated Notes."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and, except
for the rights of holders of Preferred Securities to appoint a Substitute
Property Trustee upon the occurrence of certain events described herein, will
not be entitled to vote to appoint, remove or replace the Securities Trustees,
which voting rights are vested exclusively in the holder of the Common
Securities.
S-8
<PAGE> 10
TRADING CHARACTERISTICS OF PREFERRED SECURITIES
The Preferred Securities are expected to be listed on the NYSE, subject to
official notice of issuance. Accordingly, the Preferred Securities are expected
to trade at a price that takes into account the value, if any, of accrued but
unpaid distributions; thus, purchasers will not pay and sellers will not receive
accrued and unpaid interest with respect to the Preferred Securities that is not
included in the trading price thereof. If a Preferred Security is disposed of
prior to the occurrence of an Extension Period, any portion of the amount
received that is attributable to accrued interest will be treated as interest to
a U.S. Holder for tax purposes and will not be treated as part of the amount
realized for purposes of determining gain or loss on the disposition of the
Preferred Security. If an Extension Period occurs, interest on the Series A
Junior Subordinated Notes will be included in the gross income of U.S. holders
of Preferred Securities as it accrues rather than when it is paid. Should an
Extension Period occur, a holder who disposes of his Preferred Securities
between record dates for payments of distributions thereon would be required to
include accrued but unpaid interest on the Series A Junior Subordinated Notes
through the date of disposition in income as OID, and to add such amount to his
adjusted tax basis in his pro rata share of the related Series A Junior
Subordinated Notes deemed disposed of. To the extent the selling price is less
than the holder's adjusted tax basis, a holder generally will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
See "Certain Federal Income Tax Considerations -- Original Issue Discount" and
"-- Sale of Preferred Securities."
The trading price of the Preferred Securities is likely to be sensitive to
the level of interest rates generally. If interest rates rise in general, the
trading price of the Preferred Securities may decline to reflect the additional
yield requirements of the purchasers. Conversely, a decline in interest rates
may increase the trading price of the Preferred Securities, although any
increase will be moderated by the Company's ability to call the Series A Junior
Subordinated Notes at any time on or after February , 2002 at a redemption
price equal to 100% of the principal amount to be redeemed plus accrued but
unpaid interest. In addition, because holders of Preferred Securities will be
paid only from payments on the Series A Junior Subordinated Notes and may
receive Series A Junior Subordinated Notes upon the termination of the Trust,
prospective purchasers of Preferred Securities are making an investment decision
with regard to the Series A Junior Subordinated Notes and should carefully
review all the information regarding the Series A Junior Subordinated Notes
contained herein. See "Description of the Preferred Securities -- Special Event
Redemption; Distribution of Series A Junior Subordinated Notes" and "Description
of the Series A Junior Subordinated Notes."
MISSISSIPPI POWER CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State on
January 24, 1997. The Trust's business is defined in a trust agreement, executed
by the Company, as Depositor, and the Delaware Trustee thereunder. This trust
agreement will be amended and restated in its entirety on the Issue Date
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus Supplement and the accompanying Prospectus form a part
(the "Trust Agreement"). The Trust Agreement will be qualified as an indenture
under the Trust Indenture Act of 1939, as amended (the "1939 Act"). The Trust
exists for the exclusive purposes of (i) issuing the Trust Securities
representing undivided beneficial interests in the assets of the Trust, (ii)
investing the gross proceeds of the Trust Securities in the Series A Junior
Subordinated Notes, and (iii) engaging in only those other activities necessary,
appropriate, convenient or incidental thereto. The Trust has a term of
approximately 45 years, but may terminate earlier as provided in the Trust
Agreement.
Upon issuance of the Preferred Securities, the purchasers thereof will own
all of the Preferred Securities. The Company will acquire all of the Common
Securities, which will have an aggregate liquidation amount equal to
approximately 3% of the total capital of the Trust. The Common Securities will
rank pari passu, and payments will be made thereon pro rata, with the Preferred
Securities, except that upon the occurrence and continuance of a Subordinated
Note Indenture Event of Default, the rights of the holders of Common Securities
to payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the Preferred
Securities.
S-9
<PAGE> 11
The Trust's business and affairs will be conducted by the Securities
Trustees, which shall be appointed by the Company as the holder of the Common
Securities. Two officers of the Company initially will serve as Administrative
Trustees. Bankers Trust Company will serve as Property Trustee and will hold
legal title to the Series A Junior Subordinated Notes issued by the Company on
behalf of the Trust and the holders of the Trust Securities. Bankers Trust
(Delaware) will serve as Delaware Trustee. In certain circumstances, the holders
of a majority in liquidation amount of the Preferred Securities will be entitled
to appoint a Substitute Property Trustee. See "Description of the Preferred
Securities -- Voting Rights."
The Property Trustee will hold legal title to the Series A Junior
Subordinated Notes for the benefit of the Trust and the holders of the Trust
Securities and will have the power to exercise all rights, powers and privileges
under the Subordinated Note Indenture as the holder of the Series A Junior
Subordinated Notes. The Property Trustee will make payments of distributions and
payments on liquidation, redemption and otherwise to the holders of the Trust
Securities. Subject to the right of the holders of the Preferred Securities to
appoint a Substitute Property Trustee in certain instances, the Company, as the
holder of all the Common Securities, will have the right to appoint, remove or
replace all the Securities Trustees.
The Series A Junior Subordinated Notes will constitute substantially all of
the assets of the Trust. Other assets that may constitute "Trust Property" (as
that term is defined in the Trust Agreement) include any cash on deposit in, or
owing to, the payment account as established under the Trust Agreement, as well
as any other property or assets held by the Property Trustee pursuant to the
Trust Agreement. In addition, the Trust may, from time to time, receive cash
pursuant to the Agreement as to Expenses and Liabilities.
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are as set forth in the Trust
Agreement, the Delaware Business Trust Act, and the 1939 Act. See "Description
of the Preferred Securities."
The Trust's registered office in the State of Delaware is c/o Bankers Trust
(Delaware), 1001 Jefferson Street, Suite 550, Wilmington, Delaware 19801-1457.
The principal place of business of the Trust shall be c/o the Company, 2992 West
Beach, Gulfport, Mississippi 39501, telephone (601) 864-1211, Attn: Treasurer.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1996, and as adjusted to reflect the issuances described in note
(2) below. The following data is qualified in its entirety by reference to and,
therefore, should be read together with the detailed information and financial
statements appearing in the documents incorporated herein by reference. See also
"Selected Information" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
--------------------------------
ACTUAL AS ADJUSTED(2)
--------- -------------------
(THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Common Stock Equity......................................... $387,889 $387,889 43.8%
Cumulative Preferred Stock.................................. 74,414 74,414 8.4
Company Obligated Mandatorily Redeemable Preferred or
Capital Securities of Subsidiary Trusts Holding Company
Junior Subordinated Notes(1).............................. -- 55,000 6.2
Long-Term Debt.............................................. 276,312 367,908 41.6
-------- -------- -----
Total, excluding amounts due within one year........... $738,615 $885,211 100.0%
======== ======== =====
</TABLE>
- ---------------
(1) As described herein and in the accompanying Prospectus, substantially all of
the assets of the respective Trusts will be Junior Subordinated Notes of
the Company with an aggregate principal amount not exceeding $56,701,050,
and upon redemption of such debt, the related Securities will be
mandatorily redeemable.
S-10
<PAGE> 12
(2) Reflects (i) $50,000,000 of new term notes payable to banks, (ii)
$41,596,000 of new First Mortgage Bonds which could be issued and are
covered by previous shelf registration filings, and (iii) the proposed
issuance of $55,000,000 of new Securities covered by the accompanying
Prospectus.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of the Company and, accordingly, the accounts of the Trust will be included in
the consolidated financial statements of the Company. The Preferred Securities
will be presented as a separate line item in the consolidated balance sheet of
the Company, and appropriate disclosures concerning the Preferred Securities,
the Guarantee and the Series A Junior Subordinated Notes will be included in the
notes to the consolidated financial statements. For financial reporting
purposes, the Company will record distributions payable on the Preferred
Securities as an expense.
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the Trust
Agreement. The Trust Agreement will be qualified as an indenture under the 1939
Act. The Property Trustee will act as the indenture trustee with respect to the
Trust, as well as the Guarantee, for purposes of compliance with the provisions
of the 1939 Act. The terms of the Preferred Securities will include those stated
in the Trust Agreement, the Delaware Business Trust Act, and those made part of
the Trust Agreement by the 1939 Act. The following summary of the principal
terms and provisions of the Preferred Securities does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the Trust
Agreement, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
are a part, as well as the 1939 Act.
GENERAL
The Trust Agreement authorizes the Administrative Trustees, on behalf of
the Trust, to issue the Preferred Securities, which represent preferred
undivided beneficial interests in the assets of the Trust, and the Common
Securities, which represent common undivided beneficial interests in the assets
of the Trust. All of the Common Securities will be owned by the Company. The
Common Securities rank pari passu, and payments will be made thereon on a pro
rata basis, with the Preferred Securities, except that upon the occurrence of a
Subordinated Note Indenture Event of Default, the rights of the holders of the
Common Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Preferred Securities. The Trust Agreement does not permit the
issuance by the Trust of any securities other than the Trust Securities or the
incurrence of any indebtedness by the Trust. Pursuant to the Trust Agreement,
the Property Trustee will own and hold the Series A Junior Subordinated Notes
for the benefit of the Trust and the holders of the Trust Securities. The
payment of distributions out of money held by the Trust, and payments upon
redemption of the Preferred Securities or liquidation of the Trust, are
guaranteed by the Company on a subordinated basis as and to the extent described
under "Description of the Guarantees" in the accompanying Prospectus. The
Guarantee does not cover payment of distributions on the Preferred Securities
when the Trust does not have legally and immediately available funds sufficient
to make such distributions. In such event, the remedy of a holder of Preferred
Securities is to direct the Property Trustee to enforce its rights under the
Series A Junior Subordinated Notes. If the Property Trustee fails to enforce its
rights under the Series A Junior Subordinated Notes, a holder of Preferred
Securities may, to the fullest extent permitted by applicable law, institute a
legal proceeding directly against the Company to enforce its rights under the
Trust Agreement without first instituting any legal proceeding against the
Property Trustee or the Trust. In addition, a holder of Preferred Securities may
institute a legal proceeding directly against the Company, without first
instituting a legal proceeding against the Property Trustee or any other person
or entity, for enforcement of payment to such holder of principal of or interest
on the Series A Junior Subordinated Notes having a principal amount equal to the
aggregate stated liquidation amount of the Preferred Securities of such holder
on or after the due dates
S-11
<PAGE> 13
specified in the Series A Junior Subordinated Notes. The above mechanisms and
obligations, together with the Company's obligations under the Agreement as to
Expenses and Liabilities, constitute a full and unconditional guarantee by the
Company of payments due on the Preferred Securities. See "-- Voting Rights"
below.
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at the Securities
Rate and will accrue from the Issue Date and, except in the event of an
Extension Period, will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year. In the event that any date on which
distributions are to be made on the Preferred Securities is not a Business Day,
then payment of the distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. A "Business Day" shall mean any day other than a Saturday or
Sunday, a day on which banks in New York City are authorized or obligated by law
or executive order to remain closed or a day on which the principal corporate
trust office of the Property Trustee or the Indenture Trustee is closed for
business.
Distributions payable on any Distribution Date will be payable to the
holders of record on the Record Date for such Distribution Date, which is the
close of business on the fifteenth calendar day preceding such Distribution
Date. Subject to any applicable laws and regulations and the provisions of the
Trust Agreement, each such payment will be made as described under
"-- Book-Entry Only Issuance -- The Depository Trust Company" below. The amount
of distributions payable for any period will be computed on the basis of a
360-day year of twelve 30-day months.
The Company has the right under the Subordinated Note Indenture to defer
payments of interest on the Series A Junior Subordinated Notes by extending the
interest payment period from time to time on the Series A Junior Subordinated
Notes (each, an "Extension Period") which, if exercised, would defer quarterly
distributions on the Preferred Securities during any such extended interest
payment period. Deferred installments of interest on the Series A Junior
Subordinated Notes will bear interest, compounded quarterly, at a rate per annum
equal to the Securities Rate. If distributions are deferred, the deferred
distributions and accrued interest thereon shall be paid, if funds are legally
available therefor, to holders of record of the Preferred Securities as they
appear on the books and records of the Trust on the Record Date next following
the termination of such Extension Period. See "Description of the Series A
Junior Subordinated Notes -- Interest" and "-- Option to Extend Interest Payment
Period."
Distributions on the Preferred Securities must be paid on the Distribution
Dates to the extent that the Trust has funds legally and immediately available
for the payment of such distributions. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received under the Series A Junior Subordinated Notes. See "Description
of the Series A Junior Subordinated Notes."
REDEMPTION
The Preferred Securities are subject to mandatory redemption upon repayment
of the Series A Junior Subordinated Notes at maturity or their earlier
redemption. The Series A Junior Subordinated Notes will mature on December 31,
2036 and may be redeemed, in whole or in part, at the option of the Company, at
any time on or after February , 2002 or at any time in whole upon the
occurrence of a Special Event. Upon the repayment of the Series A Junior
Subordinated Notes, whether at maturity or upon redemption, the proceeds from
such repayment or payment shall simultaneously be applied to redeem a like
amount of Trust Securities upon not less than 30 nor more than 60 days' notice,
at the Redemption Price (as defined below). See "Description of the Series A
Junior Subordinated Notes -- Optional Redemption." If a partial redemption of
the Series A Junior Subordinated Notes would result in the delisting of the
Preferred Securities, the Company may only redeem the Series A Junior
Subordinated Notes in whole. In the event that fewer than all of the outstanding
Trust Securities are to be redeemed, the Preferred Securities to be redeemed
S-12
<PAGE> 14
will be selected as described under "-- Book-Entry Only Issuance -- The
Depository Trust Company" below. If the Preferred Securities are no longer in
book-entry only form, the Preferred Securities to be redeemed will be selected
by such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal to $25 or
integral multiples thereof) of the aggregate liquidation amount of Preferred
Securities of a denomination larger than $25; provided, however, that before
undertaking the redemption of the Preferred Securities on other than a pro rata
basis, the Property Trustee shall have received an opinion of counsel that the
status of the Trust as a grantor trust for federal income tax purposes would not
be adversely affected.
The Redemption Price for each Preferred Security shall equal the stated
liquidation amount of $25 plus accrued and unpaid distributions thereon to the
date of payment.
SPECIAL EVENT REDEMPTION; DISTRIBUTION OF SERIES A JUNIOR SUBORDINATED NOTES
Upon the occurrence of a Special Event at any time, the Company will have
the option to redeem the Series A Junior Subordinated Notes in whole (and thus
cause the redemption of the Preferred Securities in whole). A Special Event is
either an Investment Company Act Event or a Tax Event.
An "Investment Company Act Event" means that the Administrative Trustees
and the Company shall have received an opinion of independent counsel (which may
be counsel to the Company) to the effect that, as a result of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority after the Issue Date, there is more than an insubstantial risk that
the Trust is or will be considered an investment company under the 1940 Act.
"Tax Event" means that the Administrative Trustees and the Company shall
have received an opinion from independent tax counsel experienced in such
matters (which may be counsel to the Company) to the effect that, as a result of
(a) any amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to, or
change in, an interpretation or application of such laws or regulations, there
is more than an insubstantial risk that (i) the Trust would be subject to United
States federal income tax with respect to income accrued or received on the
Series A Junior Subordinated Notes, (ii) interest payable to the Trust on the
Series A Junior Subordinated Notes would not be deductible by the Company for
United States federal income tax purposes or (iii) the Trust would be subject to
more than a de minimis amount of other taxes, duties or other governmental
charges, which change or amendment becomes effective on or after the Issue Date.
See "Risk Factors -- Possible Tax Law Changes."
The Company will have the right at any time to terminate the Trust and,
after satisfaction of liabilities to creditors of the Trust, if any, cause the
Series A Junior Subordinated Notes to be distributed to the holders of the Trust
Securities in liquidation of the Trust. See "-- Liquidation Distribution Upon
Dissolution" below. This right is optional and wholly within the discretion of
the Company. Circumstances under which the Company may determine to exercise
such right could include the occurrence of an Investment Company Act Event or a
Tax Event, adverse tax consequences to the Company or the Trust that are not
within the definition of a Tax Event because they do not result from an
amendment or change described in such definition, and changes in the accounting
requirements applicable to the Preferred Securities as described under
"Accounting Treatment."
If Series A Junior Subordinated Notes are distributed to the holders of the
Preferred Securities, the Company will use its best efforts to have the Series A
Junior Subordinated Notes listed on the NYSE or on such other exchange as the
Preferred Securities are then listed. After the date for any distribution of
Series A Junior Subordinated Notes upon termination of the Trust, (i) the
Preferred Securities and the Guarantee will no longer be deemed to be
outstanding, (ii) the depositary or its nominee, as the record holder of the
Preferred Securities, will receive a registered global certificate or
certificates representing the Series A Junior Subordinated Notes to be delivered
upon such distribution and (iii) any certificates representing Preferred
Securities and the Guarantee not held by the depositary or its nominee will be
deemed to represent Series A Junior Subordinated Notes having an aggregate
principal amount equal to the aggregate stated liquidation
S-13
<PAGE> 15
amount of, with an interest rate identical to the Securities Rate of, and
accrued and unpaid interest equal to accrued and unpaid distributions on, such
Preferred Securities, until such certificates are presented to the Company or
its agent for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Series A Junior Subordinated Notes that may be distributed in
exchange for the Preferred Securities if a termination and liquidation of the
Trust were to occur. Accordingly, the Preferred Securities that an investor may
purchase, or the Series A Junior Subordinated Notes that the investor may
receive on termination and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby.
REDEMPTION PROCEDURES
In the event that fewer than all of the Trust Securities are to be
redeemed, then the aggregate liquidation amount of the Trust Securities to be
redeemed shall be allocated 97% to the Preferred Securities and 3% to the Common
Securities.
The Preferred Securities redeemed on each redemption date shall be redeemed
at the Redemption Price with the proceeds from the contemporaneous redemption of
the Series A Junior Subordinated Notes. The Redemption Price of Preferred
Securities shall be deemed payable on each redemption date only to the extent
that the Trust has funds legally and immediately available for payment of such
Redemption Price.
If the Property Trustee gives a notice of redemption in respect of
Preferred Securities (which notice will be irrevocable), then, by 2:00 P.M., New
York City time, on the redemption date, subject to the immediately preceding
paragraph, the Property Trustee will irrevocably deposit with the securities
depositary, so long as the Preferred Securities are in book-entry only form,
sufficient funds to pay the applicable Redemption Price. See "-- Book-Entry Only
Issuance -- The Depository Trust Company" below. If the Preferred Securities are
no longer in book-entry only form, the Property Trustee, subject to the
immediately preceding paragraph, shall irrevocably deposit with the Paying Agent
funds sufficient to pay the applicable Redemption Price and will give the Paying
Agent irrevocable instructions to pay the Redemption Price to the holders
thereof upon surrender of their Preferred Securities certificates. If notice of
redemption shall have been given and funds deposited as required, then
immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of such Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price, but without
interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day. In
the event that payment of the Redemption Price in respect of Preferred
Securities is improperly withheld or refused and not paid either by the Trust or
by the Company pursuant to the Guarantee, distributions on such Preferred
Securities will continue to accrue at the then applicable rate, from such
redemption date originally established by the Trust for such Preferred
Securities to the date such Redemption Price is actually paid. See "-- Events of
Default" below, "Relationship Among the Preferred Securities, the Series A
Junior Subordinated Notes and the Guarantee" and "Description of the
Guarantees -- Events of Default" in the accompanying Prospectus.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), the Company or its
affiliates may, at any time and from time to time, purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as the initial securities
depositary for the Preferred Securities. The Preferred Securities will be issued
only as fully registered securities registered in the name of Cede & Co., DTC's
nominee. One or more fully registered global Preferred Securities certificates
will be issued, representing in the aggregate the total number of Preferred
Securities, and will be deposited with DTC.
S-14
<PAGE> 16
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, 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 1934 Act. DTC holds
securities that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the NYSE, the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Preferred Securities, except in the event that use
of the book-entry system for the Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the Preferred
Securities are being redeemed, DTC will reduce the amount of the interest of
each Direct Participant in the Preferred Securities in accordance with its
procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Trust, any trustee or the
Company, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Direct Participants is the
responsibility of
S-15
<PAGE> 17
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred
Security will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Preferred Securities. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of securities in definitive form. Such laws may impair the ability to
transfer beneficial interests in a global Preferred Security.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates will be printed
and delivered to the holders of record. Additionally, the Company may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depositary) with respect to the Preferred Securities. In that event,
certificates for the Preferred Securities will be printed and delivered to the
holders of record.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and the Trust believe to be
reliable, but the Company and the Trust take no responsibility for the accuracy
thereof. The Trust has no responsibility for the performance by DTC or its
Participants of their respective obligations as described herein or under the
rules and procedures governing their respective operations.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the Trust Agreement, the Trust shall terminate on December 31,
2042, or earlier upon (i) the occurrence of a Bankruptcy Event (as defined in
the Trust Agreement) in respect of the Company, dissolution or liquidation of
the Company, or dissolution of the Trust pursuant to a judicial decree; (ii) the
delivery of written direction to the Property Trustee by the Company, as
Depositor, at any time (which direction is optional and wholly within the
discretion of the Company, as Depositor) to terminate the Trust and distribute
the Series A Junior Subordinated Notes to the holders of the Trust Securities in
liquidation of the Trust (see "-- Special Event Redemption; Distribution of
Series A Junior Subordinated Notes" above); or (iii) the payment at maturity or
redemption of all of the Series A Junior Subordinated Notes, and the consequent
payment of the Trust Securities.
If an early termination occurs as described in clause (i) or (ii) above,
the Trust shall be liquidated, and the Property Trustee shall distribute to each
holder of Preferred Securities and Common Securities a like amount of Series A
Junior Subordinated Notes, unless in the case of an event described in clause
(i) such distribution is determined by the Administrative Trustees not to be
practical, in which event such holders will be entitled to receive, out of the
assets of the Trust available for distribution to holders after satisfaction of
liabilities to creditors, an amount equal to the aggregate of the stated
liquidation preference of $25 per Trust Security plus accrued and unpaid
distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then subject to the next succeeding sentence, the
amounts payable directly by the Trust on the Trust Securities shall be paid on a
pro rata basis. The holder of the Common Securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders of the
Preferred Securities, except that if a Subordinated Note Indenture Event of
Default has occurred and is continuing, the holders of Preferred Securities
shall have a preference over the holders of Common Securities.
EVENTS OF DEFAULT
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement ("Trust Agreement Event of Default") with respect to the Trust
Securities issued thereunder (whatever the reason for such Event of Default, and
whether it shall be voluntary or involuntary or be effected by operation of law
or
S-16
<PAGE> 18
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) the occurrence of an "Event of Default" as defined in Section 501
of the Subordinated Note Indenture ("Subordinated Note Indenture Event of
Default") (see "Description of the Junior Subordinated Notes -- Events of
Default" in the accompanying Prospectus); or
(ii) default by the Trust in the payment of any distribution when it
becomes due and payable, and the continuation of such default for a period
of 30 days; or
(iii) default by the Trust in the payment of any Redemption Price of
any Preferred Security or Common Security when it becomes due and payable;
or
(iv) default in the performance, or breach, of any covenant or
warranty of the Securities Trustees in the Trust Agreement (other than a
covenant or warranty a default in the performance of which or the breach of
which is dealt with in clause (ii) or (iii) above), and continuation of
such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to such Securities Trustees by the holders
of at least 10% in liquidation amount of the outstanding Preferred
Securities a written notice specifying such default or breach and requiring
it to be remedied and stating that such notice is a "Notice of Default"
under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Trust.
Within 90 days after the occurrence of any Trust Agreement Event of
Default, the Property Trustee shall transmit notice of any default known to the
Property Trustee to the holders of Trust Securities and the Company, unless such
Trust Agreement Event of Default shall have been cured or waived.
If a Trust Agreement Event of Default occurs and is continuing, then,
pursuant to the Trust Agreement, holders of a majority in aggregate liquidation
amount of Preferred Securities have the right to direct the exercise of any
trust or power conferred upon the Property Trustee under the Trust Agreement,
including the right to direct the Property Trustee under the Trust Agreement to
exercise the remedies available to it as holder of the Series A Junior
Subordinated Notes. If the Property Trustee fails to enforce its rights under
the Series A Junior Subordinated Notes, a holder of Preferred Securities may, to
the fullest extent permitted by applicable law, institute a legal proceeding
directly against the Company to enforce its rights under the Trust Agreement
without first instituting any legal proceeding against the Property Trustee or
the Trust. Notwithstanding the foregoing, a holder of Preferred Securities may
institute a legal proceeding directly against the Company, without first
instituting a legal proceeding against the Property Trustee or any other person
or entity, for enforcement of payment to such holder of principal of or interest
on the Series A Junior Subordinated Notes having a principal amount equal to the
aggregate stated liquidation amount of the Preferred Securities of such holder
on or after the due dates specified in the Series A Junior Subordinated Notes.
See "Relationship Among the Preferred Securities, the Series A Junior
Subordinated Notes and the Guarantee" herein and "Description of the
Guarantees -- Events of Default" in the accompanying Prospectus.
Unless a Subordinated Note Indenture Event of Default shall have occurred
and be continuing, the Securities Trustees may be removed at any time by act of
the holder of the Common Securities. If a Subordinated Note Indenture Event of
Default has occurred and is continuing, any Securities Trustee may be removed at
such time by act of the holders of a majority in liquidation amount of the
Preferred Securities, delivered to the appropriate Securities Trustee (in its
individual capacity and on behalf of the Trust). No resignation or removal of
any Securities Trustee and no appointment of a successor shall be effective
until the acceptance of appointment by the successor Trustee in accordance with
the requirements of the Trust Agreement.
If a Subordinated Note Indenture Event of Default has occurred and is
continuing, the holders of Preferred Securities shall have a preference over the
holders of Common Securities upon dissolution of the Trust as described above.
See "-- Liquidation Distribution Upon Dissolution."
S-17
<PAGE> 19
VOTING RIGHTS
Except as provided below and under "Description of the
Guarantees -- Amendments and Assignment" in the accompanying Prospectus and as
otherwise required by law and the Trust Agreement, the holders of the Preferred
Securities will have no voting rights.
If any proposed amendment to the Trust Agreement provides for, or the
Securities Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Preferred
Securities, whether by way of amendment to the Trust Agreement or otherwise, or
(ii) the dissolution, winding-up or termination of the Trust, other than
pursuant to the Trust Agreement, then the holders of outstanding Preferred
Securities will be entitled to vote as a class on such amendment or proposal of
the Securities Trustees, and such amendment or proposal shall not be effective
except with the approval of the holders of at least 66 2/3% in liquidation
amount of such outstanding Preferred Securities.
So long as any Series A Junior Subordinated Notes are held by the Property
Trustee, the Securities Trustees shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the Indenture Trustee
(as defined herein), or executing any trust or power conferred on the Indenture
Trustee with respect to the Series A Junior Subordinated Notes, (ii) waive any
past default which is waivable under Section 513 of the Subordinated Note
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Series A Junior Subordinated Notes shall be due and
payable, or (iv) consent to any amendment, modification or termination of the
Subordinated Note Indenture or the Series A Junior Subordinated Notes, where
such consent shall be required, or to any other action, as the holder of the
Series A Junior Subordinated Notes, under the Subordinated Note Indenture,
without, in each case, obtaining the prior approval of the holders of at least
66 2/3% in liquidation amount of the outstanding Preferred Securities; provided,
however, that where a consent under the Subordinated Note Indenture would
require the consent of each holder of Series A Junior Subordinated Notes
affected thereby, no such consent shall be given by the Securities Trustees
without the prior consent of each holder of Preferred Securities. The Securities
Trustees shall not revoke any action previously authorized or approved by a vote
of the holders of the Preferred Securities, except pursuant to a subsequent vote
of such holders. The Property Trustee shall notify all holders of the Preferred
Securities of any notice of default received from the Indenture Trustee with
respect to the Series A Junior Subordinated Notes. In addition to obtaining the
foregoing approvals of the holders of the Preferred Securities, prior to taking
any of the foregoing actions, the Securities Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Trust will not be
classified as other than a grantor trust for federal income tax purposes on
account of such action.
Any required approval of holders of Preferred Securities may be given at a
separate meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Administrative Trustees will cause a notice of
any meeting at which holders of Preferred Securities are entitled to vote to be
given to each holder of record of Preferred Securities in the manner set forth
in the Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Company, the Securities Trustees or any
affiliate of the Company or any Securities Trustee, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
CO-PROPERTY TRUSTEES AND SEPARATE PROPERTY TRUSTEE
At any time or times, for the purpose of meeting the legal requirements of
the 1939 Act or of any jurisdiction in which any part of the Trust Property (as
defined in the Trust Agreement) may at the time be located, the holder of the
Common Securities and the Property Trustee shall have power to appoint, and upon
the written request of the Property Trustee, the Company, as Depositor, shall
for such purpose join with the Property Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint,
one or more persons approved by the Property Trustee either to act as
co-property trustee, jointly with the Property Trustee, of all or any part of
such Trust Property, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity, any
property, title, right or power deemed necessary or
S-18
<PAGE> 20
desirable, subject to the provisions of the Trust Agreement. If the Company, as
Depositor, does not join in such appointment within 15 days after the receipt by
it of a request so to do, or in case a Subordinated Note Indenture Event of
Default has occurred and is continuing, the Property Trustee alone shall have
power to make such appointment.
AMENDMENT OF THE TRUST AGREEMENT
The Trust Agreement may be amended from time to time by the Company and the
Securities Trustees without the consent of the holders of the Trust Securities
(i) to cure any ambiguity, correct or supplement any provision therein which may
be inconsistent with any other provision therein, or to make any other
provisions with respect to matters or questions arising under the Trust
Agreement, which shall not be inconsistent with the other provisions of the
Trust Agreement, provided that the amendment does not adversely affect in any
material respect the interests of any holder of Trust Securities, or (ii) to
modify, eliminate or add to any provisions of the Trust Agreement to such extent
as shall be necessary to ensure that the Trust will not be classified as other
than a grantor trust for federal income tax purposes. Except as provided in the
succeeding paragraph, other amendments to the Trust Agreement may be made (i)
upon approval of the holders of not less than 66 2/3% in aggregate liquidation
amount of the Trust Securities then outstanding and (ii) upon receipt by the
Securities Trustees of an opinion of counsel to the effect that such amendment
will not affect the Trust's status as a grantor trust or the Trust's exemption
from the 1940 Act.
Notwithstanding the foregoing, without the consent of each affected holder
of Trust Securities, the Trust Agreement may not be amended to (i) change the
amount or timing of any distribution on the Trust Securities or otherwise
adversely affect the amount of any distribution required to be made in respect
of the Trust Securities as of a specified date, (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date, or (iii) change the consent required to amend the
Trust Agreement.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below. The Trust may at the request of the Company, with the consent
of the Administrative Trustees and without the consent of the holders of the
Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by
a trust organized as such under the laws of any state; provided, that (i) such
successor entity either (x) expressly assumes all of the obligations of the
Trust with respect to the Trust Securities or (y) substitutes for the Preferred
Securities other securities having substantially the same terms as the Trust
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Trust Securities rank in priority with respect to distributions
and payments upon liquidation, redemption and otherwise, (ii) the Company
expressly appoints a trustee of such successor entity possessing the same powers
and duties as the Property Trustee as the holder of the Junior Subordinated
Notes, (iii) the Preferred Securities or any Successor Securities are listed, or
any Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Preferred
Securities are then listed, (iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose substantially identical to
that of the Trust, (vii) prior to such merger, consolidation, amalgamation or
replacement, the Company has received an opinion of counsel to the effect that
(A) such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect, and (B)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be required to register as an investment
company under the 1940 Act, and (viii) the Company guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, the
S-19
<PAGE> 21
Trust shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified as other than a grantor trust for federal income tax
purposes.
Any corporation or other body into which any of the Property Trustee, the
Delaware Trustee or any Administrative Trustee that is not a natural person may
be merged or converted or with which it may be consolidated, or any corporation
or other body resulting from any merger, conversion or consolidation to which
any such Securities Trustee shall be a party, or any corporation or other body
succeeding to all or substantially all the corporate trust business of any such
Securities Trustee, shall be the successor of such Securities Trustee under the
Trust Agreement, provided such corporation is otherwise qualified and eligible
under the Trust Agreement.
PAYMENT AND PAYING AGENT
So long as DTC is acting as securities depositary for the Preferred
Securities, payments in respect of the Preferred Securities shall be made to
DTC, which is to credit the relevant accounts at DTC on the applicable
Distribution Dates. If the Preferred Securities are not held by DTC, such
payments shall be made by check mailed to the address of the holder entitled
thereto as such address shall appear on the Securities Register (as such term is
defined in the Trust Agreement). The Paying Agent shall initially be the
Property Trustee. The Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Administrative Trustees and the Company. In
such event, the Administrative Trustees shall appoint a successor to act as
Paying Agent.
REGISTRAR AND TRANSFER AGENT
It is anticipated that the Property Trustee, or one of its affiliates, will
act as registrar and transfer agent (the "Securities Registrar") for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment in respect of any tax or
other governmental charges which may be imposed in relation to it.
The Securities Registrar will not be required to register or cause to be
registered any transfer of Preferred Securities after they have been called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a Trust Agreement Event of
Default with respect to the Trust Securities, undertakes to perform only such
duties as are specifically set forth in the Trust Agreement and, after default,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provisions, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Preferred Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby.
Bankers Trust Company, the Property Trustee, also serves as Indenture
Trustee and Guarantee Trustee. The Company and certain of its affiliates
maintain deposit accounts and banking relationships with Bankers Trust Company.
Bankers Trust Company serves as trustee under other indentures pursuant to which
securities of the Company and affiliates of the Company are outstanding.
GOVERNING LAW
The Trust Agreement and the Trust Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware;
provided that the immunities and standard of care of the Property Trustee shall
be governed by New York law.
S-20
<PAGE> 22
MISCELLANEOUS
The Administrative Trustees are authorized and directed to operate the
Trust so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or taxed as other than a grantor
trust for federal income tax purposes and so that the Series A Junior
Subordinated Notes will be treated as indebtedness of the Company for federal
income tax purposes. In this connection, the Administrative Trustees and the
Company are authorized to take any action, not inconsistent with applicable law,
the Trust's certificate of trust or the Trust Agreement, that the Administrative
Trustees and the Company determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially and
adversely affect the interests of the holders of the Preferred Securities.
DESCRIPTION OF THE SERIES A JUNIOR SUBORDINATED NOTES
Set forth below is a description of the specific terms of the Series A
Junior Subordinated Notes. This description supplements, and should be read
together with, the description of the general terms and provisions of the Junior
Subordinated Notes set forth in the accompanying Prospectus under the caption
"Description of the Junior Subordinated Notes." The following description does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the description in the accompanying Prospectus and the
Subordinated Note Indenture (as defined therein).
GENERAL
The Series A Junior Subordinated Notes will be issued as a series of Junior
Subordinated Notes under the Subordinated Note Indenture. The Series A Junior
Subordinated Notes will be limited in aggregate principal amount to $36,082,475,
such amount being the approximate aggregate liquidation amount of the Trust
Securities.
The entire principal amount of the Series A Junior Subordinated Notes will
mature and become due and payable, together with any accrued and unpaid interest
thereon, including Additional Interest, if any, on December 31, 2036. The Series
A Junior Subordinated Notes are not subject to any sinking fund provision.
The terms of the Series A Junior Subordinated Notes correspond to those of
the Preferred Securities, as described herein.
OPTIONAL REDEMPTION
The Company shall have the right to redeem the Series A Junior Subordinated
Notes, in whole or in part, without premium, from time to time, on or after
February , 2002, or at any time in whole upon the occurrence of a Special
Event as described under "Description of the Preferred Securities -- Special
Event Redemption or Distribution," upon not less than 30 nor more than 60 days'
notice, at a Redemption Price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including Additional Interest, if
any, to the Redemption Date. If a partial redemption of the Series A Junior
Subordinated Notes would result in the delisting of the Preferred Securities,
the Company may only redeem the Series A Junior Subordinated Notes in whole.
INTEREST
Each Series A Junior Subordinated Note shall bear interest at the
Securities Rate from the Issue Date, payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year to the person in whose name
such Series A Junior Subordinated Note is registered at the close of business on
the fifteenth calendar day prior to such payment date. The amount of interest
payable will be computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which interest is payable on the Series A Junior
Subordinated Notes is not a Business Day, then payment of the interest payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such
S-21
<PAGE> 23
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time, and from time to time, to
defer payments of interest on the Series A Junior Subordinated Notes by
extending the interest payment period for up to 20 consecutive quarters, but not
beyond the stated maturity date. At the end of an Extension Period, the Company
shall pay all interest then accrued and unpaid (including any Additional
Interest) (together with interest thereon at the Securities Rate compounded
quarterly); provided, that if the Company shall have given notice of its
election to select an Extension Period, (a) the Company shall not declare or pay
any dividend or distribution on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or make any
guarantee payments with respect to the foregoing, and (b) the Company shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees other than the
Guarantee) issued by the Company which rank pari passu with or junior to the
Series A Junior Subordinated Notes. Prior to the termination of any Extension
Period, the Company may further defer payments of interest by extending the
interest payment period, provided that such Extension Period, together with all
such previous and further extensions thereof, may not exceed 20 consecutive
quarters. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may select a new Extension Period, subject to the
above requirements. The Company has no present intention of exercising its
rights to defer payments of interest by extending the interest payment period on
the Series A Junior Subordinated Notes. See "Certain Federal Income Tax
Considerations -- Original Issue Discount."
The Company shall give the holder or holders of the Series A Junior
Subordinated Notes and the Indenture Trustee notice of its selection or
extension of an Extension Period at least one Business Day prior to the earlier
of (i) the record date relating to the interest payment date on which the
Extension Period is to commence or relating to the interest payment date on
which an Extension Period that is being extended would otherwise terminate or
(ii) the date the Company or the Trust is required to give notice to the NYSE or
other applicable self-regulatory organization of the record date or the date
such distributions are payable.
BOOK-ENTRY AND ISSUANCE
If distributed to holders of Trust Securities in connection with the
voluntary or involuntary dissolution, winding-up or liquidation of the Trust,
the Series A Junior Subordinated Notes are expected to be issued in the form of
one or more global certificates registered in the name of the securities
depositary or its nominee. In such event, the procedures applicable to the
transfer and payment of the Series A Junior Subordinated Notes are expected to
be substantially similar to those described with respect to the Preferred
Securities in "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company."
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SERIES A JUNIOR SUBORDINATED NOTES AND THE GUARANTEE
As long as payments of interest and other payments are made when due on the
Series A Junior Subordinated Notes, such payments will be sufficient to cover
distributions and payments due on the Trust Securities primarily because (i) the
aggregate principal amount of Series A Junior Subordinated Notes will be equal
to the sum of the aggregate stated liquidation amount of the Trust Securities;
(ii) the interest rate and interest and other payment dates on the Series A
Junior Subordinated Notes will match the distribution rate and distribution and
other payment dates for the Preferred Securities; (iii) the Company shall pay
for all costs and expenses of the Trust pursuant to the Agreement as to Expenses
and Liabilities; and (iv) the Trust Agreement provides that the Securities
Trustees shall not cause or permit the Trust to, among other things, engage in
any activity that is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are legally and
immediately available) and other payments due on the Preferred Securities (to
the extent funds therefor are legally and immediately available) are guaranteed
by the Company as and to the extent set forth under "Description of the
Guarantees" in the
S-22
<PAGE> 24
accompanying Prospectus. If the Company does not make interest payments on the
Series A Junior Subordinated Notes, it is not expected that the Trust will have
sufficient funds to pay distributions on the Preferred Securities. The Guarantee
is a guarantee from the time of its issuance, but does not apply to any payment
of distributions unless and until the Trust has sufficient funds legally and
immediately available for the payment of such distributions.
If the Company fails to make interest or other payments on the Series A
Junior Subordinated Notes when due (taking into account any Extension Period),
the Trust Agreement provides a mechanism whereby the holders of the Preferred
Securities may appoint a substitute Property Trustee. Such holders may also
direct the Property Trustee to enforce its rights under the Series A Junior
Subordinated Notes, including proceeding directly against the Company to enforce
the Series A Junior Subordinated Notes. If the Property Trustee fails to enforce
its rights under the Series A Junior Subordinated Notes, to the fullest extent
permitted by applicable law, any holder of Preferred Securities may institute a
legal proceeding directly against the Company to enforce the Property Trustee's
rights under the Series A Junior Subordinated Notes without first instituting
any legal proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, a holder of Preferred Securities may institute a
legal proceeding directly against the Company, without first instituting a legal
proceeding against the Property Trustee or any other person or entity, for
enforcement of payment to such holder of principal of or interest on the Series
A Junior Subordinated Notes having a principal amount equal to the aggregate
stated liquidation amount of the Preferred Securities of such holder on or after
the due dates specified in the Series A Junior Subordinated Notes.
If the Company fails to make payments under the Guarantee, the Guarantee
provides a mechanism whereby the holders of the Preferred Securities may direct
the Guarantee Trustee to enforce its rights thereunder. In addition, any holder
of Preferred Securities may institute a legal proceeding directly against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee or any other
person or entity.
The Guarantee, the Subordinated Note Indenture, the Series A Junior
Subordinated Notes, the Trust Agreement and the Agreement as to Expenses and
Liabilities, as described above, constitute a full and unconditional guarantee
by the Company of the payments due on the Preferred Securities.
Upon any voluntary or involuntary dissolution, winding-up or termination of
the Trust, unless the Series A Junior Subordinated Notes are distributed in
connection therewith, the holders of Preferred Securities will be entitled to
receive, out of assets legally available for distribution to holders, the
Liquidation Distribution in cash. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the Series A Junior Subordinated Notes, would be a subordinated
creditor of the Company, subordinated in right of payment to all Senior
Indebtedness, but entitled to receive payment in full of principal and interest,
before any stockholders of the Company receive payments or distributions.
Because the Company is guarantor under the Guarantee and has agreed to pay for
all costs, expenses and liabilities of the Trust (other than the Trust's
obligations to holders of the Preferred Securities) pursuant to the Agreement as
to Expenses and Liabilities, the positions of a holder of Preferred Securities
and a holder of Series A Junior Subordinated Notes relative to other creditors
and to stockholders of the Company in the event of liquidation or bankruptcy of
the Company would be substantially the same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Subordinated Note Indenture.
However, in the event of payment defaults under, or acceleration of, Senior
Indebtedness, the subordination provisions of the Series A Junior Subordinated
Notes provide that no payments may be made in respect of the Series A Junior
Subordinated Notes until such Senior Indebtedness has been paid in full or any
payment default thereunder has been cured or waived. Failure to make required
payments on the Series A Junior Subordinated Notes would constitute an Event of
Default under the Subordinated Note Indenture except that failure to make
interest payments on the Series A Junior Subordinated Notes will not be an Event
of Default during an Extension Period; provided, however, that any Extension
Period may not exceed 20 consecutive quarters or extend beyond the stated
maturity of the Series A Junior Subordinated Notes.
S-23
<PAGE> 25
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain material United States federal income
tax consequences of the ownership and disposition of the Preferred Securities
and constitutes the opinion of Troutman Sanders LLP, counsel to the Company and
the Trust, insofar as it relates to matters of law and legal conclusions. This
summary deals only with Preferred Securities held as capital assets within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended to the
date hereof (the "Code"), by Holders (as defined herein). Moreover, it does not
discuss all of the tax consequences that may be relevant to a Holder in light of
his particular circumstances or to Holders subject to special rules, such as
certain financial institutions, insurance companies, dealers in securities,
individual retirement and certain tax deferred accounts, and persons who engage
in a straddle or a hedge relating to a Preferred Security. Prospective investors
should consult their own tax advisors with regard to the application of the tax
considerations discussed below to their particular situations as well as the
application of any state, local or other tax laws. This summary is based on
laws, existing and proposed regulations, and applicable judicial and
administrative determinations, all of which are subject to change at any time,
and any such changes may be retroactively applied in a manner that could
adversely affect Holders. As used herein, the term "Holder" means a beneficial
owner of a Preferred Security that for United States federal income tax purposes
is (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 political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source. Thus, the following summary does not address any tax
consequences that apply specifically to nonresident aliens or foreign entities.
TREATMENT OF THE TRUST AND PREFERRED SECURITIES FOR FEDERAL INCOME TAX PURPOSES
The Trust will be treated as a "grantor trust" and not as an association
taxable as a corporation for federal income tax purposes. Thus, for federal
income tax purposes, each Holder will be treated as the beneficial owner of a
pro rata undivided interest in the Series A Junior Subordinated Notes and,
consequently, will be required to include in income the Holder's pro rata share
of the entire income from the Series A Junior Subordinated Notes. Each Holder
generally will determine its net income or loss with respect to the Trust in
accordance with its own method of accounting, although income arising from OID,
if any, must be taken into account under the accrual method of accounting even
if the Holder otherwise would use the cash receipts and disbursements method.
PAYMENTS OF INTEREST
Except as set forth below, stated interest on a Series A Junior
Subordinated Note will generally be taxable to a Holder as ordinary income at
the time it is paid or accrued in accordance with the Holder's own method of
accounting.
ORIGINAL ISSUE DISCOUNT
Under income tax regulations that recently became effective, the Company
believes that the Series A Junior Subordinated Notes will not be treated as
issued with OID. It should be noted that these regulations have not yet been
addressed in any rulings or other interpretations by the Internal Revenue
Service (the "IRS"). Accordingly, it is possible that the IRS could take a
position contrary to the interpretations described herein.
The terms of the Series A Junior Subordinated Notes permit the Company to
defer the payment of interest on the Series A Junior Subordinated Notes at any
time and from time to time by extending the interest payment period for up to 20
consecutive quarters with respect to each Extension Period; provided, however,
that no Extension Period may extend beyond the stated maturity date of the
Series A Junior Subordinated Notes. Should the Company exercise this option to
defer payments of interest, the Series A Junior Subordinated Notes would at that
time be treated as issued with OID and all the stated interest payments on the
Series A Junior Subordinated Notes would thereafter be treated as OID for so
long as they remained outstanding. As a result, all Holders would, in effect, be
required to accrue interest income even if
S-24
<PAGE> 26
such Holders are on a cash method of accounting. Consequently, in the event that
the payment of interest is deferred, a Holder could be required to include OID
in income on an economic accrual basis, notwithstanding that the Company will
not make any interest payments during such period on the Series A Junior
Subordinated Notes.
MARKET DISCOUNT
A purchaser of a Preferred Security at a discount from the liquidation
amount at maturity of such purchaser's pro rata share of the Series A Junior
Subordinated Notes acquires such Preferred Security with "market discount."
However, market discount with respect to a Preferred Security will be considered
to be zero if it is de minimis. Market discount will be de minimis with respect
to a Preferred Security if it is less than the product of (i) 0.25% of the
adjusted issue price of the purchaser's pro rata share of the Series A Junior
Subordinated Notes multiplied by (ii) the number of complete years to maturity
of such Series A Junior Subordinated Notes after the date of purchase. The
purchaser of a Preferred Security with more than a de minimis amount of market
discount generally will be required to treat any gain on the sale, exchange,
redemption or other disposition of all or part of the Preferred Securities (or
related Series A Junior Subordinated Notes) as ordinary income to the extent of
accrued (but not previously taxed) market discount. Market discount generally
will accrue ratably during the period from the date of purchase of such
Preferred Security to the maturity date of the Series A Junior Subordinated
Notes, unless the Holder irrevocably elects to accrue such market discount on
the basis of a constant interest rate.
A Holder who has acquired a Preferred Security at a market discount
generally will be required to defer any deductions of interest expense
attributable to any indebtedness incurred or continued to purchase or carry the
Preferred Security, to the extent such interest expense exceeds the related
interest income. Any such deferred interest expense generally will be allowable
as a deduction not later than the year in which the related market discount
income is recognized. As an alternative to the inclusion of market discount in
income upon disposition of all or a portion of a Preferred Security or the
related Series A Junior Subordinated Notes (including redemptions thereof), a
Holder may make an election (which may not be revoked without the Internal
Revenue Service's consent) to include market discount in income as it accrues on
all market discount instruments acquired by the Holder during or after the
taxable year for which the election is made. In that case, the preceding
deferral rule for interest expense will not apply.
In lieu of the foregoing treatment of market discount and interest expense,
a Holder may elect to treat any market discount (including a de minimis amount)
as OID and accrue such discount on a constant-yield basis in the same manner as
the Holder accrues OID.
SALE OF PREFERRED SECURITIES
Upon the sale, retirement (including redemption) or other taxable
disposition of all or part of a Preferred Security, a Holder thereof will
recognize gain or loss equal to the difference between the amount realized on
such sale, retirement or other disposition and such Holder's adjusted tax basis
in the Preferred Security or part thereof. If the Holder disposes of a Preferred
Security prior to the occurrence of an Extension Period, any portion of the
amount received that is attributable to accrued interest will be treated as
interest income to the Holder and will not be treated as part of the amount
realized for purposes of determining gain or loss on the disposition of the
Preferred Security. Any recognized gain or loss will be capital gain or loss,
except to the extent of any accrued market discount (see "Market Discount"
above), and such capital gain or loss will be long-term if the holding period
for the Preferred Security is more than one year at the time of sale, retirement
or other disposition. A Holder's adjusted tax basis in a Preferred Security
acquired by purchase will equal the cost of such Preferred Security to the
Holder, increased by the amount of any related accrued OID and market discount
included in taxable income by the Holder and reduced by any prior payments on
the Series A Junior Subordinated Notes distributed on the Preferred Security.
The redemption of only part of a Preferred Security will require an allocation
of the Holder's adjusted tax basis in his pro rata share of the related Series A
Junior Subordinated Notes between the portion of the Series A Junior
Subordinated Notes redeemed and retained by the Holder in order to determine
gain or loss.
S-25
<PAGE> 27
RECEIPT OF SERIES A JUNIOR SUBORDINATED NOTES UPON LIQUIDATION OF THE TRUST
As described under "Description of the Preferred Securities -- Special
Event Redemption; Distribution of Series A Junior Subordinated Notes," Series A
Junior Subordinated Notes may be distributed to Holders in exchange for the
Preferred Securities and in liquidation of the Trust. Such a distribution would
be treated as a non-taxable event to each Holder and each Holder would receive
an aggregate tax basis in the Holder's Series A Junior Subordinated Notes equal
to the Holder's aggregate tax basis in its Preferred Securities. A Holder's
holding period with respect to the Series A Junior Subordinated Notes so
received in liquidation of the Trust would include the period for which the
Preferred Securities were held by such Holder.
INFORMATION REPORTING TO HOLDERS
Income on the Preferred Securities will be reported to Holders on Form
1099, which form should be mailed to Holders of Preferred Securities by January
31 following each calendar year.
BACKUP WITHHOLDING
A Holder may be subject to "backup withholding" under certain
circumstances. Backup withholding applies to a Holder if the Holder, among other
things, (i) fails to furnish his social security number or other taxpayer
identification number ("TIN") to the payor responsible for backup withholding
(for example, the Holder's securities broker), (ii) furnishes such payor an
incorrect TIN, (iii) fails to provide such payor with a certified statement,
signed under penalties of perjury, that the TIN provided to the payor is correct
and that the Holder is not subject to backup withholding, or (iv) fails to
report properly interest and dividends on his tax return. Backup withholding,
however, does not apply to payments made to certain exempt recipients, such as
corporations and tax-exempt organizations. The backup withholding rate is 31% of
"reportable payments," which generally will include distributions of interest
and principal payments on the Series A Junior Subordinated Notes.
POSSIBLE TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"),
the revenue portion of President Clinton's 1996 budget proposal, was released.
The Bill would, among other things, generally deny interest deductions for
interest on an instrument, issued by a corporation, that has a maximum term of
more than 20 years and that is not shown as indebtedness on the separate balance
sheet of the issuer or, where the instrument is issued to a related party (other
than a corporation), where the holder or some other related party issues a
related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. The above-described provisions of the Bill were
proposed to be effective generally for instruments issued on or after December
7, 1995. If such provisions were to apply to the Series A Junior Subordinated
Notes, the Company would be unable to deduct interest on the Series A Junior
Subordinated Notes. However, on March 29, 1996, the Chairmen of the Senate
Finance and House Ways and Means Committees issued a joint statement to the
effect that it was their intention that the effective date of the President's
legislative proposals, if adopted, will be no earlier than the date of
appropriate Congressional action. The Company believes that, under current law,
it will be able to deduct interest on the Series A Junior Subordinated Notes.
There can be no assurance, however, that current or future legislative proposals
or final legislation will not affect the ability of the Company to deduct
interest on the Series A Junior Subordinated Notes. Such a change could give
rise to a Tax Event, which would permit the Company to cause a redemption of the
Preferred Securities, as described more fully under "Description of the
Preferred Securities -- Special Event Redemption; Distribution of Series
Junior Subordinated Notes."
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE MAY NOT BE APPLICABLE TO
A HOLDER, DEPENDING UPON A HOLDER'S PARTICULAR SITUATION, AND THEREFORE EACH
HOLDER SHOULD CONSULT HIS TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF
THE OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAW.
S-26
<PAGE> 28
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to the Underwriters
named below, and each of the Underwriters have severally agreed to purchase the
number of Preferred Securities set forth opposite their respective names below.
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Preferred
Securities offered hereby if any of the Preferred Securities are purchased.
<TABLE>
<CAPTION>
NUMBER OF
NAME PREFERRED SECURITIES
---- --------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
PaineWebber Incorporated....................................
Prudential Securities Incorporated..........................
The Robinson-Humphrey Company, Inc..........................
Smith Barney Inc............................................
---------
Total............................................. 1,400,000
=========
</TABLE>
The Underwriters have advised the Company and the Trust that they propose
to offer the Preferred Securities in part directly to the public at the price to
the public, as set forth on the cover page of this Prospectus Supplement, and in
part to certain securities dealers at such price less a concession not in excess
of $ per Preferred Security. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per Preferred Security to
certain other dealers. After the Preferred Securities are released for sale to
the public, the offering price and other selling terms may from time to time be
varied by the Underwriters.
The Preferred Securities are expected to be approved for listing on the
NYSE, subject to official notice of issuance. Trading of the Preferred
Securities on the NYSE is expected to commence within a 30-day period after the
initial delivery of the Preferred Securities. The Representative has advised the
Company and the Trust that it intends to make a market in the Preferred
Securities prior to the commencement of trading on the NYSE. The Representative
will have no obligation to make a market in the Preferred Securities, however,
and may cease market making activities, if commenced, at any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the NYSE, the Underwriters will undertake to sell lots of 100 or
more Preferred Securities to a minimum of 400 beneficial holders.
The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the 1933 Act.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, the Company and its affiliates in the
ordinary course of business.
LEGAL OPINIONS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Company and the Trust by
Richards, Layton & Finger, Wilmington, Delaware, special Delaware counsel to the
Company and the Trust. The validity of the Series A Junior Subordinated Notes,
the Guarantee and certain matters relating thereto will be passed upon on behalf
of the Company by Eaton and Cottrell, P.A., Gulfport, Mississippi, and by
Troutman Sanders LLP, Atlanta, Georgia. Troutman Sanders LLP will also pass upon
certain matters relating to United States federal income tax considerations.
Certain legal matters will be passed upon for the Underwriters by Dewey
Ballantine, New York, New York.
S-27
<PAGE> 29
GLOSSARY
1933 Act................... The Securities Act of 1933, as amended.
1934 Act................... The Securities Exchange Act of 1934, as amended.
1939 Act................... The Trust Indenture Act of 1939, as amended.
1940 Act................... The Investment Company Act of 1940, as amended.
Additional Interest........ Amounts payable by the Company as defined under
"Description of the Junior Subordinated
Notes -- Additional Interest" in the accompanying
Prospectus.
Administrative Trustees.... Ann Estes and Wayne Boston.
Agreement as to Expenses
and Liabilities............ The agreement between the Company and the Trust
pursuant to which the Company has agreed to pay all
indebtedness, expenses or liabilities of the Trust,
other than the Trust's obligations to pay to the
holders of the Preferred Securities the amounts due
such holders pursuant to the terms thereof.
Code....................... The Internal Revenue Code of 1986, as amended.
Common Securities.......... The Trust Securities being sold to the Company.
Company.................... Mississippi Power Company.
Delaware Trustee........... Bankers Trust (Delaware).
DTC........................ The Depository Trust Company, a "clearing
corporation" that initially will hold (through its
agents) a global certificate evidencing the
Preferred Securities.
Distribution Dates......... March 31, June 30, September 30 and December 31 of
each year.
Extension Period........... Any period during which interest is not paid on the
Series A Junior Subordinated Notes (and,
consequently, on the Preferred Securities) at the
election of the Company to the extent permitted
under the terms of the Series A Junior Subordinated
Notes.
Guarantee.................. The guarantee by the Company of the payments by the
Trust on the Preferred Securities from funds
available in the Trust.
Guarantee Payments......... Payments required to be made pursuant to the
Guarantee as described in "Description of the
Guarantees -- General" in the accompanying
Prospectus.
Guarantee Trustee.......... The trustee under the Guarantee; initially, Bankers
Trust Company.
Indenture Trustee.......... The trustee under the Subordinated Note Indenture;
initially, Bankers Trust Company.
Issue Date................. The date set forth on the cover page on which the
Series A Junior Subordinated Notes and Preferred
Securities are scheduled to be issued.
Investment Company
Act Event................ An event of the type described in "Description of
the Preferred Securities -- Special Event
Redemption; Distribution of Series A Junior
Subordinated Notes."
NYSE....................... New York Stock Exchange.
S-28
<PAGE> 30
Preferred Securities....... The Trust Securities being offered to investors
pursuant to this Prospectus Supplement and the
accompanying Prospectus.
Property Trustee........... A trustee under the Trust designated to hold the
trust property; initially Bankers Trust Company.
Record Date................ The close of business on the 15th calendar day
prior to a Distribution Date.
Redemption Price........... The stated liquidation amount of $25 per Preferred
Security, plus accrued and unpaid distributions
thereon (and interest thereon) to the date of
payment.
Securities Rate............ The per annum interest rate expressed as a
percentage of the stated liquidation amount of $25
per Preferred Security, and set forth on the cover
page of this Prospectus Supplement.
Securities Trustees........ The Property Trustee, Administrative Trustees and
Delaware Trustee.
Senior Indebtedness........ Indebtedness of the Company described hereunder
under "Description of the Junior Subordinated
Notes -- Subordination" in the accompanying
Prospectus.
Series A Junior
Subordinated Notes......... The Series A % junior subordinated deferrable
interest notes of the Company due
.
Special Event.............. A Tax Event or Investment Company Act Event.
Subordinated Note
Indenture.................. The indenture pursuant to which the Company's
Series A Junior Subordinated Notes will be issued.
Subordinated Note Indenture
Event of Default......... As described under "Description of the Junior
Subordinated Notes -- Events of Default" in the
accompanying Prospectus.
Tax Event.................. An event of the type described in "Description of
the Preferred Securities -- Special Event
Redemption; Distribution of Series A Junior
Subordinated Notes."
Trust...................... Mississippi Power Capital Trust I, a Delaware
business trust that will issue the Trust
Securities.
Trust Agreement............ The agreement pursuant to which the Trust is
organized as it may be amended and restated from
time to time.
Trust Agreement Event of
Default.................. As described under "Description of the Preferred
Securities -- Events of Default."
Trust Securities........... The Preferred Securities and the Common Securities.
S-29
<PAGE> 31
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, MISSISSIPPI POWER CAPITAL TRUST I
OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY OR MISSISSIPPI POWER CAPITAL TRUST I SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Summary of Offering....................... S-3
Risk Factors.............................. S-7
Mississippi Power Capital Trust I......... S-9
Capitalization............................ S-10
Accounting Treatment...................... S-11
Description of the Preferred Securities... S-11
Description of the Series A Junior
Subordinated Notes...................... S-21
Relationship Among the Preferred
Securities, the Series A Junior
Subordinated Notes and the Guarantee.... S-22
Certain Federal Income Tax
Considerations.......................... S-24
Underwriting.............................. S-27
Legal Opinions............................ S-27
Glossary.................................. S-28
PROSPECTUS
Available Information..................... 2
Incorporation of Certain Documents by
Reference............................... 2
Selected Information...................... 3
Mississippi Power Company................. 4
The Trusts................................ 4
Accounting Treatment...................... 5
Use of Proceeds........................... 5
Recent Results of Operations.............. 5
Description of the Junior Subordinated
Notes................................... 5
Description of the Securities............. 11
Description of the Guarantees............. 11
Relationship Among the Securities, the
Junior Subordinated Notes and the
Guarantees.............................. 13
Possible Tax Law Changes.................. 15
Plan of Distribution...................... 15
Legal Matters............................. 16
Experts................................... 16
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
1,400,000 PREFERRED SECURITIES
MISSISSIPPI POWER
CAPITAL TRUST I
% TRUST ORIGINATED PREFERRED SECURITIES(SM)
("TOPRS(SM)")
(LIQUIDATION AMOUNT
$25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED, AS SET FORTH HEREIN, BY
MISSISSIPPI POWER
COMPANY
A SUBSIDIARY OF THE SOUTHERN COMPANY
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
THE ROBINSON-HUMPHREY
COMPANY, INC.
SMITH BARNEY INC.
FEBRUARY , 1997
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 32
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 31, 1997
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY , 1997
[ ] CAPITAL SECURITIES
MISSISSIPPI POWER CAPITAL TRUST [ ]
% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $ PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS SET FORTH HEREIN, BY
MISSISSIPPI POWER COMPANY
A SUBSIDIARY OF THE SOUTHERN COMPANY
---------------------------
The % Capital Securities (the "Capital Securities") offered hereby
evidence preferred undivided beneficial interests, representing 97% undivided
beneficial interests in the assets of Mississippi Power Capital Trust [ ], a
statutory business trust created under the laws of the State of Delaware (the
"Trust"). Mississippi Power Company, a Mississippi corporation (the "Company"),
will own all the common securities (the "Common Securities" and, together with
the Capital Securities, the "Trust Securities") representing the remaining 3%
undivided beneficial interests in the assets of the Trust. The Trust exists for
the sole purpose of issuing the Capital Securities and Common Securities and
investing the proceeds thereof in an equivalent amount of the Company's Series
% junior subordinated deferrable interest notes due ,
(the "Series Junior Subordinated Notes").
The Series Junior Subordinated Notes will be unsecured obligations of the
Company and will be subordinate and junior in right of payment to Senior
Indebtedness of the Company, as described herein. See "Description of the Junior
Subordinated Notes -- Subordination" in the accompanying Prospectus. Holders of
the Capital Securities are entitled to receive cumulative cash distributions at
the rate of % per annum (the "Securities Rate"), accruing from the date of
original issuance and payable, unless deferred, semi-annually in arrears on
and of each year (each, a "Distribution
Date").
--------------------------- (continued on page S-2)
See "Risk Factors" beginning on page S-7 for certain information relevant
to an investment in the Capital Securities, including the period and
circumstances during and under which payments of distributions on the Capital
Securities may be deferred and the related United States federal income tax
consequences of such deferral.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Price to Underwriting Proceeds to
Public(1) Discount(2)(3) Trust(2)(3)(4)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Capital Security........................ $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Total....................................... $ $ $
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued distributions, if any, from the Issue Date.
(2) The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(3) Because the proceeds of the sale of the Capital Securities will be invested
in Series Junior Subordinated Notes, the Company has agreed to pay to the
Underwriters, as compensation (the "Underwriters' Compensation") for
arranging the investment therein of such proceeds, $ per Capital
Security. See "Underwriting."
(4) Expenses of the offering to be paid by the Company are estimated to be
approximately $ .
---------------------------
The Capital Securities are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that delivery of
the Capital Securities will be made in book-entry only form through the
facilities of The Depository Trust Company on or about , (the
"Issue Date").
, 199
<PAGE> 33
(CONTINUED FROM PAGE S-1)
The Securities Rate and the Distribution Dates for the Capital Securities
will correspond to the interest rate and interest and other payment dates on the
Series Junior Subordinated Notes, which will constitute substantially all the
assets of the Trust. As a result, if principal or interest is not paid on the
Series Junior Subordinated Notes, no amounts will be paid on the Capital
Securities. THE COMPANY HAS THE RIGHT TO DEFER PAYMENTS OF INTEREST ON THE
SERIES JUNIOR SUBORDINATED NOTES BY EXTENDING THE INTEREST PAYMENT PERIOD ON
THE SERIES JUNIOR SUBORDINATED NOTES, AT ANY TIME AND FROM TIME TO TIME, FOR
UP TO 10 CONSECUTIVE SEMI-ANNUAL PERIODS (EACH, AN "EXTENSION PERIOD"). If
interest payments are so deferred, distributions on the Capital Securities also
will be deferred and the Company will not be permitted to declare or pay any
dividend or distribution on any of its capital stock or make any guarantee
payments with respect to the foregoing, or make any payment on any debt
securities issued by the Company which rank pari passu with or junior to the
Series Junior Subordinated Notes. During any Extension Period, holders of
Capital Securities will be required to include income in the form of original
issue discount ("OID") in their gross income for United States federal income
tax purposes in advance of the receipt of the cash payments attributable to such
deferred interest. See "Description of the Series Junior Subordinated
Notes -- Option to Extend Interest Payment Period," "Risk Factors -- Option to
Extend Interest Payment Period" and "Certain Federal Income Tax
Considerations -- Original Issue Discount" and "-- Market Discount." Deferred
installments of interest on the Series Junior Subordinated Notes will bear
interest, compounded semi-annually, at a rate per annum equal to the Securities
Rate. The payment of such deferred interest, together with interest thereon to
the extent permitted by applicable law, will be distributed to the holders of
the Capital Securities as received at the end of any Extension Period.
The Trust Securities are subject to mandatory redemption upon repayment of
the Series Junior Subordinated Notes at maturity or their earlier redemption.
The Series Junior Subordinated Notes are redeemable at the option of the
Company (in whole or in part), from time to time, on or after ,
, or at any time in whole upon the occurrence of a Tax Event or Investment
Company Act Event (either, a "Special Event"). The Company will have the right
at any time to terminate the Trust and cause the Series Junior Subordinated
Notes to be distributed to the holders of the Trust Securities in liquidation of
the Trust. See "Description of the Capital Securities -- Special Event
Redemption; Distribution of Series Junior Subordinated Notes." The Series
Junior Subordinated Notes are subordinated and junior in right of payment to all
Senior Indebtedness (as defined herein) of the Company. See "Description of the
Junior Subordinated Notes -- Subordination" in the accompanying Prospectus. As
of September 30, 1996, Senior Indebtedness of the Company aggregated
approximately $330,000,000. If the Series Junior Subordinated Notes are
distributed to the holders of the Capital Securities, the Company will use its
best efforts to have the Series Junior Subordinated Notes listed on the NYSE
or on such other exchange as the Capital Securities are then listed. See
"Description of the Capital Securities -- Special Event Redemption; Distribution
of Series Junior Subordinated Notes" and "Description of the Series Junior
Subordinated Notes."
The payment of distributions on the Capital Securities is guaranteed by the
Company under the Guarantee Agreement, but only to the extent that the Trust has
funds legally and immediately available therefor (the "Guarantee"). If the
Company fails to make required payments on the Series Junior Subordinated
Notes, the Trust will not have sufficient funds to pay such distributions, and
the Guarantee does not cover the payment of distributions when the Trust does
not have sufficient funds legally available therefor. In such event, the remedy
of a holder of Capital Securities is to enforce the Series Junior Subordinated
Notes. See "Description of the Series Junior Subordinated Notes" herein and
"Description of the Junior Subordinated Notes" in the accompanying Prospectus.
The Company's obligations under the Guarantee are subordinate and junior in
right of payment to all of its other liabilities and will rank pari passu (equal
in priority) with the most senior preferred stock of the Company. See
"Description of the Guarantees" in the accompanying Prospectus. The Company has,
through the Guarantee, the Subordinated Note Indenture, the Series Junior
Subordinated Notes, the Trust Agreement and the Agreement as to Expenses and
Liabilities, fully and unconditionally guaranteed, subject to certain
subordination provisions, all the Trust's obligations with respect to the
Capital Securities.
In the event of the voluntary or involuntary dissolution, winding-up or
termination of the Trust, the holders of the Capital Securities will be entitled
to receive, for each Capital Security, a liquidation amount of $ plus accrued
and unpaid distributions thereon (including interest thereon) to the date of
payment, unless in connection with such dissolution, winding-up or termination,
the Series Junior Subordinated Notes are distributed to the holders of the
Capital Securities. See "Description of the Capital Securities -- Liquidation
Distribution Upon Dissolution."
The Capital Securities initially will be represented by a global certificate
or certificates registered in the name of The Depository Trust Company ("DTC")
or its nominee. Beneficial interests in the Capital Securities will be shown on,
and transfers thereof will be effected only through, records maintained by
Participants (as defined herein) in DTC. Except as described herein, Capital
Securities in certificated form will not be issued in exchange for the global
certificates. See "Description of the Capital Securities -- Book-Entry Only
Issuance -- The Depository Trust Company."
---------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER THE COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 34
SUMMARY OF OFFERING
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Capitalized terms not otherwise defined shall have
the meanings assigned in the Glossary.
The Company................ The Company was incorporated under the laws of the
State of Mississippi on July 12, 1972, was
admitted to do business in Alabama on November
28, 1972, and, effective December 21, 1972, by
the merger into it of the predecessor Mississippi
Power Company, succeeded to the business and
properties of the latter company. The predecessor
Mississippi Power Company was incorporated under
the laws of the State of Maine on November 24,
1924, and was admitted to do business in
Mississippi on December 23, 1924, and in Alabama
on December 7, 1962. The Company has its
principal office at 2992 West Beach, Gulfport,
Mississippi 39501, telephone (601) 864-1211. The
Company is a wholly owned subsidiary of The
Southern Company.
The Company is a regulated public utility engaged
in the generation, transmission, distribution and
sale of electric energy within an approximately
1,200 square mile service area within the 23
counties of southeastern Mississippi.
The Trust.................. Mississippi Power Capital Trust is a statutory
business trust created under Delaware law solely
for the purpose of holding the Company's Series
Junior Subordinated Notes and issuing Capital
Securities and Common Securities evidencing the
entire beneficial interest therein (and engaging
in activities necessary, appropriate, convenient
or incidental thereto).
The Trustees............... Bankers Trust Company will act as property trustee
(the "Property Trustee") of the Trust. Two
officers of the Company also will act as trustees
(the "Administrative Trustees") of the Trust.
Bankers Trust (Delaware) will be an additional
trustee (the "Delaware Trustee") of the Trust.
Bankers Trust Company also will act as trustee
(the "Indenture Trustee") under the Subordinated
Note Indenture pursuant to which the Series
Junior Subordinated Notes will be issued and will
act as trustee under the Guarantee (the
"Guarantee Trustee").
The Property Trustee, Delaware Trustee and
Administrative Trustees are sometimes referred to
as the "Securities Trustees."
Capital Securities
Offered.................... The Trust will offer Capital Securities
evidencing preferred undivided beneficial
interests in the assets of the Trust. Holders of
the Capital Securities are entitled to receive
cumulative cash distributions at the Securities
Rate, accruing from the date of original issuance
and payable semi-annually in arrears on
and of each year, commencing on
, (each, a "Distribution
Date"). The Securities Rate and the Distribution
Dates for the Capital Securities will correspond
to the interest rate and payment dates on the
Series Junior Subordinated Notes, which will
constitute substantially all the assets of the
Trust. As a result, if principal or interest is
not paid on the Series Junior Subordinated
Notes, no amounts will be paid on the Capital
Securities. See "Description of the Capital
Securities" herein.
S-3
<PAGE> 35
Record Date................ The record date for each Distribution Date will be
the close of business on the 15th calendar day
prior to such Distribution Date.
Series Junior
Subordinated Notes......... The Trust will invest the proceeds from the
issuance of the Capital Securities and Common
Securities in an equivalent amount of Series
% junior subordinated deferrable interest
notes due . The Series Junior
Subordinated Notes will be subordinate and junior
in right of payment to all indebtedness for
borrowed money and other obligations of the
Company included in the definition of Senior
Indebtedness. See "Description of the Junior
Subordinated Notes -- Subordination" in the
accompanying Prospectus.
Guarantee.................. The payment of distributions on the Capital
Securities is guaranteed by the Company under the
Guarantee, but only to the extent the Trust has
funds legally and immediately available to make
such distributions. If the Company does not make
principal or interest payments on the Series
Junior Subordinated Notes, the Trust will not
have sufficient funds to make distributions on
the Capital Securities, in which event the
Guarantee will not apply to such distributions
until the Trust has sufficient funds legally
available therefor. The obligations of the
Company under the Guarantee will be subordinate
and junior in right of payment to all other
liabilities of the Company and will rank pari
passu with the most senior preferred stock issued
by the Company. See "Risk Factors -- Ranking of
and Rights Under the Guarantee" herein and
"Description of the Guarantees" in the
accompanying Prospectus. The Company has, through
the Guarantee, the Subordinated Note Indenture,
the Series Junior Subordinated Notes, the Trust
Agreement and the Agreement as to Expenses and
Liabilities, fully and unconditionally
guaranteed, subject to certain subordination
provisions, all the Trust's obligations with
respect to the Capital Securities.
Interest Deferral.......... The Company has the right to defer payments of
interest on the Series Junior Subordinated
Notes by extending the interest payment period on
the Series Junior Subordinated Notes, at any
time and from time to time, for up to 10
consecutive semi-annual periods (each, an
"Extension Period"). The only restrictions on the
Company's ability to defer payments of interest
are that during the Extension Period the Company
may not (i) pay dividends on or redeem any of its
capital stock or (ii) pay principal or interest
on any debt securities ranking pari passu with or
subordinate to the Series Junior Subordinated
Notes. There could be multiple Extension Periods
of varying lengths throughout the term of the
Series Junior Subordinated Notes.
If interest payments on the Series Junior
Subordinated Notes are deferred, distributions on
the Capital Securities will also be deferred.
During an Extension Period, holders of Capital
Securities will be required to include income in
the form of OID in their gross income for federal
income tax purposes in advance of the receipt of
the cash payments attributable to such deferred
interest. See "Description of the Series Junior
Subordinated Notes -- Option to Extend Interest
Payment Period" and "Certain Federal Income Tax
Considerations --
S-4
<PAGE> 36
Original Issue Discount" and "-- Market
Discount." Deferred interest will bear interest
to the extent permitted by applicable law,
compounded semi-annually, at a rate per annum
equal to the Securities Rate from the date of
deferral to the date of payment.
Redemption; Distribution... The Capital Securities are subject to mandatory
redemption upon repayment of the Series Junior
Subordinated Notes at maturity or their earlier
redemption. The Series Junior Subordinated
Notes are redeemable by the Company (in whole or
in part), from time to time on or after ,
or at any time in whole upon the occurrence of a
Special Event. If a partial redemption of the
Series Junior Subordinated Notes would result
in the delisting of the Capital Securities, the
Company may only redeem the Series Junior
Subordinated Notes in whole. Any partial
redemption of the Series Junior Subordinated
Notes will be effected by the redemption of an
equivalent amount of Trust Securities, to be
allocated approximately 97% to the Capital
Securities and 3% to the Common Securities. See
"Description of the Capital Securities --
Redemption" and "-- Special Event Redemption;
Distribution of Series Junior Subordinated
Notes."
The Company will have the right at any time to
terminate the Trust and cause the Series Junior
Subordinated Notes to be distributed to the
holders of the Capital Securities in liquidation
of the Trust. This right is optional and wholly
within the discretion of the Company.
Circumstances under which the Company may
determine to exercise such right could include
the occurrence of an Investment Company Act Event
or a Tax Event, adverse tax consequences to the
Company or the Trust that are not within the
definition of a Tax Event because they do not
result from an amendment or change described in
such definition, and changes in the accounting
requirements applicable to the Capital Securities
as described under "Accounting Treatment." See
"Description of the Capital Securities -- Special
Event Redemption; Distribution of Series Junior
Subordinated Notes."
Special Event.............. A Special Event means a Tax Event or an Investment
Company Act Event. A "Tax Event" means that the
Administrative Trustees and the Company shall
have received an opinion from independent tax
counsel experienced in such matters (which may be
counsel to the Company) to the effect that, as a
result of (a) any amendment to, or change
(including any announced prospective change) in,
the laws (or any regulations thereunder) of the
United States or any political subdivision or
taxing authority thereof or therein or (b) any
amendment to, or change in, an interpretation or
application of such laws or regulations, there is
more than an insubstantial risk that (i) the
Trust would be subject to United States federal
income tax with respect to income accrued or
received on the Series Junior Subordinated
Notes, (ii) interest payable to the Trust on the
Series Junior Subordinated Notes would not be
deductible by the Company for United States
federal income tax purposes, or (iii) the Trust
would be subject to more than a de minimis amount
of other taxes, duties or other governmental
charges, which change or amendment becomes
effective on or after the Issue Date. An
"Investment Company Act Event" means that the
Administrative Trustees and the Company shall
have received an opinion of independent counsel
(which may be counsel to
S-5
<PAGE> 37
the Company) to the effect that, as a result of a
change in law or regulation or a written change
in interpretation or application of law or
regulation by any legislative body, court,
governmental agency or regulatory authority after
the Issue Date, there is more than an
insubstantial risk that the Trust is or will be
considered an investment company under the
Investment Company Act of 1940, as amended (the
"1940 Act").
Redemption Price........... See "Description of the Capital
Securities -- Redemption Price."
S-6
<PAGE> 38
RISK FACTORS
Prospective purchasers of Capital Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should consider particularly the following matters:
RANKING OF AND RIGHTS UNDER THE SERIES JUNIOR SUBORDINATED NOTES
No amounts will be available to make payments on the Capital Securities
except from payments made on the Series Junior Subordinated Notes. The
obligations of the Company under the Series Junior Subordinated Notes are
subordinate and junior in right of payment to all present and future Senior
Indebtedness of the Company. At September 30, 1996, Senior Indebtedness of the
Company aggregated approximately $330,000,000. There are no terms in the Capital
Securities, the Series Junior Subordinated Notes or the Guarantee that limit
the Company's ability to incur additional indebtedness, including indebtedness
that ranks senior to the Series Junior Subordinated Notes. See "Description of
the Guarantees" and "Description of the Junior Subordinated
Notes -- Subordination" in the accompanying Prospectus.
RANKING OF AND RIGHTS UNDER THE GUARANTEE
The Company's obligations under the Guarantee are subordinate and junior in
right of payment to all liabilities of the Company and will be pari passu with
the most senior preferred stock issued by the Company. If the Company were to
default in its obligation to pay amounts payable on the Series Junior
Subordinated Notes, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Capital Securities or
otherwise, and in such event holders of the Capital Securities would not be able
to rely upon the Guarantee for payment of such amounts.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Subordinated Note Indenture, and at any
time, and from time to time, to defer payments of interest on the Series
Junior Subordinated Notes for a period of up to 10 consecutive semi-annual
periods (each, an "Extension Period"), but not beyond the stated maturity of the
Series Junior Subordinated Notes. Prior to the termination of any Extension
Period, the Company may further defer payments of interest, provided that such
Extension Period, together with all such previous and further extensions
thereof, may not exceed 10 consecutive semi-annual periods. Upon the termination
of any Extension Period and the payment of all amounts then due, the Company may
select a new Extension Period, subject to the above requirements. There could be
multiple Extension Periods of varying lengths throughout the term of the Series
Junior Subordinated Notes. Deferred installments of interest on the Series
Junior Subordinated Notes will bear interest to the extent permitted by
applicable law, compounded semi-annually, at a rate per annum equal to the
Securities Rate. The payment of such deferred interest, together with interest
thereon, will be passed through to the holders of the Capital Securities as
received at the end of any Extension Period.
The only restrictions on the Company's ability to defer payments of
interest are that during any Extension Period the Company may not (i) pay
dividends on or redeem any of its capital stock or (ii) pay principal or
interest on any debt securities ranking pari passu with or subordinate to the
Series Junior Subordinated Notes. See "Description of the Capital
Securities -- Distributions" and "Description of the Series Junior
Subordinated Notes -- Option to Extend Interest Payment Period."
Should the Company exercise its rights to defer payments of interest, each
holder of Capital Securities will be required to include income in the form of
OID in their gross income for United States federal income tax purposes in
respect of the deferred interest allocable to its Capital Securities. As a
result, holders of Capital Securities will recognize income for United States
federal income tax purposes in advance of the receipt of cash and will not
receive the cash from the Trust related to such income if such holders dispose
of their Capital Securities prior to the record date for the date on which
distributions of such amounts are made. See "Certain Federal Income Tax
Considerations -- Original Issue Discount" and "-- Sale of Capital
S-7
<PAGE> 39
Securities." INVESTORS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES OF AN INVESTMENT IN THE CAPITAL SECURITIES.
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series
Junior Subordinated Notes. However, should the Company determine to exercise
such right in the future, the market price of the Capital Securities is likely
to be affected. A holder that disposes of its Capital Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Capital Securities. In addition, as a
result of the existence of the Company's right to defer interest payments, the
market price of the Capital Securities (which represent an undivided beneficial
interest in the Series Junior Subordinated Notes) may be more volatile than
other similar securities that do not have such rights.
SPECIAL EVENT REDEMPTION; DISTRIBUTION OF SERIES JUNIOR SUBORDINATED NOTES
If a Special Event shall occur and be continuing, the Company will have the
option to redeem the Series Junior Subordinated Notes in cash (with the result
that the Capital Securities shall be redeemed). In addition, the Company will
have the right at any time to terminate the Trust and cause the Series Junior
Subordinated Notes to be distributed to the holders of the Trust Securities in
liquidation of the Trust. See "Description of the Capital Securities Special
Event Redemption; Distribution of Series Junior Subordinated Notes."
There can be no assurance as to the market price for the Series Junior
Subordinated Notes that may be distributed in exchange for Capital Securities if
a termination or liquidation of the Trust were to occur. Accordingly, the Series
Junior Subordinated Notes that the investor may receive on termination and
liquidation of the Trust may trade at a discount to the price that the investor
paid to purchase the Capital Securities offered hereby. See "Description of the
Series Junior Subordinated Notes."
POSSIBLE TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"),
the revenue portion of President Clinton's 1996 budget proposal, was released.
The Bill would, among other things, generally deny interest deductions for
interest on an instrument, issued by a corporation, that has a maximum term of
more than 20 years and that is not shown as indebtedness on the separate balance
sheet of the issuer or, where the instrument is issued to a related party (other
than a corporation), where the holder or some other related party issues a
related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. The above-described provisions of the Bill were
proposed to be effective generally for instruments issued on or after December
7, 1995. If such provisions were to apply to the Series Junior Subordinated
Notes, the Company would be unable to deduct interest on the Series Junior
Subordinated Notes. However, on March 29, 1996, the Chairmen of the Senate
Finance and House Ways and Means Committees issued a joint statement to the
effect that it was their intention that the effective date of the President's
legislative proposals, if adopted, will be no earlier than the date of
appropriate Congressional action. The Company believes that, under current law,
it will be able to deduct interest on the Series Junior Subordinated Notes.
There can be no assurance, however, that current or future legislative proposals
or final legislation will not affect the ability of the Company to deduct
interest on the Series Junior Subordinated Notes. Such a change could give
rise to a Tax Event, which would permit the Company to cause a redemption of the
Capital Securities, as described more fully under "Description of the Capital
Securities -- Special Event Redemption; Distribution of Series Junior
Subordinated Notes."
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights and, except
for the rights of holders of Capital Securities to appoint a Substitute Property
Trustee upon the occurrence of certain events described herein, will not be
entitled to vote to appoint, remove or replace the Securities Trustees, which
voting rights are vested exclusively in the holder of the Common Securities.
S-8
<PAGE> 40
TRADING CHARACTERISTICS OF CAPITAL SECURITIES
The Company and the Trust do not intend to have the Capital Securities
listed on any securities exchange. If the underwriters do not make a market for
the Capital Securities, the liquidity of the Capital Securities could be
adversely affected. See "Certain Federal Income Tax Considerations -- Sale of
Capital Securities" for a discussion of the United States federal income tax
consequences that may result from a taxable disposition of the Capital
Securities.
MISSISSIPPI POWER CAPITAL TRUST [ ]
The Trust is a statutory business trust created under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State on
January 24, 1997. The Trust's business is defined in a trust agreement, executed
by the Company, as Depositor, and the Delaware Trustee thereunder. This trust
agreement will be amended and restated in its entirety on the Issue Date
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus Supplement and the accompanying Prospectus form a part
(the "Trust Agreement"). The Trust Agreement will be qualified as an indenture
under the Trust Indenture Act of 1939, as amended (the "1939 Act"). The Trust
exists for the exclusive purposes of (i) issuing the Trust Securities
representing undivided beneficial interests in the assets of the Trust, (ii)
investing the gross proceeds of the Trust Securities in the Series Junior
Subordinated Notes, and (iii) engaging in only those other activities necessary,
appropriate, convenient or incidental thereto. The Trust has a term of
approximately years, but may terminate earlier as provided in the Trust
Agreement.
Upon issuance of the Capital Securities, the purchasers thereof will own
all of the Capital Securities. The Company will acquire all of the Common
Securities, which will have an aggregate liquidation amount equal to
approximately 3% of the total capital of the Trust. The Common Securities will
rank pari passu, and payments will be made thereon pro rata, with the Capital
Securities, except that upon the occurrence and continuance of a Subordinated
Note Indenture Event of Default, the rights of the holders of Common Securities
to payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the Capital
Securities.
The Trust's business and affairs will be conducted by the Securities
Trustees, which shall be appointed by the Company as the holder of the Common
Securities. Two officers of the Company initially will serve as Administrative
Trustees. Bankers Trust Company will serve as Property Trustee and will hold
legal title to the Series Junior Subordinated Notes issued by the Company on
behalf of the Trust and the holders of the Trust Securities. Bankers Trust
(Delaware) will serve as Delaware Trustee. In certain circumstances, the holders
of a majority in liquidation amount of the Capital Securities will be entitled
to appoint a Substitute Property Trustee. See "Description of the Capital
Securities -- Voting Rights."
The Property Trustee will hold legal title to the Series Junior
Subordinated Notes for the benefit of the Trust and the holders of the Trust
Securities and will have the power to exercise all rights, powers and privileges
under the Subordinated Note Indenture as the holder of the Series Junior
Subordinated Notes. The Property Trustee will make payments of distributions and
payments on liquidation, redemption and otherwise to the holders of the Trust
Securities. Subject to the right of the holders of the Capital Securities to
appoint a Substitute Property Trustee in certain instances, the Company, as the
holder of all the Common Securities, will have the right to appoint, remove or
replace all the Securities Trustees.
The Series Junior Subordinated Notes will constitute substantially all of
the assets of the Trust. Other assets that may constitute "Trust Property" (as
that term is defined in the Trust Agreement) include any cash on deposit in, or
owing to, the payment account as established under the Trust Agreement, as well
as any other property or assets held by the Property Trustee pursuant to the
Trust Agreement. In addition, the Trust may, from time to time, receive cash
pursuant to the Agreement as to Expenses and Liabilities.
The rights of the holders of the Capital Securities, including economic
rights, rights to information and voting rights, are as set forth in the Trust
Agreement, the Delaware Business Trust Act, and the 1939 Act. See "Description
of the Capital Securities."
S-9
<PAGE> 41
The Trust's registered office in the State of Delaware is c/o Bankers Trust
(Delaware), 1001 Jefferson Street, Suite 550, Wilmington, Delaware 19801-1457.
The principal place of business of the Trust shall be c/o the Company, 2992 West
Beach, Gulfport, Mississippi 39501, telephone (601) 864-1211, Attn: Treasurer.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1996, and as adjusted to reflect the issuances described in note
(2) below. The following data is qualified in its entirety by reference to and,
therefore, should be read together with the detailed information and financial
statements appearing in the documents incorporated herein by reference. See also
"Selected Information" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
--------------------------------
ACTUAL AS ADJUSTED(2)
--------- -------------------
(THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Common Stock Equity......................................... $387,889 $387,889 43.8%
Cumulative Preferred Stock.................................. 74,414 74,414 8.4
Company Obligated Mandatorily Redeemable Preferred or
Capital Securities of Subsidiary Trusts Holding Company
Junior Subordinated Notes(1).............................. -- 55,000 6.2
Long-Term Debt.............................................. 276,312 367,908 41.6
-------- -------- -----
Total, excluding amounts due within one year........... $738,615 $885,211 100.0%
======== ======== =====
</TABLE>
- ---------------
(1) As described herein and in the accompanying Prospectus, substantially all of
the assets of the respective Trusts will be Junior Subordinated Notes of
the Company with an aggregate principal amount not exceeding $56,701,050,
and upon redemption of such debt, the related Securities will be
mandatorily redeemable.
(2) Reflects (i) $50,000,000 of term notes payable to banks, (ii) $41,596,000 of
new First Mortgage Bonds which could be issued and are covered by previous
shelf registration filings, and (iii) the proposed issuance of $55,000,000
of new Securities covered by the accompanying Prospectus.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of the Company and, accordingly, the accounts of the Trust will be included in
the consolidated financial statements of the Company. The Capital Securities
will be presented as a separate line item in the consolidated balance sheet of
the Company, and appropriate disclosures concerning the Capital Securities, the
Guarantee and the Series Junior Subordinated Notes will be included in the
notes to the consolidated financial statements. For financial reporting
purposes, the Company will record distributions payable on the Capital
Securities as an expense.
DESCRIPTION OF THE CAPITAL SECURITIES
The Capital Securities will be issued pursuant to the terms of the Trust
Agreement. The Trust Agreement will be qualified as an indenture under the 1939
Act. The Property Trustee will act as the indenture trustee with respect to the
Trust, as well as the Guarantee, for purposes of compliance with the provisions
of the 1939 Act. The terms of the Capital Securities will include those stated
in the Trust Agreement, the Delaware Business Trust Act, and those made part of
the Trust Agreement by the 1939 Act. The following summary of the principal
terms and provisions of the Capital Securities does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the Trust
Agreement, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
are a part, as well as the 1939 Act.
S-10
<PAGE> 42
GENERAL
The Trust Agreement authorizes the Administrative Trustees, on behalf of
the Trust, to issue the Capital Securities, which represent preferred undivided
beneficial interests in the assets of the Trust, and the Common Securities,
which represent common undivided beneficial interests in the assets of the
Trust. All of the Common Securities will be owned by the Company. The Common
Securities rank pari passu, and payments will be made thereon on a pro rata
basis, with the Capital Securities, except that upon the occurrence of a
Subordinated Note Indenture Event of Default, the rights of the holders of the
Common Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Capital Securities. The Trust Agreement does not permit the
issuance by the Trust of any securities other than the Trust Securities or the
incurrence of any indebtedness by the Trust. Pursuant to the Trust Agreement,
the Property Trustee will own and hold the Series Junior Subordinated Notes
for the benefit of the Trust and the holders of the Trust Securities. The
payment of distributions out of money held by the Trust, and payments upon
redemption of the Capital Securities or liquidation of the Trust, are
guaranteed by the Company on a subordinated basis as and to the extent
described under "Description of the Guarantees" in the accompanying Prospectus.
The Guarantee does not cover payment of distributions on the Capital Securities
when the Trust does not have legally and immediately available funds sufficient
to make such distributions. In such event, the remedy of a holder of Capital
Securities is to direct the Property Trustee to enforce its rights under the
Series Junior Subordinated Notes. If the Property Trustee fails to enforce its
rights under the Series Junior Subordinated Notes, a holder of Capital
Securities may, to the fullest extent permitted by applicable law, institute a
legal proceeding directly against the Company to enforce its rights under the
Trust Agreement without first instituting any legal proceeding against the
Property Trustee or the Trust. In addition, a holder of Capital Securities may
institute a legal proceeding directly against the Company, without first
instituting a legal proceeding against the Property Trustee or any other person
or entity, for enforcement of payment to such holder of principal of or
interest on the Series Junior Subordinated Notes having a principal amount
equal to the aggregate stated liquidation amount of the Capital Securities of
such holder on or after the due dates specified in the Series Junior
Subordinated Notes. The above mechanisms and obligations, together with the
Company's obligations under the Agreement as to Expenses and Liabilities,
constitute a full and unconditional guarantee by the Company of payments due on
the Capital Securities. See "-- Voting Rights" below.
DISTRIBUTIONS
Distributions on the Capital Securities will be fixed at the Securities
Rate and will accrue from the Issue Date and, except in the event of an
Extension Period, will be payable semi-annually in arrears on and
of each year. In the event that any date on which distributions are to
be made on the Capital Securities is not a Business Day, then payment of the
distributions payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. A "Business
Day" shall mean any day other than a Saturday or Sunday, a day on which banks in
New York City are authorized or obligated by law or executive order to remain
closed or a day on which the principal corporate trust office of the Property
Trustee or the Indenture Trustee is closed for business.
Distributions payable on any Distribution Date will be payable to the
holders of record on the Record Date for such Distribution Date, which is the
close of business on the fifteenth calendar day preceding such Distribution
Date. Subject to any applicable laws and regulations and the provisions of the
Trust Agreement, each such payment will be made as described under
"-- Book-Entry Only Issuance -- The Depository Trust Company" below. The amount
of distributions payable for any period will be computed on the basis of a
360-day year of twelve 30-day months.
The Company has the right under the Subordinated Note Indenture to defer
payments of interest on the Series Junior Subordinated Notes by extending the
interest payment period from time to time on the Series Junior Subordinated
Notes (each, an "Extension Period") which, if exercised, would defer semi-annual
distributions on the Capital Securities during any such extended interest
payment period. Deferred
S-11
<PAGE> 43
installments of interest on the Series Junior Subordinated Notes will bear
interest, compounded semi-annually, at a rate per annum equal to the Securities
Rate. If distributions are deferred, the deferred distributions and accrued
interest thereon shall be paid, if funds are legally available therefor, to
holders of record of the Capital Securities as they appear on the books and
records of the Trust on the Record Date next following the termination of such
Extension Period. See "Description of the Series Junior Subordinated
Notes -- Interest" and "-- Option to Extend Interest Payment Period."
Distributions on the Capital Securities must be paid on the Distribution
Dates to the extent that the Trust has funds legally and immediately available
for the payment of such distributions. The Trust's funds available for
distribution to the holders of the Capital Securities will be limited to
payments received under the Series Junior Subordinated Notes. See
"Description of the Series Junior Subordinated Notes."
REDEMPTION
The Capital Securities are subject to mandatory redemption upon repayment
of the Series Junior Subordinated Notes at maturity or their earlier
redemption. The Series Junior Subordinated Notes will mature on ,
and may be redeemed, in whole or in part, at the option of the Company, at
any time on or after , or at any time in whole upon the
occurrence of a Special Event. Upon the repayment of the Series Junior
Subordinated Notes, whether at maturity or upon redemption, the proceeds from
such repayment or payment shall simultaneously be applied to redeem a like
amount of Trust Securities upon not less than 30 nor more than 60 days' notice,
at the Redemption Price (as defined below). See "Description of the Series
Junior Subordinated Notes -- Optional Redemption." If a partial redemption of
the Series Junior Subordinated Notes would result in the delisting of the
Capital Securities, the Company may only redeem the Series Junior
Subordinated Notes in whole. In the event that fewer than all of the
outstanding Trust Securities are to be redeemed, the Capital Securities to be
redeemed will be selected as described under "-- Book-Entry Only Issuance --
The Depository Trust Company" below. If the Capital Securities are no longer in
book-entry only form, the Capital Securities to be redeemed will be selected by
such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal to $ or
integral multiples thereof) of the aggregate liquidation amount of Capital
Securities of a denomination larger than $ ; provided, however, that before
undertaking the redemption of the Capital Securities on other than a pro rata
basis, the Property Trustee shall have received an opinion of counsel that the
status of the Trust as a grantor trust for federal income tax purposes would
not be adversely affected.
SPECIAL EVENT REDEMPTION; DISTRIBUTION OF SERIES JUNIOR SUBORDINATED NOTES
Upon the occurrence of a Special Event at any time, the Company will have
the option to redeem the Series Junior Subordinated Notes in whole (and thus
cause the redemption of the Capital Securities in whole). A Special Event is
either an Investment Company Act Event or a Tax Event.
An "Investment Company Act Event" means that the Administrative Trustees
and the Company shall have received an opinion of independent counsel (which may
be counsel to the Company) to the effect that, as a result of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority after the Issue Date, there is more than an insubstantial risk that
the Trust is or will be considered an investment company under the 1940 Act.
"Tax Event" means that the Administrative Trustees and the Company shall
have received an opinion from independent tax counsel experienced in such
matters (which may be counsel to the Company) to the effect that, as a result of
(a) any amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to, or
change in, an interpretation or application of such laws or regulations, there
is more than an insubstantial risk that (i) the Trust would be subject to United
States federal income tax with respect to income accrued or received on the
Series Junior Subordinated Notes, (ii) interest payable to the Trust on the
Series Junior Subordinated Notes would not be deductible by the
S-12
<PAGE> 44
Company for United States federal income tax purposes or (iii) the Trust would
be subject to more than a de minimis amount of other taxes, duties or other
governmental charges, which change or amendment becomes effective on or after
the Issue Date. See "Risk Factors -- Possible Tax Law Changes."
The Company will have the right at any time to terminate the Trust and,
after satisfaction of liabilities to creditors of the Trust, if any, cause the
Series Junior Subordinated Notes to be distributed to the holders of the Trust
Securities in liquidation of the Trust. See "-- Liquidation Distribution Upon
Dissolution" below. This right is optional and wholly within the discretion of
the Company. Circumstances under which the Company may determine to exercise
such right could include the occurrence of an Investment Company Act Event or a
Tax Event, adverse tax consequences to the Company or the Trust that are not
within the definition of a Tax Event because they do not result from an
amendment or change described in such definition, and changes in the accounting
requirements applicable to the Capital Securities as described under "Accounting
Treatment."
If Series Junior Subordinated Notes are distributed to the holders of the
Capital Securities, the Company will use its best efforts to have the Series
Junior Subordinated Notes listed on the NYSE or on such other exchange as the
Capital Securities are then listed. After the date for any distribution of
Series Junior Subordinated Notes upon termination of the Trust, (i) the Capital
Securities and the Guarantee will no longer be deemed to be outstanding, (ii)
the depositary or its nominee, as the record holder of the Capital Securities,
will receive a registered global certificate or certificates representing the
Series Junior Subordinated Notes to be delivered upon such distribution and
(iii) any certificates representing Capital Securities and the Guarantee not
held by the depositary or its nominee will be deemed to represent Series Junior
Subordinated Notes having an aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate identical to the Securities
Rate of, and accrued and unpaid interest equal to accrued and unpaid
distributions on, such Capital Securities, until such certificates are presented
to the Company or its agent for transfer or reissuance.
There can be no assurance as to the market prices for the Capital
Securities or the Series Junior Subordinated Notes that may be distributed in
exchange for the Capital Securities if a termination and liquidation of the
Trust were to occur. Accordingly, the Capital Securities that an investor may
purchase, or the Series Junior Subordinated Notes that the investor may
receive on termination and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the Capital Securities offered
hereby.
REDEMPTION PRICE
"Redemption Price", in the case of an optional redemption on or after
, shall equal the following prices expressed in percentages of the
principal amount of the Series Junior Subordinated Notes being redeemed
together with accrued interest to but excluding the date fixed for redemption.
If redeemed during the 12-month period beginning , ;
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ------------------------------------------------------------ ----------
<S> <C>
.................................................. %
.................................................. %
.................................................. %
.................................................. %
.................................................. %
.................................................. %
.................................................. %
.................................................. %
.................................................. %
.................................................. %
</TABLE>
and at 100% on or after , .
"Redemption Price", in the case of a redemption following a Special Event
prior to , means a price equal to the greater of (i) 100% of the
principal amount of the Series Junior Subordinated Notes
S-13
<PAGE> 45
being redeemed or (ii) as determined by an Independent Investment Banker, the
sum of the present values of the remaining scheduled payments of principal of
and interest on the Series Junior Subordinated Notes being redeemed discounted
to the date of redemption on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at a discount rate equal to the Treasury
Yield plus basis points, plus, for (i) and (ii) above, whichever is
applicable, accrued interest to the date of redemption.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of Series Junior Subordinated Notes to be redeemed that
would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of the Series Junior Subordinated
Notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day in New York City preceding such redemption date, as set forth in
the most recent weekly statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "H.15(519)" or (ii) if
such release (or any successor release) is not published or does not contain
such prices on such business day, the Reference Treasury Dealer Quotation for
such redemption date.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Company.
"Reference Treasury Dealer" means a primary US Government securities dealer
in New York City appointed by the Company and reasonably acceptable to the
Indenture Trustee.
"Reference Treasury Dealer Quotation" means, with respect to the Reference
Treasury Dealer and any redemption date, the average, as determined by the
Indenture Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount and quoted in
writing to the Indenture Trustee by such Reference Treasury Dealer at 5:00 p.m.
on the third business day in New York City preceding such redemption date).
REDEMPTION PROCEDURES
In the event that fewer than all of the Trust Securities are to be
redeemed, then the aggregate liquidation amount of the Trust Securities to be
redeemed shall be allocated 97% to the Capital Securities and 3% to the Common
Securities.
The Capital Securities redeemed on each redemption date shall be redeemed
at the Redemption Price with the proceeds from the contemporaneous redemption of
the Series Junior Subordinated Notes. The Redemption Price of Capital
Securities shall be deemed payable on each redemption date only to the extent
that the Trust has funds legally and immediately available for payment of such
Redemption Price.
If the Property Trustee gives a notice of redemption in respect of Capital
Securities (which notice will be irrevocable), then, by 2:00 P.M., New York City
time, on the redemption date, subject to the immediately preceding paragraph,
the Property Trustee will irrevocably deposit with the securities depositary, so
long as the Capital Securities are in book-entry only form, sufficient funds to
pay the applicable Redemption Price. See "-- Book-Entry Only Issuance -- The
Depository Trust Company" below. If the Capital Securities are no longer in
book-entry only form, the Property Trustee, subject to the immediately preceding
paragraph, shall irrevocably deposit with the Paying Agent funds sufficient to
pay the applicable Redemption Price and will give the Paying Agent irrevocable
instructions to pay the Redemption Price to the holders thereof upon surrender
of their Capital Securities certificates. If notice of redemption shall have
been given and funds deposited as required, then immediately prior to the close
of business on the date of such deposit, distributions
S-14
<PAGE> 46
will cease to accrue and all rights of holders of such Capital Securities so
called for redemption will cease, except the right of the holders of such
Capital Securities to receive the Redemption Price, but without interest on such
Redemption Price. In the event that any date fixed for redemption of Capital
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Capital Securities is improperly withheld or
refused and not paid either by the Trust or by the Company pursuant to the
Guarantee, distributions on such Capital Securities will continue to accrue at
the then applicable rate, from such redemption date originally established by
the Trust for such Capital Securities to the date such Redemption Price is
actually paid. See "-- Events of Default" below, "Relationship Among the Capital
Securities, the Series Junior Subordinated Notes and the Guarantee" and
"Description of the Guarantees -- Events of Default" in the accompanying
Prospectus.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), the Company or its
affiliates may, at any time and from time to time, purchase outstanding Capital
Securities by tender, in the open market or by private agreement.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as the initial securities
depositary for the Capital Securities. The Capital Securities will be issued
only as fully registered securities registered in the name of Cede & Co., DTC's
nominee. One or more fully registered global Capital Securities certificates
will be issued, representing in the aggregate the total number of Capital
Securities, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, 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 1934 Act. DTC holds
securities that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the NYSE, the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Commission.
Purchases of Capital Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Capital
Securities on DTC's records. The ownership interest of each actual purchaser of
Capital Securities ("Beneficial Owner") is in turn to be recorded on the Direct
and Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchases, but Beneficial Owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct or Indirect Participants
through which the Beneficial Owners purchased Preferred Securities. Transfers of
ownership interests in the Capital Securities are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Capital Securities, except in the event that use of the book-entry
system for the Capital Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Capital
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Capital Securities are credited, which may or may not be
the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
S-15
<PAGE> 47
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the Capital
Securities are being redeemed, DTC will reduce the amount of the interest of
each Direct Participant in the Capital Securities in accordance with its
procedures.
Although voting with respect to the Capital Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to Capital Securities. Under its usual procedures, DTC
would mail an Omnibus Proxy to the Trust as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the Capital Securities are credited
on the record date (identified in a listing attached to the Omnibus Proxy).
Distribution payments on the Capital Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the account of customers registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Trust, any trustee or the
Company, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Capital Security
will not be entitled to receive physical delivery of Capital Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Capital Securities. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of
securities in definitive form. Such laws may impair the ability to transfer
beneficial interests in a global Capital Security.
DTC may discontinue providing its services as securities depositary with
respect to the Capital Securities at any time by giving reasonable notice to the
Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Capital Securities certificates will be printed and
delivered to the holders of record. Additionally, the Company may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depositary) with respect to the Capital Securities. In that event,
certificates for the Capital Securities will be printed and delivered to the
holders of record.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and the Trust believe to be
reliable, but the Company and the Trust take no responsibility for the accuracy
thereof. The Trust has no responsibility for the performance by DTC or its
Participants of their respective obligations as described herein or under the
rules and procedures governing their respective operations.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the Trust Agreement, the Trust shall terminate on ,
or earlier upon (i) the occurrence of a Bankruptcy Event (as defined in the
Trust Agreement) in respect of the Company, dissolution or liquidation of the
Company, or dissolution of the Trust pursuant to a judicial decree; (ii) the
delivery of written direction to the Property Trustee by the Company, as
Depositor, at any time (which direction is optional and wholly within the
discretion of the Company, as Depositor) to terminate the Trust and distribute
the Series Junior Subordinated Notes to the holders of the Trust Securities in
liquidation of the Trust (see "-- Special Event Redemption; Distribution of
Series Junior Subordinated Notes" above); or (iii) the
S-16
<PAGE> 48
payment at maturity or redemption of all of the Series Junior Subordinated
Notes, and the consequent payment of the Trust Securities.
If an early termination occurs as described in clause (i) or (ii) above,
the Trust shall be liquidated, and the Property Trustee shall distribute to each
holder of Capital Securities and Common Securities a like amount of Series
Junior Subordinated Notes, unless in the case of an event described in clause
(i) such distribution is determined by the Administrative Trustees not to be
practical, in which event such holders will be entitled to receive, out of the
assets of the Trust available for distribution to holders after satisfaction of
liabilities to creditors, an amount equal to the aggregate of the stated
liquidation preference of $ per Trust Security plus accrued and unpaid
distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then subject to the next succeeding sentence, the
amounts payable directly by the Trust on the Trust Securities shall be paid on a
pro rata basis. The holder of the Common Securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders of the Capital
Securities, except that if a Subordinated Note Indenture Event of Default has
occurred and is continuing, the holders of Capital Securities shall have a
preference over the holders of Common Securities.
EVENTS OF DEFAULT
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement ("Trust Agreement Event of Default") with respect to the Trust
Securities issued thereunder (whatever the reason for such Event of Default, and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) the occurrence of an "Event of Default" as defined in Section 501
of the Subordinated Note Indenture ("Subordinated Note Indenture Event of
Default") (see "Description of the Junior Subordinated Notes -- Events of
Default" in the accompanying Prospectus); or
(ii) default by the Trust in the payment of any distribution when it
becomes due and payable, and the continuation of such default for a period
of 30 days; or
(iii) default by the Trust in the payment of any Redemption Price of
any Capital Security or Common Security when it becomes due and payable; or
(iv) default in the performance, or breach, of any covenant or
warranty of the Securities Trustees in the Trust Agreement (other than a
covenant or warranty a default in the performance of which or the breach of
which is dealt with in clause (ii) or (iii) above), and continuation of
such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to such Securities Trustees by the holders
of at least 10% in liquidation amount of the outstanding Capital Securities
a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" under the
Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Trust.
Within 90 days after the occurrence of any Trust Agreement Event of
Default, the Property Trustee shall transmit notice of any default known to the
Property Trustee to the holders of Trust Securities and the Company, unless such
Trust Agreement Event of Default shall have been cured or waived.
If a Trust Agreement Event of Default occurs and is continuing, then,
pursuant to the Trust Agreement, holders of a majority in aggregate liquidation
amount of Capital Securities have the right to direct the exercise of any trust
or power conferred upon the Property Trustee under the Trust Agreement,
including the right to direct the Property Trustee under the Trust Agreement to
exercise the remedies available to it as holder of the Series Junior
Subordinated Notes. If the Property Trustee fails to enforce its rights under
the Series Junior Subordinated Notes, a holder of Capital Securities may, to
the fullest extent permitted by applicable law, institute a legal proceeding
directly against the Company to enforce its rights under the Trust Agreement
S-17
<PAGE> 49
without first instituting any legal proceeding against the Property Trustee or
the Trust. Notwithstanding the foregoing, a holder of Capital Securities may
institute a legal proceeding directly against the Company, without first
instituting a legal proceeding against the Property Trustee or any other person
or entity, for enforcement of payment to such holder of principal of or interest
on the Series Junior Subordinated Notes having a principal amount equal to the
aggregate stated liquidation amount of the Capital Securities of such holder on
or after the due dates specified in the Series Junior Subordinated Notes. See
"Relationship Among the Capital Securities, the Series Junior Subordinated
Notes and the Guarantee" herein and "Description of the Guarantees -- Events of
Default" in the accompanying Prospectus.
Unless a Subordinated Note Indenture Event of Default shall have occurred
and be continuing, the Securities Trustees may be removed at any time by act of
the holder of the Common Securities. If a Subordinated Note Indenture Event of
Default has occurred and is continuing, any Securities Trustee may be removed at
such time by act of the holders of a majority in liquidation amount of the
Preferred Securities, delivered to the appropriate Securities Trustee (in its
individual capacity and on behalf of the Trust). No resignation or removal of
any Securities Trustee and no appointment of a successor shall be effective
until the acceptance of appointment by the successor Trustee in accordance with
the requirements of the Trust Agreement.
If a Subordinated Note Indenture Event of Default has occurred and is
continuing, the holders of Capital Securities shall have a preference over the
holders of Common Securities upon dissolution of the Trust as described above.
See "-- Liquidation Distribution Upon Dissolution."
VOTING RIGHTS
Except as provided below and under "Description of the
Guarantees -- Amendments and Assignment" in the accompanying Prospectus and as
otherwise required by law and the Trust Agreement, the holders of the Capital
Securities will have no voting rights.
If any proposed amendment to the Trust Agreement provides for, or the
Securities Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Capital
Securities, whether by way of amendment to the Trust Agreement or otherwise, or
(ii) the dissolution, winding-up or termination of the Trust, other than
pursuant to the Trust Agreement, then the holders of outstanding Capital
Securities will be entitled to vote as a class on such amendment or proposal of
the Securities Trustees, and such amendment or proposal shall not be effective
except with the approval of the holders of at least 66 2/3% in liquidation
amount of such outstanding Capital Securities.
So long as any Series Junior Subordinated Notes are held by the Property
Trustee, the Securities Trustees shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the Indenture Trustee
(as defined herein), or executing any trust or power conferred on the Indenture
Trustee with respect to the Series Junior Subordinated Notes, (ii) waive any
past default which is waivable under Section 513 of the Subordinated Note
Indenture, (iii) exercise any right to rescind or annul a declaration that the
principal of all the Series Junior Subordinated Notes shall be due and
payable, or (iv) consent to any amendment, modification or termination of the
Subordinated Note Indenture or the Series Junior Subordinated Notes, where
such consent shall be required, or to any other action, as the holder of the
Series Junior Subordinated Notes, under the Subordinated Note Indenture,
without, in each case, obtaining the prior approval of the holders of at least
66 2/3% in liquidation amount of the outstanding Capital Securities; provided,
however, that where a consent under the Subordinated Note Indenture would
require the consent of each holder of Series Junior Subordinated Notes
affected thereby, no such consent shall be given by the Securities Trustees
without the prior consent of each holder of Capital Securities. The Securities
Trustees shall not revoke any action previously authorized or approved by a vote
of the holders of the Capital Securities, except pursuant to a subsequent vote
of such holders. The Property Trustee shall notify all holders of the Capital
Securities of any notice of default received from the Indenture Trustee with
respect to the Series Junior Subordinated Notes. In addition to obtaining the
foregoing approvals of the holders of the Capital Securities, prior to taking
any of the foregoing actions, the Securities Trustees shall obtain an
S-18
<PAGE> 50
opinion of counsel experienced in such matters to the effect that the Trust will
not be classified as other than a grantor trust for federal income tax purposes
on account of such action.
Any required approval of holders of Capital Securities may be given at a
separate meeting of holders of Capital Securities convened for such purpose or
pursuant to written consent. The Administrative Trustees will cause a notice of
any meeting at which holders of Capital Securities are entitled to vote to be
given to each holder of record of Capital Securities in the manner set forth in
the Trust Agreement.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Company, the Securities Trustees or any
affiliate of the Company or any Securities Trustee, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
CO-PROPERTY TRUSTEES AND SEPARATE PROPERTY TRUSTEE
At any time or times, for the purpose of meeting the legal requirements of
the 1939 Act or of any jurisdiction in which any part of the Trust Property (as
defined in the Trust Agreement) may at the time be located, the holder of the
Common Securities and the Property Trustee shall have power to appoint, and upon
the written request of the Property Trustee, the Company, as Depositor, shall
for such purpose join with the Property Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint,
one or more persons approved by the Property Trustee either to act as
co-property trustee, jointly with the Property Trustee, of all or any part of
such Trust Property, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity, any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. If the Company, as Depositor, does not join
in such appointment within 15 days after the receipt by it of a request so to
do, or in case a Subordinated Note Indenture Event of Default has occurred and
is continuing, the Property Trustee alone shall have power to make such
appointment.
AMENDMENT OF THE TRUST AGREEMENT
The Trust Agreement may be amended from time to time by the Company and the
Securities Trustees without the consent of the holders of the Trust Securities
(i) to cure any ambiguity, correct or supplement any provision therein which may
be inconsistent with any other provision therein, or to make any other
provisions with respect to matters or questions arising under the Trust
Agreement, which shall not be inconsistent with the other provisions of the
Trust Agreement, provided that the amendment does not adversely affect in any
material respect the interests of any holder of Trust Securities, or (ii) to
modify, eliminate or add to any provisions of the Trust Agreement to such extent
as shall be necessary to ensure that the Trust will not be classified as other
than a grantor trust for federal income tax purposes. Except as provided in the
succeeding paragraph, other amendments to the Trust Agreement may be made (i)
upon approval of the holders of not less than 66 2/3% in aggregate liquidation
amount of the Trust Securities then outstanding and (ii) upon receipt by the
Securities Trustees of an opinion of counsel to the effect that such amendment
will not affect the Trust's status as a grantor trust or the Trust's exemption
from the 1940 Act.
Notwithstanding the foregoing, without the consent of each affected holder
of Trust Securities, the Trust Agreement may not be amended to (i) change the
amount or timing of any distribution on the Trust Securities or otherwise
adversely affect the amount of any distribution required to be made in respect
of the Trust Securities as of a specified date, (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date, or (iii) change the consent required to amend the
Trust Agreement.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below. The Trust may at the request of the Company, with the consent
of the Administrative Trustees and
S-19
<PAGE> 51
without the consent of the holders of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any state; provided, that (i) such successor entity either (x)
expressly assumes all of the obligations of the Trust with respect to the Trust
Securities or (y) substitutes for the Capital Securities other securities having
substantially the same terms as the Trust Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Trust
Securities rank in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly appoints a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee as the holder of the Junior Subordinated Notes, (iii) the
Capital Securities or any Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the Capital Securities are
then listed, (iv) such merger, consolidation, amalgamation or replacement does
not cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect, (vi)
such successor entity has a purpose substantially identical to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation or replacement,
the Company has received an opinion of counsel to the effect that (A) such
merger, consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect, and (B) following
such merger, consolidation, amalgamation or replacement, neither the Trust nor
such successor entity will be required to register as an investment company
under the 1940 Act, and (viii) the Company guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except
with the consent of holders of 100% in liquidation amount of the Trust
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or the successor entity to be classified as
other than a grantor trust for federal income tax purposes.
Any corporation or other body into which any of the Property Trustee, the
Delaware Trustee or any Administrative Trustee that is not a natural person may
be merged or converted or with which it may be consolidated, or any corporation
or other body resulting from any merger, conversion or consolidation to which
any such Securities Trustee shall be a party, or any corporation or other body
succeeding to all or substantially all the corporate trust business of any such
Securities Trustee, shall be the successor of such Securities Trustee under the
Trust Agreement, provided such corporation is otherwise qualified and eligible
under the Trust Agreement.
PAYMENT AND PAYING AGENT
So long as DTC is acting as securities depositary for the Capital
Securities, payments in respect of the Capital Securities shall be made to DTC,
which is to credit the relevant accounts at DTC on the applicable Distribution
Dates. If the Capital Securities are not held by DTC, such payments shall be
made by check mailed to the address of the holder entitled thereto as such
address shall appear on the Securities Register (as such term is defined in the
Trust Agreement). The Paying Agent shall initially be the Property Trustee. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Administrative Trustees and the Company. In such event, the
Administrative Trustees shall appoint a successor to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
It is anticipated that the Property Trustee, or one of its affiliates, will
act as registrar and transfer agent (the "Securities Registrar") for the Capital
Securities.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Trust, but upon payment in respect of any tax or
other governmental charges which may be imposed in relation to it.
S-20
<PAGE> 52
The Securities Registrar will not be required to register or cause to be
registered any transfer of Capital Securities after they have been called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a Trust Agreement Event of
Default with respect to the Trust Securities, undertakes to perform only such
duties as are specifically set forth in the Trust Agreement and, after default,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provisions, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Capital Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby.
Bankers Trust Company, the Property Trustee, also serves as Indenture
Trustee and Guarantee Trustee. The Company and certain of its affiliates
maintain deposit accounts and banking relationships with Bankers Trust Company.
Bankers Trust Company serves as trustee under other indentures pursuant to which
securities of the Company and affiliates of the Company are outstanding.
GOVERNING LAW
The Trust Agreement and the Trust Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware;
provided that the immunities and standard of care of the Property Trustee shall
be governed by New York law.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to operate the
Trust so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or taxed as other than a grantor
trust for federal income tax purposes and so that the Series Junior
Subordinated Notes will be treated as indebtedness of the Company for federal
income tax purposes. In this connection, the Administrative Trustees and the
Company are authorized to take any action, not inconsistent with applicable law,
the Trust's certificate of trust or the Trust Agreement, that the Administrative
Trustees and the Company determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially and
adversely affect the interests of the holders of the Preferred Securities.
DESCRIPTION OF THE SERIES JUNIOR SUBORDINATED NOTES
Set forth below is a description of the specific terms of the Series
Junior Subordinated Notes. This description supplements, and should be read
together with, the description of the general terms and provisions of the Junior
Subordinated Notes set forth in the accompanying Prospectus under the caption
"Description of the Junior Subordinated Notes." The following description does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the description in the accompanying Prospectus and the
Subordinated Note Indenture (as defined therein).
GENERAL
The Series Junior Subordinated Notes will be issued as a series of Junior
Subordinated Notes under the Subordinated Note Indenture. The Series Junior
Subordinated Notes will be limited in aggregate principal amount to $ ,
such amount being the approximate aggregate liquidation amount of the Trust
Securities.
The entire principal amount of the Series Junior Subordinated Notes will
mature and become due and payable, together with any accrued and unpaid interest
thereon, including Additional Interest, if any, on . The Series
Junior Subordinated Notes are not subject to any sinking fund provision.
S-21
<PAGE> 53
The terms of the Series Junior Subordinated Notes correspond to those of
the Capital Securities, as described herein.
OPTIONAL REDEMPTION
The Company shall have the right to redeem the Series Junior Subordinated
Notes at a Redemption Price as described under "Description of the Capital
Securities -- Redemption Price", in whole or in part, from time to time, on or
after , or at any time in whole upon the occurrence of a Special Event
as described under "Description of the Capital Securities -- Special Event
Redemption or Distribution," upon not less than 30 nor more than 60 days'
notice. If a partial redemption of the Series Junior Subordinated Notes would
result in the delisting of the Capital Securities, the Company may only redeem
the Series Junior Subordinated Notes in whole.
INTEREST
Each Series Junior Subordinated Note shall bear interest at the
Securities Rate from the Issue Date, payable semi-annually in arrears on
and of each year to the person in whose name such
Series Junior Subordinated Note is registered at the close of business on the
fifteenth calendar day prior to such payment date. The amount of interest
payable will be computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which interest is payable on the Series Junior
Subordinated Notes is not a Business Day, then payment of the interest payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time, and from time to time, to
defer payments of interest on the Series Junior Subordinated Notes by
extending the interest payment period for up to 10 consecutive semi-annual
periods, but not beyond the stated maturity date. At the end of an Extension
Period, the Company shall pay all interest then accrued and unpaid (including
any Additional Interest) (together with interest thereon at the Securities Rate
compounded semi-annually); provided, that if the Company shall have given notice
of its election to select an Extension Period, (a) the Company shall not declare
or pay any dividend or distribution on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or make any
guarantee payments with respect to the foregoing, and (b) the Company shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees other than the
Guarantee) issued by the Company which rank pari passu with or junior to the
Series Junior Subordinated Notes. Prior to the termination of any Extension
Period, the Company may further defer payments of interest by extending the
interest payment period, provided that such Extension Period, together with all
such previous and further extensions thereof, may not exceed 10 consecutive
semi-annual periods. Upon the termination of any Extension Period and the
payment of all amounts then due, the Company may select a new Extension Period,
subject to the above requirements. The Company has no present intention of
exercising its rights to defer payments of interest by extending the interest
payment period on the Series Junior Subordinated Notes. See "Certain Federal
Income Tax Considerations -- Original Issue Discount."
The Company shall give the holder or holders of the Series Junior
Subordinated Notes and the Indenture Trustee notice of its selection or
extension of an Extension Period at least one Business Day prior to the earlier
of (i) the record date relating to the interest payment date on which the
Extension Period is to commence or relating to the interest payment date on
which an Extension Period that is being extended would otherwise terminate or
(ii) the date the Company or the Trust is required to give notice to the NYSE or
other applicable self-regulatory organization of the record date or the date
such distributions are payable.
S-22
<PAGE> 54
BOOK-ENTRY AND ISSUANCE
If distributed to holders of Trust Securities in connection with the
voluntary or involuntary dissolution, winding-up or liquidation of the Trust,
the Series Junior Subordinated Notes are expected to be issued in the form of
one or more global certificates registered in the name of the securities
depositary or its nominee. In such event, the procedures applicable to the
transfer and payment of the Series Junior Subordinated Notes are expected to
be substantially similar to those described with respect to the Preferred
Securities in "Description of the Capital Securities -- Book-Entry Only
Issuance -- The Depository Trust Company."
RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE SERIES JUNIOR SUBORDINATED NOTES AND THE GUARANTEE
As long as payments of interest and other payments are made when due on the
Series Junior Subordinated Notes, such payments will be sufficient to cover
distributions and payments due on the Trust Securities primarily because (i) the
aggregate principal amount of Series Junior Subordinated Notes will be equal
to the sum of the aggregate stated liquidation amount of the Trust Securities;
(ii) the interest rate and interest and other payment dates on the Series
Junior Subordinated Notes will match the distribution rate and distribution and
other payment dates for the Capital Securities; (iii) the Company shall pay for
all costs and expenses of the Trust pursuant to the Agreement as to Expenses and
Liabilities; and (iv) the Trust Agreement provides that the Securities Trustees
shall not cause or permit the Trust to, among other things, engage in any
activity that is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are legally and
immediately available) and other payments due on the Capital Securities (to the
extent funds therefor are legally and immediately available) are guaranteed by
the Company as and to the extent set forth under "Description of the Guarantees"
in the accompanying Prospectus. If the Company does not make interest payments
on the Series Junior Subordinated Notes, it is not expected that the Trust
will have sufficient funds to pay distributions on the Capital Securities. The
Guarantee is a guarantee from the time of its issuance, but does not apply to
any payment of distributions unless and until the Trust has sufficient funds
legally and immediately available for the payment of such distributions.
If the Company fails to make interest or other payments on the Series
Junior Subordinated Notes when due (taking into account any Extension Period),
the Trust Agreement provides a mechanism whereby the holders of the Capital
Securities may appoint a substitute Property Trustee. Such holders may also
direct the Property Trustee to enforce its rights under the Series Junior
Subordinated Notes, including proceeding directly against the Company to enforce
the Series Junior Subordinated Notes. If the Property Trustee fails to enforce
its rights under the Series Junior Subordinated Notes, to the fullest extent
permitted by applicable law, any holder of Capital Securities may institute a
legal proceeding directly against the Company to enforce the Property Trustee's
rights under the Series Junior Subordinated Notes without first instituting
any legal proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, a holder of Capital Securities may institute a
legal proceeding directly against the Company, without first instituting a legal
proceeding against the Property Trustee or any other person or entity, for
enforcement of payment to such holder of principal of or interest on the Series
Junior Subordinated Notes having a principal amount equal to the aggregate
stated liquidation amount of the Capital Securities of such holder on or after
the due dates specified in the Series Junior Subordinated Notes.
If the Company fails to make payments under the Guarantee, the Guarantee
provides a mechanism whereby the holders of the Capital Securities may direct
the Guarantee Trustee to enforce its rights thereunder. In addition, any holder
of Capital Securities may institute a legal proceeding directly against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee or any other
person or entity.
The Guarantee, the Subordinated Note Indenture, the Series Junior
Subordinated Notes, the Trust Agreement and the Agreement as to Expenses and
Liabilities, as described above, constitute a full and unconditional guarantee
by the Company of the payments due on the Capital Securities.
S-23
<PAGE> 55
Upon any voluntary or involuntary dissolution, winding-up or termination of
the Trust, unless the Series Junior Subordinated Notes are distributed in
connection therewith, the holders of Capital Securities will be entitled to
receive, out of assets legally available for distribution to holders, the
Liquidation Distribution in cash. See "Description of the Capital
Securities -- Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the Series Junior Subordinated Notes, would be a subordinated
creditor of the Company, subordinated in right of payment to all Senior
Indebtedness, but entitled to receive payment in full of principal and interest,
before any stockholders of the Company receive payments or distributions.
Because the Company is guarantor under the Guarantee and has agreed to pay for
all costs, expenses and liabilities of the Trust (other than the Trust's
obligations to holders of the Capital Securities) pursuant to the Agreement as
to Expenses and Liabilities, the positions of a holder of Capital Securities and
a holder of Series Junior Subordinated Notes relative to other creditors and
to stockholders of the Company in the event of liquidation or bankruptcy of the
Company would be substantially the same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Subordinated Note Indenture.
However, in the event of payment defaults under, or acceleration of, Senior
Indebtedness, the subordination provisions of the Series Junior Subordinated
Notes provide that no payments may be made in respect of the Series Junior
Subordinated Notes until such Senior Indebtedness has been paid in full or any
payment default thereunder has been cured or waived. Failure to make required
payments on the Series Junior Subordinated Notes would constitute an Event of
Default under the Subordinated Note Indenture except that failure to make
interest payments on the Series Junior Subordinated Notes will not be an Event
of Default during an Extension Period; provided, however, that any Extension
Period may not exceed 10 consecutive semi-annual periods or extend beyond the
stated maturity of the Series Junior Subordinated Notes.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain material United States federal income
tax consequences of the ownership and disposition of the Capital Securities and
constitutes the opinion of Troutman Sanders LLP, counsel to the Company and the
Trust, insofar as it relates to matters of law and legal conclusions. This
summary deals only with Capital Securities held as capital assets within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended to the
date hereof (the "Code"), by Holders (as defined herein). Moreover, it does not
discuss all of the tax consequences that may be relevant to a Holder in light of
his particular circumstances or to Holders subject to special rules, such as
certain financial institutions, insurance companies, dealers in securities,
individual retirement and certain tax deferred accounts, and persons who engage
in a straddle or a hedge relating to a Capital Security. Prospective investors
should consult their own tax advisors with regard to the application of the tax
considerations discussed below to their particular situations as well as the
application of any state, local or other tax laws. This summary is based on
laws, existing and proposed regulations, and applicable judicial and
administrative determinations, all of which are subject to change at any time,
and any such changes may be retroactively applied in a manner that could
adversely affect Holders. As used herein, the term "Holder" means a beneficial
owner of a Capital Security that for United States federal income tax purposes
is (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 political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source. Thus, the following summary does not address any tax
consequences that apply specifically to nonresident aliens or foreign entities.
TREATMENT OF THE TRUST AND CAPITAL SECURITIES FOR FEDERAL INCOME TAX PURPOSES
The Trust will be treated as a "grantor trust" and not as an association
taxable as a corporation for federal income tax purposes. Thus, for federal
income tax purposes, each Holder will be treated as the beneficial owner of a
pro rata undivided interest in the Series Junior Subordinated Notes and,
consequently, will be required to include in income the Holder's pro rata share
of the entire income from the Series Junior Subordinated Notes. Each Holder
generally will determine its net income or loss with respect to the Trust in
S-24
<PAGE> 56
accordance with its own method of accounting, although income arising from OID,
if any, must be taken into account under the accrual method of accounting even
if the Holder otherwise would use the cash receipts and disbursements method.
PAYMENTS OF INTEREST
Except as set forth below, stated interest on a Series Junior
Subordinated Note will generally be taxable to a Holder as ordinary income at
the time it is paid or accrued in accordance with the Holder's own method of
accounting.
ORIGINAL ISSUE DISCOUNT
Under income tax regulations that recently became effective, the Company
believes that the Series Junior Subordinated Notes will not be treated as
issued with OID. It should be noted that these regulations have not yet been
addressed in any rulings or other interpretations by the Internal Revenue
Service (the "IRS"). Accordingly, it is possible that the IRS could take a
position contrary to the interpretations described herein.
The terms of the Series Junior Subordinated Notes permit the Company to
defer the payment of interest on the Series Junior Subordinated Notes at any
time and from time to time by extending the interest payment period for up to 10
consecutive semi-annual periods with respect to each Extension Period; provided,
however, that no Extension Period may extend beyond the stated maturity date of
the Series Junior Subordinated Notes. Should the Company exercise this option
to defer payments of interest, the Series Junior Subordinated Notes would at
that time be treated as issued with OID and all the stated interest payments on
the Series Junior Subordinated Notes would thereafter be treated as OID for so
long as they remained outstanding. As a result, all Holders would, in effect, be
required to accrue interest income even if such Holders are on a cash method of
accounting. Consequently, in the event that the payment of interest is deferred,
a Holder could be required to include OID in income on an economic accrual
basis, notwithstanding that the Company will not make any interest payments
during such period on the Series Junior Subordinated Notes.
MARKET DISCOUNT
A purchaser of a Capital Security at a discount from the liquidation amount
at maturity of such purchaser's pro rata share of the Series Junior
Subordinated Notes acquires such Capital Security with "market discount."
However, market discount with respect to a Capital Security will be considered
to be zero if it is de minimis. Market discount will be de minimis with respect
to a Capital Security if it is less than the product of (i) 0.25% of the
adjusted issue price of the purchaser's pro rata share of the Series Junior
Subordinated Notes multiplied by (ii) the number of complete years to maturity
of such Series Junior Subordinated Notes after the date of purchase. The
purchaser of a Capital Security with more than a de minimis amount of market
discount generally will be required to treat any gain on the sale, exchange,
redemption or other disposition of all or part of the Capital Securities (or
related Series Junior Subordinated Notes) as ordinary income to the extent of
accrued (but not previously taxed) market discount. Market discount generally
will accrue ratably during the period from the date of purchase of such Capital
Security to the maturity date of the Series Junior Subordinated Notes, unless
the Holder irrevocably elects to accrue such market discount on the basis of a
constant interest rate.
A Holder who has acquired a Capital Security at a market discount generally
will be required to defer any deductions of interest expense attributable to any
indebtedness incurred or continued to purchase or carry the Capital Security, to
the extent such interest expense exceeds the related interest income. Any such
deferred interest expense generally will be allowable as a deduction not later
than the year in which the related market discount income is recognized. As an
alternative to the inclusion of market discount in income upon disposition of
all or a portion of a Capital Security or the related Series Junior
Subordinated Notes (including redemptions thereof), a Holder may make an
election (which may not be revoked without the Internal Revenue Service's
consent) to include market discount in income as it accrues on all market
discount
S-25
<PAGE> 57
instruments acquired by the Holder during or after the taxable year for which
the election is made. In that case, the preceding deferral rule for interest
expense will not apply.
In lieu of the foregoing treatment of market discount and interest expense,
a Holder may elect to treat any market discount (including a de minimis amount)
as OID and accrue such discount on a constant-yield basis in the same manner as
the Holder accrues OID.
SALE OF CAPITAL SECURITIES
Upon the sale, retirement (including redemption) or other taxable
disposition of all or part of a Capital Security, a Holder thereof will
recognize gain or loss equal to the difference between the amount realized on
such sale, retirement or other disposition and such Holder's adjusted tax basis
in the Capital Security or part thereof. If the Holder disposes of a Capital
Security prior to the occurrence of an Extension Period, any portion of the
amount received that is attributable to accrued interest will be treated as
interest income to the Holder and will not be treated as part of the amount
realized for purposes of determining gain or loss on the disposition of the
Capital Security. Any recognized gain or loss will be capital gain or loss,
except to the extent of any accrued market discount (see "Market Discount"
above), and such capital gain or loss will be long-term if the holding period
for the Capital Security is more than one year at the time of sale, retirement
or other disposition. A Holder's adjusted tax basis in a Capital Security
acquired by purchase will equal the cost of such Capital Security to the Holder,
increased by the amount of any related accrued OID and market discount included
in taxable income by the Holder and reduced by any prior payments on the Series
Junior Subordinated Notes distributed on the Capital Security. The redemption
of only part of a Capital Security will require an allocation of the Holder's
adjusted tax basis in his pro rata share of the related Series Junior
Subordinated Notes between the portion of the Series Junior Subordinated Notes
redeemed and retained by the Holder in order to determine gain or loss.
RECEIPT OF SERIES JUNIOR SUBORDINATED NOTES UPON LIQUIDATION OF THE TRUST
As described under "Description of the Capital Securities -- Special Event
Redemption; Distribution of Series Junior Subordinated Notes," Series
Junior Subordinated Notes may be distributed to Holders in exchange for the
Capital Securities and in liquidation of the Trust. Such a distribution would be
treated as a non-taxable event to each Holder and each Holder would receive an
aggregate tax basis in the Holder's Series Junior Subordinated Notes equal to
the Holder's aggregate tax basis in its Capital Securities. A Holder's holding
period with respect to the Series Junior Subordinated Notes so received in
liquidation of the Trust would include the period for which the Capital
Securities were held by such Holder.
INFORMATION REPORTING TO HOLDERS
Income on the Capital Securities will be reported to Holders on Form 1099,
which form should be mailed to Holders of Capital Securities by January 31
following each calendar year.
BACKUP WITHHOLDING
A Holder may be subject to "backup withholding" under certain
circumstances. Backup withholding applies to a Holder if the Holder, among other
things, (i) fails to furnish his social security number or other taxpayer
identification number ("TIN") to the payor responsible for backup withholding
(for example, the Holder's securities broker), (ii) furnishes such payor an
incorrect TIN, (iii) fails to provide such payor with a certified statement,
signed under penalties of perjury, that the TIN provided to the payor is correct
and that the Holder is not subject to backup withholding, or (iv) fails to
report properly interest and dividends on his tax return. Backup withholding,
however, does not apply to payments made to certain exempt recipients, such as
corporations and tax-exempt organizations. The backup withholding rate is 31% of
"reportable payments," which generally will include distributions of interest
and principal payments on the Series Junior Subordinated Notes.
POSSIBLE TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"),
the revenue portion of President Clinton's 1996 budget proposal, was released.
The Bill would, among other things, generally deny interest deductions for
interest on an instrument, issued by a corporation, that has a maximum term of
more
S-26
<PAGE> 58
than 20 years and that is not shown as indebtedness on the separate balance
sheet of the issuer or, where the instrument is issued to a related party (other
than a corporation), where the holder or some other related party issues a
related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. The above-described provisions of the Bill were
proposed to be effective generally for instruments issued on or after December
7, 1995. If such provisions were to apply to the Series Junior Subordinated
Notes, the Company would be unable to deduct interest on the Series Junior
Subordinated Notes. However, on March 29, 1996, the Chairmen of the Senate
Finance and House Ways and Means Committees issued a joint statement to the
effect that it was their intention that the effective date of the President's
legislative proposals, if adopted, will be no earlier than the date of
appropriate Congressional action. The Company believes that, under current law,
it will be able to deduct interest on the Series Junior Subordinated Notes.
There can be no assurance, however, that current or future legislative proposals
or final legislation will not affect the ability of the Company to deduct
interest on the Series Junior Subordinated Notes. Such a change could give rise
to a Tax Event, which would permit the Company to cause a redemption of the
Capital Securities, as described more fully under "Description of the Capital
Securities -- Special Event Redemption; Distribution of Series
Junior Subordinated Notes."
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE MAY NOT BE APPLICABLE TO
A HOLDER, DEPENDING UPON A HOLDER'S PARTICULAR SITUATION, AND THEREFORE EACH
HOLDER SHOULD CONSULT HIS TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF
THE OWNERSHIP AND DISPOSITION OF CAPITAL SECURITIES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAW.
ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (an "ERISA Plan") should consider the fiduciary standards of ERISA in
the context of the ERISA Plan's particular circumstances before authorizing an
investment in the Capital Securities. Among other factors, the fiduciary should
consider whether such an investment is in accordance with the documents
governing the ERISA Plan and whether the investment is appropriate for the ERISA
Plan in view of its overall investment policy and diversification of its
portfolio.
Certain provisions of ERISA and the Code prohibit ERISA Plans, as well as
individual retirement accounts and Keogh plans subject to section 4975 of the
Code (collectively, "Plans"), from engaging in certain transactions involving
"plan assets" with parties that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to the Plan. The U.S.
Department of Labor has issued a final regulation (the "Regulation") with regard
to whether the underlying assets of an entity in which employee benefit plans
acquire equity interests are deemed to be plan assets.
Under such Regulation, for purposes of ERISA and section 4975 of the Code,
the assets of the Trust would be deemed to be "plan assets" of a Plan whose
assets were used to purchase Capital Securities if the Capital Securities were
considered to be equity interests in the Trust and no exception to plan assets
status were applicable under the Regulation.
If the assets of the Trust were deemed to be plan assets of Plans that are
holders of the Capital Securities, a Plan's investment in the Capital Securities
might be deemed to constitute a delegation under ERISA of the duty to manage
plan assets by a fiduciary investing in Capital Securities. In addition, the
Company might be considered a "party in interest" or "disqualified person" with
respect to Plans whose assets were used to purchase Capital Securities. If this
were the case, an investment in Capital Securities by a Plan might constitute
or, in the course of the operation of the Trust, give rise to a prohibited
transaction under ERISA or the Code. In particular, it is likely that, under
such circumstances, a prohibited "extension of credit" to the Company would be
considered to occur under ERISA and the Code.
Because of the possibility that the assets of the Trust would be considered
plan assets of Plans whose assets were invested in the Capital Securities, and
the likelihood that under such circumstances a prohibited extension of credit
would occur, the Capital Securities may not be purchased or held by any Plan or
any person
S-27
<PAGE> 59
investing "plan assets" of any Plan, unless such purchaser or holder is eligible
for the exemptive relief available under PTCE 96-23 (for certain transactions
determined by in-house asset managers), PTCE 95-60 (for certain transactions
involving insurance company general accounts), PTCE 91-38 (for certain
transactions involving bank collective investment funds), PTCE 90-1 (for certain
transactions involving insurance company separate accounts), or PTCE 84-14 (for
certain transactions determined by independent qualified asset managers). Any
purchaser or holder of the Capital Securities or any interest therein will be
deemed to have represented by its purchase and holding thereof that it either
(a) is not a Plan and is not purchasing such securities on behalf of or with
"plan assets" of any Plan or (b) is eligible for the exemptive relief available
under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is important that any person considering
the purchase of Capital Securities with Plan assets consult with its counsel
regarding the consequences under ERISA and the Code of the acquisition and
ownership of Capital Securities and the availability of exemptive relief under
the class exemptions listed above. Employee benefit plans which are governmental
plans (as defined in Section 3(32) of ERISA) and certain church plans (as
defined in Section 3(33) of ERISA) generally are not subject to ERISA
requirements.
S-28
<PAGE> 60
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to the Underwriters
named below, and the Underwriters, for whom is acting as
representative (the "Representative"), have severally agreed to purchase the
number of Capital Securities set forth opposite their respective names below. In
the Underwriting Agreement, the Underwriters have agreed, subject to the terms
and conditions set forth therein, to purchase all of the Capital Securities
offered hereby if any of the Capital Securities are purchased.
<TABLE>
<CAPTION>
NUMBER OF
NAME CAPITAL SECURITIES
---- ------------------
<S> <C>
---------
Total.............................................
=========
</TABLE>
The Underwriters have advised the Company and the Trust that they propose
to offer the Capital Securities in part directly to the public at the price to
the public, as set forth on the cover page of this Prospectus Supplement, and in
part to certain securities dealers at such price less a concession not in excess
of $ per Capital Security. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per Capital Security to certain
other dealers. After the Capital Securities are released for sale to the public,
the offering price and other selling terms may from time to time be varied by
the Underwriters.
Prior to this offering, there has been no public market for the Capital
Securities. The Representative has advised the Company and the Trust that it
intends to make a market in the Capital Securities. The Representative will have
no obligation to make a market in the Capital Securities, however, and may cease
market making activities, if commenced, at any time.
The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the 1933 Act.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, the Company and its affiliates in the
ordinary course of business.
LEGAL OPINIONS
Certain matters of Delaware law relating to the validity of the Capital
Securities will be passed upon on behalf of the Company and the Trust by
Richards, Layton & Finger, Wilmington, Delaware, special Delaware counsel to the
Company and the Trust. The validity of the Series Junior Subordinated Notes, the
Guarantee and certain matters relating thereto will be passed upon on behalf of
the Company by Eaton and Cottrell, P.A., Gulfport, Mississippi, and by Troutman
Sanders LLP, Atlanta, Georgia. Troutman Sanders LLP will also pass upon certain
matters relating to United States federal income tax considerations. Certain
legal matters will be passed upon for the Underwriters by Dewey Ballantine, New
York, New York.
S-29
<PAGE> 61
GLOSSARY
1933 Act................... The Securities Act of 1933, as amended.
1934 Act................... The Securities Exchange Act of 1934, as amended.
1939 Act................... The Trust Indenture Act of 1939, as amended.
1940 Act................... The Investment Company Act of 1940, as amended.
Additional Interest........ Amounts payable by the Company as defined under
"Description of the Junior Subordinated
Notes -- Additional Interest" in the accompanying
Prospectus.
Administrative Trustees.... Ann Estes and Wayne Boston.
Agreement as to Expenses
and Liabilities............ The agreement between the Company and the Trust
pursuant to which the Company has agreed to pay all
indebtedness, expenses or liabilities of the Trust,
other than the Trust's obligations to pay to the
holders of the Capital Securities the amounts due
such holders pursuant to the terms thereof.
Capital Securities......... The Trust Securities being offered to investors
pursuant to this Prospectus Supplement and the
accompanying Prospectus.
Code....................... The Internal Revenue Code of 1986, as amended.
Common Securities.......... The Trust Securities being sold to the Company.
Company.................... Mississippi Power Company.
Delaware Trustee........... Bankers Trust (Delaware).
DTC........................ The Depository Trust Company, a "clearing
corporation" that initially will hold (through its
agents) a global certificate evidencing the Capital
Securities.
Distribution Dates......... and of each
year.
Extension Period........... Any period during which interest is not paid on the
Series Junior Subordinated Notes (and,
consequently, on the Capital Securities) at the
election of the Company to the extent permitted
under the terms of the Series Junior Subordinated
Notes.
Guarantee.................. The guarantee by the Company of the payments by the
Trust on the Capital Securities from funds
available in the Trust.
Guarantee Payments......... Payments required to be made pursuant to the
Guarantee as described in "Description of the
Guarantees -- General" in the accompanying
Prospectus.
Guarantee Trustee.......... The trustee under the Guarantee; initially, Bankers
Trust Company.
Indenture Trustee.......... The trustee under the Subordinated Note Indenture;
initially, Bankers Trust Company.
Issue Date................. The date set forth on the cover page on which the
Series Junior Subordinated Notes and Capital
Securities are scheduled to be issued.
S-30
<PAGE> 62
Investment Company
Act Event................ An event of the type described in "Description of
the Capital Securities -- Special Event Redemption;
Distribution of Series Junior Subordinated
Notes."
NYSE....................... New York Stock Exchange.
Property Trustee........... A trustee under the Trust designated to hold the
trust property; initially Bankers Trust Company.
Record Date................ The close of business on the 15th calendar day
prior to a Distribution Date.
Redemption Price........... As described under "Description of Capital
Securities -- Redemption Price."
Securities Rate............ The per annum interest rate expressed as a
percentage of the stated liquidation amount of
$ per Capital Security, and set forth on the
cover page of this Prospectus Supplement.
Securities Trustees........ The Property Trustee, Administrative Trustees and
Delaware Trustee.
Senior Indebtedness........ Indebtedness of the Company described hereunder
under "Description of the Junior Subordinated
Notes -- Subordination" in the accompanying
Prospectus.
Series Junior
Subordinated Notes......... The Series % junior subordinated deferrable
interest notes of the Company due
.
Special Event.............. A Tax Event or Investment Company Act Event.
Subordinated Note
Indenture.................. The indenture pursuant to which the Company's
Series Junior Subordinated Notes will be issued.
Subordinated Note Indenture
Event of Default......... As described under "Description of the Junior
Subordinated Notes -- Events of Default" in the
accompanying Prospectus.
Tax Event.................. An event of the type described in "Description of
the Capital Securities -- Special Event Redemption;
Distribution of Series Junior Subordinated
Notes."
Trust...................... Mississippi Power Capital Trust , a Delaware
business trust that will issue the Trust
Securities.
Trust Agreement............ The agreement pursuant to which the Trust is
organized as it may be amended and restated from
time to time.
Trust Agreement Event of
Default.................. As described under "Description of the Capital
Securities -- Events of Default."
Trust Securities........... The Capital Securities and the Common Securities.
S-31
<PAGE> 63
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, MISSISSIPPI POWER CAPITAL TRUST
[ ] OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY OR MISSISSIPPI POWER CAPITAL TRUST [ ] SINCE THE DATE HEREOF.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Summary of Offering....................... S-3
Risk Factors.............................. S-7
Mississippi Power Capital Trust [ ].... S-9
Capitalization............................ S-10
Accounting Treatment...................... S-10
Description of the Capital Securities..... S-10
Description of the Series Junior
Subordinated Notes...................... S-21
Relationship Among the Capital Securities,
the Series Junior Subordinated Notes
and the Guarantee....................... S-23
Certain Federal Income Tax
Considerations.......................... S-24
ERISA Considerations...................... S-27
Underwriting.............................. S-29
Legal Opinions............................ S-29
Glossary.................................. S-30
PROSPECTUS
Available Information..................... 2
Incorporation of Certain Documents by
Reference............................... 2
Selected Information...................... 3
Mississippi Power Company................. 4
The Trusts................................ 4
Accounting Treatment...................... 5
Use of Proceeds........................... 5
Recent Results of Operations.............. 5
Description of the Junior Subordinated
Notes................................... 5
Description of the Securities............. 11
Description of the Guarantees............. 11
Relationship Among the Securities, the
Junior Subordinated Notes and the
Guarantees.............................. 13
Possible Tax Law Changes.................. 15
Plan of Distribution...................... 15
Legal Matters............................. 16
Experts................................... 16
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
[ ] CAPITAL SECURITIES
MISSISSIPPI POWER
CAPITAL TRUST [ ]
% CAPITAL SECURITIES
(LIQUIDATION AMOUNT
$ PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED, AS SET FORTH HEREIN, BY
MISSISSIPPI POWER
COMPANY
A SUBSIDIARY OF THE SOUTHERN COMPANY
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 64
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 31, 1997
PROSPECTUS
$55,000,000
MISSISSIPPI POWER COMPANY
JUNIOR SUBORDINATED NOTES
---------------------------
MISSISSIPPI POWER CAPITAL TRUST I
MISSISSIPPI POWER CAPITAL TRUST II
TRUST PREFERRED SECURITIES AND CAPITAL SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED, AS SET FORTH HEREIN, BY
MISSISSIPPI POWER COMPANY
A SUBSIDIARY OF THE SOUTHERN COMPANY
---------------------------
Mississippi Power Company, a Mississippi corporation (the "Company"), may
offer, from time to time, its junior subordinated notes (the "Junior
Subordinated Notes") in one or more series. The Junior Subordinated Notes will
be unsecured obligations of the Company and will be subordinate and junior in
right of payment to Senior Indebtedness (as defined herein) of the Company.
Mississippi Power Capital Trust I and Mississippi Power Capital Trust II,
each a statutory business trust created under the laws of the State of Delaware
(individually, a "Trust" and collectively, the "Trusts"), may offer, from time
to time, trust preferred securities (collectively, the "Preferred Securities")
and capital securities (collectively, the "Capital Securities" and, together
with the Preferred Securities, the "Securities") representing preferred
undivided beneficial interests in the assets of the respective Trusts. The
Company will own all the common securities (the "Common Securities" and,
together with the Securities, the "Trust Securities") representing common
undivided beneficial interests in the assets of the respective Trusts. The
payment of periodic cash distributions on the Securities of each Trust and
payments on liquidation or redemption with respect to such Securities, in each
case to the extent such Trust has funds legally and immediately available
therefor, will be guaranteed by the Company as described herein (individually, a
"Guarantee" and collectively, the "Guarantees"). See "Description of the
Guarantees." The Company's obligations under each Guarantee will be subordinate
and junior in right of payment to all of its other liabilities and will rank
pari passu (equal in priority) with the most senior preferred stock of the
Company. Concurrently with the issuance by a Trust of its Securities, such Trust
will invest the proceeds thereof and of the Company's purchase of the Common
Securities of such Trust in a related series of Junior Subordinated Notes of the
Company with terms corresponding to the terms of such Trust's Securities. Junior
Subordinated Notes may subsequently be distributed pro rata to holders of the
Trust Securities of a Trust in connection with the termination of such Trust
upon the occurrence of certain events as may be described in an accompanying
Prospectus Supplement.
As described herein, the Company will, through each Guarantee, the
Subordinated Note Indenture, the Junior Subordinated Notes of the related
series, the related Trust Agreement and the related Agreement as to Expenses and
Liabilities, fully and unconditionally guarantee all of each Trust's obligations
with respect to its Securities.
Specific terms of the Junior Subordinated Notes of any series or the
Securities of any Trust in respect of which this Prospectus is being delivered
will be set forth in an accompanying Prospectus Supplement with respect to such
securities, which will describe, without limitation and where applicable, the
following: (a) in the case of Junior Subordinated Notes, the specific
designation, aggregate principal amount, denominations, maturity, interest
payment dates, interest rate (or the method of determining such rate), any
redemption, exchange or sinking fund provisions, and any other specific terms of
the offering, and (b) in the case of Securities, the specific designation,
number of Securities, liquidation amount per security, distribution rate (or the
method of determining such rate), dates on which distributions will be payable,
voting rights, any redemption, exchange or sinking fund provisions, and any
other rights, preferences, privileges, limitations and restrictions.
The Junior Subordinated Notes and Securities may be offered in amounts, at
prices and on terms to be determined at the time of offering; provided, however,
that the aggregate initial public offering price of all Junior Subordinated
Notes and Securities shall not exceed $55,000,000.
The Prospectus Supplement relating to any series of Junior Subordinated
Notes or Securities will contain information concerning certain United States
federal income tax considerations, if applicable to such Junior Subordinated
Notes or Securities.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
The Junior Subordinated Notes and Securities may be sold directly, through
agents, underwriters or dealers as designated from time to time, or through a
combination of such methods. See "Plan of Distribution." If agents or any
underwriters or dealers are involved in the sale of Junior Subordinated Notes or
Securities in respect of which this Prospectus is being delivered, the names of
such agents, underwriters or dealers and any applicable commissions or discounts
will be set forth in or may be calculated from the Prospectus Supplement with
respect to such Junior Subordinated Notes or Securities.
---------------------------
January , 1997
<PAGE> 65
AVAILABLE INFORMATION
The Company and the Trusts have filed with the Securities and Exchange
Commission (the "Commission") a combined registration statement on Form S-3 (the
"Registration Statement," which term encompasses any amendments thereof and
exhibits thereto) under the Securities Act of 1933, as amended (the "1933 Act").
As permitted by the rules and regulations of the Commission, this Prospectus
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto, to which reference is hereby made.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports and other information with the Commission. Such reports and other
information can be inspected and copied at the public reference facilities of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can also be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants including the Company that file electronically at
http://www.sec.gov. In addition, reports and other material concerning the
Company can be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005, on which Exchange certain of the Company's
securities are listed.
No separate financial statements of any Trust are included herein. The
Company considers that such statements would not be material to holders of the
Securities because each Trust has no independent operations and exists for the
sole purpose of investing the proceeds of the sale of its Trust Securities in
Junior Subordinated Notes.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to the
1934 Act and are incorporated herein by reference and made a part of this
Prospectus:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996; and
(c) the Company's Current Report on Form 8-K dated February 21, 1996.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated herein by reference and made a part of this Prospectus from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all documents incorporated herein by reference (other than the
exhibits to such documents unless such exhibits are specifically incorporated by
reference). Such requests should be directed to Michael W. Southern, Vice
President, Secretary, Treasurer, and Chief Financial Officer, Mississippi Power
Company, 2992 West Beach, Gulfport, Mississippi 39501, telephone: (601)
864-1211.
2
<PAGE> 66
SELECTED INFORMATION
The following material, which is presented herein solely to furnish limited
introductory information regarding the Company, has been selected from, or is
based upon, the detailed information and financial statements appearing in the
documents incorporated herein by reference or elsewhere in this Prospectus, is
qualified in its entirety by reference thereto and, therefore, should be read
together therewith.
MISSISSIPPI POWER COMPANY
Business......................... Generation, transmission, distribution and
sale of electric energy
Service Area..................... Approximately 1,200 square miles in the 23
counties of southeastern Mississippi,
containing an aggregate area of
approximately 11,500 square miles
Service Area Population (1990
Census).......................... Approximately 848,000
Customers at December 31, 1995... 184,753
Generating Capacity at December
31, 1995 (kilowatts)............. 2,085,552
Sources of Generation during 1995
(kilowatt-hours)............... Coal (79%), Gas and Oil (21%)
Sources of Generation Estimated
for 1996 (kilowatt-hours)........ Coal (81%), Gas and Oil (19%)
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1991(2) 1992 1993 1994 1995 1996(1)
-------- -------- -------- -------- -------- -----------
(THOUSANDS, EXCEPT RATIOS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues............... $432,386 $434,447 $474,883 $499,162 $516,553 $544,029
Income Before Interest Charges... 61,917 63,772 67,726 76,067 82,765 80,523
Net Income After Dividends on
Preferred Stock................ 22,627 36,790 42,436 49,157 52,531 52,723
Ratio of Earnings to Fixed
Charges(3)..................... 2.62 3.47 4.47 4.72 4.61 4.86
Ratio of Earnings to Fixed
Charges Plus Preferred Dividend
Requirements (Pre-Income Tax
Basis)(4)...................... 2.26 2.82 3.23 3.55 3.54 3.68
</TABLE>
(Notes on following page)
3
<PAGE> 67
<TABLE>
<CAPTION>
CAPITALIZATION AS OF
SEPTEMBER 30, 1996
---------------------------
ACTUAL AS ADJUSTED(5)
-------- ----------------
(THOUSANDS, EXCEPT
PERCENTAGES)
<S> <C> <C> <C>
Common Stock Equity......................................... $387,889 $387,889 43.8%
Cumulative Preferred Stock.................................. 74,414 74,414 8.4
Company Obligated Mandatorily Redeemable Preferred or
Capital Securities of Subsidiary Trust Holding Company
Junior Subordinated Notes(6).............................. -- 55,000 6.2
Long-Term Debt.............................................. 276,312 367,908 41.6
-------- -------- -----
Total, excluding amounts due within on year....... $738,615 $885,211 100.0%
======== ======== =====
</TABLE>
- ---------------
(1) See "Recent Results of Operations" herein.
(2) Reflects the disposal of a merchandise subsidiary for which the aggregate
after-tax losses from operations and disposal for the year ended December
31, 1991 were $11,859,000.
(3) This ratio is computed as follows: (i) "Earnings" have been calculated by
adding to "Income Before Interest Charges" all income taxes deducted
therefrom and the debt portion of allowance for funds used during
construction, and (ii) "Fixed Charges" consist of "Net Interest Charges"
plus the debt portion of allowance for funds used during construction.
(4) In computing this ratio, "Preferred Dividend Requirements" represent the
before tax earnings necessary to pay such dividends, computed at the
effective tax rates for the applicable periods.
(5) Reflects (i) $50,000,000 of new term notes payable to banks, (ii)
$41,596,000 of new First Mortgage Bonds which could be issued and are
covered by previous shelf registration filings, and (iii) the proposed
issuance of $55,000,000 of new Securities.
(6) As described in this Prospectus, substantially all of the assets of the
respective Trusts will be the Junior Subordinated Notes of the Company with
an aggregate principal amount not exceeding $56,701,050, and upon
redemption of such debt, the related Securities will be mandatorily
redeemable.
MISSISSIPPI POWER COMPANY
The Company was incorporated under the laws of the State of Mississippi on
July 12, 1972, was admitted to do business in Alabama on November 28, 1972, and,
effective December 21, 1972, by the merger into it of the predecessor
Mississippi Power Company, succeeded to the business and properties of the
latter company. The predecessor Mississippi Power Company was incorporated under
the laws of the State of Maine on November 24, 1924, and was admitted to do
business in Mississippi on December 23, 1924, and in Alabama on December 7,
1962. The principal executive offices of the Company are located at 2992 West
Beach, Gulfport, Mississippi 39501, and the telephone number is (601) 864-1211.
The Company is a wholly owned subsidiary of The Southern Company, a holding
company registered under the Public Utility Holding Company Act of 1935. The
Company is engaged in the generation and purchase of electricity and the
distribution and sale of such energy within the 23 counties of southeastern
Mississippi, at retail in 123 communities, as well as in rural areas, and at
wholesale to one municipality, six rural electric distribution cooperative
associations and one generating and transmitting cooperative.
THE TRUSTS
Each Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State on January 24, 1997. Each Trust's business is defined in a trust
agreement, executed by the Company, as Depositor, and the Delaware Trustee
thereunder. This trust agreement of each Trust will be amended and restated in
its entirety substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part (the "Trust Agreement"). Each
Trust Agreement will be qualified as an indenture under the Trust Indenture Act
of 1939, as amended (the "1939 Act"). Each Trust exists for the exclusive
purposes of (i) issuing its Trust Securities representing
4
<PAGE> 68
undivided beneficial interests in the assets of such Trust, (ii) investing the
gross proceeds of its Trust Securities in a related series of Junior
Subordinated Notes, and (iii) engaging in only those other activities necessary,
appropriate, convenient or incidental thereto.
Each Trust's business and affairs will be conducted by its trustees, which
shall be appointed by the Company as the holder of the Common Securities: two
officers of the Company as Administrative Trustees; Bankers Trust Company as
Property Trustee; and Bankers Trust (Delaware) as Delaware Trustee. The Property
Trustee of each Trust will act as the indenture trustee with respect to such
Trust for purposes of compliance with the provisions of the 1939 Act.
The principal place of business of each Trust shall be c/o the Company,
2992 West Beach, Gulfport, Mississippi 39501, telephone (601) 864-1211, Attn:
Treasurer.
Reference is made to the Prospectus Supplement relating to the Securities
of a Trust for further information concerning such Trust.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trusts will be treated as
subsidiaries of the Company and, accordingly, the accounts of the Trusts will be
included in the consolidated financial statements of the Company. The Securities
will be presented as a separate line item in the consolidated balance sheet of
the Company, and appropriate disclosures concerning the Securities, the
Guarantees and the Junior Subordinated Notes will be included in the notes to
the consolidated financial statements. For financial reporting purposes, the
Company will record distributions payable on the Securities as an expense.
USE OF PROCEEDS
Each Trust will invest the proceeds received from the sale of its
Securities in Junior Subordinated Notes. Except as may be otherwise described in
an applicable Prospectus Supplement, the net proceeds received by the Company
from such investment will be used in connection with its ongoing construction
program, to pay scheduled maturities and/or refundings of its securities, to
repay short-term indebtedness to the extent outstanding and for other general
corporate purposes.
RECENT RESULTS OF OPERATIONS
For the year ended December 31, 1996, the unaudited amounts of "Operating
Revenues", "Income Before Interest Charges", and "Net Income After Dividends on
Preferred Stock" were $544,029,000, $80,523,000 and $52,723,000, respectively.
In the opinion of the management of the Company, the above unaudited amounts for
the year ended December 31, 1996 reflect all adjustments (which were only normal
recurring adjustments) necessary to present fairly the results of operations for
such period. The "Ratio of Earnings to Fixed Charges" and the "Ratio of Earnings
to Fixed Charges Plus Preferred Dividend Requirements (Pre-Income Tax Basis)"
for the year ended December 31, 1996 were 4.86 and 3.68, respectively.
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
Set forth below is a description of the general terms of the Junior
Subordinated Notes. The following description does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
Subordinated Note Indenture, dated as of February 1, 1997, between the Company
and Bankers Trust Company, as trustee (the "Indenture Trustee"), as to be
supplemented by a supplemental indenture thereto establishing the Junior
Subordinated Notes of each series (the Subordinated Note Indenture, as so
supplemented, is hereinafter referred to as the "Subordinated Note Indenture"),
the forms of which are filed as exhibits to the Registration Statement of which
this Prospectus forms a part. The terms of the Junior Subordinated Notes will
include those stated in the Subordinated Note Indenture and those made a part of
the Subordinated Note Indenture by reference to the 1939 Act. Certain
capitalized terms used herein are defined in the Subordinated Note Indenture.
5
<PAGE> 69
GENERAL
The Junior Subordinated Notes will be issued as unsecured junior
subordinated debt securities under the Subordinated Note Indenture. The
Subordinated Note Indenture does not limit the aggregate principal amount of
Junior Subordinated Notes that may be issued thereunder and provides that Junior
Subordinated Notes may be issued from time to time in one or more series
pursuant to an indenture supplemental to the Subordinated Note Indenture.
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Junior Subordinated Notes
being offered thereby: (i) the title of such Junior Subordinated Notes; (ii) any
limit on the aggregate principal amount of such Junior Subordinated Notes; (iii)
the date or dates on which the principal of such Junior Subordinated Notes is
payable; (iv) the rate or rates at which such Junior Subordinated Notes shall
bear interest, if any, or any method by which such rate or rates will be
determined, the date or dates from which such interest will accrue, the interest
payment dates on which such interest shall be payable, and the regular record
date for the interest payable on any interest payment date; (v) the place or
places where the principal of (and premium, if any) and interest, if any, on
such Junior Subordinated Notes shall be payable; (vi) the period or periods
within which, the price or prices at which and the terms and conditions on which
such Junior Subordinated Notes may be redeemed, in whole or in part, at the
option of the Company; (vii) the obligation, if any, of the Company to redeem or
purchase such Junior Subordinated Notes; (viii) the denominations in which such
Junior Subordinated Notes shall be issuable; (ix) if other than the principal
amount thereof, the portion of the principal amount of such Junior Subordinated
Notes which shall be payable upon declaration of acceleration of the maturity
thereof; (x) any deletions from, modifications of or additions to the Events of
Default or covenants of the Company as provided in the Subordinated Note
Indenture pertaining to such Junior Subordinated Notes; (xi) whether such Junior
Subordinated Notes shall be issued in whole or in part in the form of a Global
Security; (xii) the right, if any, of the Company to extend the interest payment
periods of such Junior Subordinated Notes; and (xiii) any other terms of such
Junior Subordinated Notes. The terms of each series of Junior Subordinated Notes
issued to a Trust will correspond to those of the related Securities of such
Trust as described in the Prospectus Supplement relating to such Securities.
The Subordinated Note Indenture does not contain provisions that afford
holders of Junior Subordinated Notes protection in the event of a highly
leveraged transaction involving the Company.
SUBORDINATION
The Junior Subordinated Notes are subordinated and junior in right of
payment to all Senior Indebtedness (as defined below) of the Company. No payment
of principal of (including redemption payments, if any), or premium, if any, or
interest on (including Additional Interest (as defined herein)) the Junior
Subordinated Notes may be made if (a) any Senior Indebtedness is not paid when
due and any applicable grace period with respect to such default has ended with
such default not being cured or waived or otherwise ceasing to exist, or (b) the
maturity of any Senior Indebtedness has been accelerated because of a default,
or (c) notice has been given of the exercise of an option to require repayment,
mandatory payment or prepayment or otherwise. Upon any payment or distribution
of assets of the Company to creditors upon any liquidation, dissolution,
winding-up, reorganization, assignment for the benefit of creditors, marshalling
of assets or liabilities, or any bankruptcy, insolvency or similar proceedings
of the Company, the holders of Senior Indebtedness shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Indebtedness before the holders of the Junior Subordinated Notes are
entitled to receive or retain any payment or distribution. Subject to the prior
payment of all Senior Indebtedness, the rights of the holders of the Junior
Subordinated Notes will be subrogated to the rights of the holders of Senior
Indebtedness to receive payments and distributions applicable to such Senior
Indebtedness until all amounts owing on the Junior Subordinated Notes are paid
in full.
The term "Senior Indebtedness" means, with respect to the Company, (i) any
payment due in respect of indebtedness of the Company, whether outstanding at
the date of execution of the Subordinated Note Indenture or thereafter incurred,
created or assumed, (a) in respect of money borrowed (including any
6
<PAGE> 70
financial derivative, hedging or futures contract or similar instrument) and (b)
evidenced by securities, debentures, bonds, notes or other similar instruments
issued by the Company that, by their terms, are senior or senior subordinated
debt securities including, without limitation, all obligations under its
indentures with various trustees; (ii) all capital lease obligations; (iii) all
obligations issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all obligations of the Company under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business and long-term purchase obligations); (iv) all
obligations for the reimbursement of any letter of credit, banker's acceptance,
security purchase facility or similar credit transaction; (v) all obligations of
the type referred to in clauses (i) through (iv) above of other persons the
payment of which the Company is responsible or liable as obligor, guarantor or
otherwise; and (vi) all obligations of the type referred to in clauses (i)
through (v) above of other persons secured by any lien on any property or asset
of the Company (whether or not such obligation is assumed by the Company),
except for (1) any such indebtedness that is by its terms subordinated to or
pari passu with the Junior Subordinated Notes and (2) any unsecured indebtedness
between or among the Company or its affiliates. Such Senior Indebtedness shall
continue to be Senior Indebtedness and be entitled to the benefits of the
subordination provisions contained in the Subordinated Note Indenture
irrespective of any amendment, modification or waiver of any term of such Senior
Indebtedness.
The Subordinated Note Indenture does not limit the aggregate amount of
Senior Indebtedness that may be issued by the Company. As of September 30, 1996,
Senior Indebtedness of the Company aggregated approximately $330,000,000.
ADDITIONAL INTEREST
"Additional Interest" is defined in the Subordinated Note Indenture as (i)
such additional amounts as may be required so that the net amounts received and
retained by a holder of Junior Subordinated Notes (if the holder is a Trust)
after paying taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United States or any other
taxing authority will not be less than the amounts the holder would have
received had no such taxes, duties, assessments, or other governmental charges
been imposed; and (ii) any interest due and not paid on an interest payment
date, together with interest thereon from such interest payment date to the date
of payment, compounded quarterly, on each interest payment date.
CERTAIN COVENANTS
The Company covenants in the Subordinated Note Indenture, for the benefit
of the holders of each series of Junior Subordinated Notes, that, (i) if at such
time the Company shall have given notice of its election to extend an interest
payment period for such series of Junior Subordinated Notes and such extension
shall be continuing, (ii) if at such time the Company shall be in default with
respect to its payment or other obligations under the Guarantee with respect to
the Trust Securities, if any, related to such series of Junior Subordinated
Notes, or (iii) if at such time an Event of Default thereunder with respect to
such series of Junior Subordinated Notes shall have occurred and be continuing,
(a) the Company shall not declare or pay any dividend or make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, and (b) the Company shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees other than the Guarantees)
issued by the Company which rank pari passu with or junior to the Junior
Subordinated Notes. None of the foregoing, however, shall restrict (i) any of
the actions described in the preceding sentence resulting from any
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the Company's capital stock, or (ii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged.
The Subordinated Note Indenture further provides that, for so long as the
Trust Securities of any Trust remain outstanding, the Company covenants (i) to
directly or indirectly maintain 100% ownership of the Common Securities of such
Trust; provided, however, that any permitted successor of the Company under the
Subordinated Note Indenture may succeed to the Company's ownership of such
Common Securities, and
7
<PAGE> 71
(ii) to use its reasonable efforts to cause such Trust (a) to remain a statutory
business trust, except in connection with the distribution of Junior
Subordinated Notes to the holders of Trust Securities in liquidation of such
Trust, the redemption of all of the Trust Securities of such Trust, or certain
mergers, consolidations or amalgamations, each as permitted by the related Trust
Agreement, and (b) to otherwise continue to be classified as a grantor trust for
United States federal income tax purposes.
EVENTS OF DEFAULT
The Subordinated Note Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Notes of any
series, which has occurred and is continuing, constitutes an "Event of Default"
with respect to the Junior Subordinated Notes of such series:
(a) failure for 10 days to pay interest on the Junior Subordinated
Notes of such series, including any Additional Interest (as defined in
clause (ii) of the definition thereof in the Subordinated Note Indenture)
in respect thereof, when due on an Interest Payment Date other than at
maturity or upon earlier redemption; provided, however, that a valid
extension of the interest payment period by the Company shall not
constitute a default in the payment of interest for this purpose; or
(b) failure for 10 days to pay Additional Interest (as defined in
clause (i) of the definition thereof in the Subordinated Note Indenture);
or
(c) failure to pay principal or premium, if any, or interest,
including Additional Interest (as defined in clause (ii) of the definition
thereof in the Subordinated Note Indenture), on the Junior Subordinated
Notes of such series when due at maturity or upon earlier redemption; or
(d) failure for three Business Days to deposit any sinking fund
payment when due by the terms of a Junior Subordinated Note of such series;
or
(e) failure to observe or perform any other covenant or warranty of
the Company in the Subordinated Note Indenture (other than a covenant or
warranty which has expressly been included therein solely for the benefit
of one or more series of Junior Subordinated Notes other than such series)
for 90 days after written notice to the Company from the Indenture Trustee
or the holders of at least 25% in principal amount of the outstanding
Junior Subordinated Notes of such series; or
(f) certain events of bankruptcy, insolvency, or reorganization of the
Company.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Indenture Trustee with respect to the Junior Subordinated Notes of such
series. If a Subordinated Note Indenture Event of Default occurs and is
continuing with respect to the Junior Subordinated Notes of any series, then the
Indenture Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of the Junior Subordinated Notes of such series may declare the
principal amount thereof due and payable immediately by notice in writing to the
Company (and to the Indenture Trustee if given by the holders), and upon any
such declaration such principal amount shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to the Junior
Subordinated Notes of any series has been made and before a judgment or decree
for payment of the money due has been obtained as provided in Article Five of
the Subordinated Note Indenture, the holders of not less than a majority in
aggregate outstanding principal amount of the Junior Subordinated Notes of such
series may rescind and annul such declaration and its consequences if the
default has been cured or waived and the Company has paid or deposited with the
Indenture Trustee a sum sufficient to pay all matured installments of interest
(including any Additional Interest) and principal due otherwise than by
acceleration and all sums paid or advanced by the Indenture Trustee, including
reasonable compensation and expenses of the Indenture Trustee.
A holder of Securities may institute a legal proceeding directly against
the Company, without first instituting a legal proceeding against the Property
Trustee or any other person or entity, for enforcement of payment to such holder
of principal of or interest on the Junior Subordinated Notes of the related
series
8
<PAGE> 72
having a principal amount equal to the aggregate stated liquidation amount of
the Securities of such holder on or after the due dates specified in the Junior
Subordinated Notes of such series.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series may, on behalf of the
holders of all the Junior Subordinated Notes of such series, waive any past
default with respect to such series, except (i) a default in the payment of
principal or interest or (ii) a default in respect of a covenant or provision
which under Article Nine of the Subordinated Note Indenture cannot be modified
or amended thereunder without the consent of the holder of each outstanding
Junior Subordinated Note of such series affected thereby.
REGISTRATION AND TRANSFER
The Company shall not be required to (i) issue, register the transfer of or
exchange Junior Subordinated Notes of any series during a period of 15 days
immediately preceding the date notice is given identifying the Junior
Subordinated Notes of such series called for redemption, or (ii) register the
transfer of or exchange any Junior Subordinated Notes so selected for
redemption, in whole or in part, except the unredeemed portion of any Junior
Subordinated Note being redeemed in part.
PAYMENT AND PAYING AGENT
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of any Junior Subordinated Notes will be made only against
surrender to the Paying Agent of such Junior Subordinated Notes. Principal of
and interest on Junior Subordinated Notes will be payable, subject to any
applicable laws and regulations, at the office of such Paying Agent or Paying
Agents as the Company may designate from time to time, except that, at the
option of the Company, payment of any interest may be made by wire transfer or
by check mailed to the address of the person entitled thereto as such address
shall appear in the Security Register with respect to the Junior Subordinated
Notes. Payment of interest on Junior Subordinated Notes on any interest payment
date will be made to the person in whose name the Junior Subordinated Notes (or
predecessor security) are registered at the close of business on the Record Date
for such interest payment (the fifteenth calendar day before such interest
payment date).
The Indenture Trustee will act as Paying Agent with respect to the Junior
Subordinated Notes. The Company may at any time designate additional Paying
Agents or rescind the designation of any Paying Agents or approve a change in
the office through which any Paying Agent acts.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or interest on the Junior Subordinated Notes of any series which
remain unclaimed at the end of two years after such principal or interest shall
have become due and payable will be repaid to the Company, and the holder of
such Junior Subordinated Notes will thereafter look only to the Company for
payment thereof.
MODIFICATION
The Subordinated Note Indenture contains provisions permitting the Company
and the Indenture Trustee, with the consent of the holders of not less than a
majority in principal amount of the outstanding Junior Subordinated Notes of
each series affected thereby, to modify the Subordinated Note Indenture or the
rights of the holders of the Junior Subordinated Note of such series; provided,
that no such modification may, without the consent of the holder of each
outstanding Junior Subordinated Note affected thereby, (i) change the stated
maturity of the principal of, or any installment of principal of or interest on,
any Junior Subordinated Note, or reduce the principal amount thereof or the rate
of interest (including Additional Interest) thereon or any premium payable upon
the redemption thereof, or change the method of calculating the rate of interest
thereon, 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 (ii) reduce the percentage of principal
amount of the outstanding Junior Subordinated Notes of any series, 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 the Subordinated Note Indenture or certain defaults thereunder and
their consequences) provided for in the Subordinated Note Indenture, or (iii)
modify
9
<PAGE> 73
any of the provisions of the Subordinated Note Indenture relating to
supplemental indentures, waiver of past defaults, or waiver of certain
covenants, except to increase any such percentage or to provide that certain
other provisions of the Subordinated Note Indenture cannot be modified or waived
without the consent of the holder of each outstanding Junior Subordinated Note
affected thereby, or (iv) modify the provisions of the Subordinated Note
Indenture with respect to the subordination of the Junior Subordinated Notes in
a manner adverse to such holder.
In addition, the Company and the Indenture Trustee may execute, without the
consent of any holders of Junior Subordinated Notes, any supplemental indenture
for certain other usual purposes, including the creation of any new series of
junior subordinated notes.
CONSOLIDATION, MERGER AND SALE
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless (1) such other corporation or person is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia and such other corporation or person
expressly assumes, by supplemental indenture executed and delivered to the
Indenture Trustee, the payment of the principal of (and premium, if any) and
interest (including Additional Interest) on all the Junior Subordinated Notes
and the performance of every covenant of the Subordinated Note Indenture on the
part of the Company to be performed or observed; (2) immediately after giving
effect to such transactions, no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default, shall have
happened and be continuing; and (3) the Company has delivered to the Indenture
Trustee an officers' certificate and an opinion of counsel, each stating that
such transaction complies with the provisions of the Subordinated Note Indenture
governing consolidation, merger, conveyance, transfer or lease and that all
conditions precedent thereto have been complied with.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee, prior to an Event of Default with respect to Junior
Subordinated Notes of any series, undertakes to perform, with respect to Junior
Subordinated Notes of such series, only such duties as are specifically set
forth in the Subordinated Note Indenture and, in case an Event of Default with
respect to Junior Subordinated Notes of any series has occurred and is
continuing, shall exercise, with respect to Junior Subordinated Notes of such
series, the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Indenture
Trustee is under no obligation to exercise any of the powers vested in it by the
Subordinated Note Indenture at the request of any holder of Junior Subordinated
Notes of any series, unless offered reasonable indemnity by such holder against
the costs, expenses and liabilities which might be incurred thereby. The
Indenture Trustee is not required to expend or risk its own funds or otherwise
incur any financial liability in the performance of its duties if the Indenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
Bankers Trust Company, the Indenture Trustee, also serves as Property
Trustee and as Guarantee Trustee. The Company and certain of its affiliates
maintain deposit accounts and banking relationships with Bankers Trust Company.
Bankers Trust Company also serves as trustee under other indentures pursuant to
which securities of the Company and affiliates of the Company are outstanding.
GOVERNING LAW
The Subordinated Note Indenture and the Junior Subordinated Notes will be
governed by, and construed in accordance with, the internal laws of the State of
New York.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Subordinated Note Indenture to a direct or indirect
wholly-owned subsidiary of the Company; provided, that, in the event of any such
assignment, the Company will remain primarily liable for all such obligations.
Subject to the foregoing, the Subordinated Note Indenture will be binding upon
and inure to the benefit of the parties thereto and their respective successors
and assigns.
10
<PAGE> 74
DESCRIPTION OF THE SECURITIES
Each Trust may issue only one series of Securities having terms described
in the Prospectus Supplement relating thereto. The Trust Agreement of each Trust
will authorize the Administrative Trustees, on behalf of the Trust, to issue the
Securities of such Trust. The Securities of each Trust will have such terms,
including distributions, redemption, voting, liquidation rights and such other
preferred, deferral or other special rights or such restrictions as shall be set
forth in the Trust Agreement of such Trust. Reference is made to the Prospectus
Supplement relating to the Securities of a Trust for specific terms, including
(i) the distinctive designation of such Securities; (ii) the number of
Securities issued by such Trust; (iii) the annual distribution rate (or method
of determining such rate) for Securities of such Trust and the date or dates on
which such distributions shall be payable; (iv) whether distributions on such
Securities shall be cumulative and, in the case of Securities having cumulative
distribution rights, the date or dates, or method of determining the date or
dates, from which distributions on such Securities shall be cumulative; (v) the
amount or amounts that shall be paid out of the assets of such Trust to the
holders of the Securities of such Trust upon voluntary or involuntary
dissolution, winding-up or termination of such Trust; (vi) the obligation, if
any, of such Trust to purchase or redeem such Securities and the price or prices
at which, the period or periods within which, and the terms and conditions upon
which such Securities shall be purchased or redeemed, in whole or in part,
pursuant to such obligation; (vii) the voting rights, if any, of such Securities
in addition to those required by law, including the number of votes per Security
and any requirement for the approval by the holders of Securities as a condition
to specified action or amendments to the Trust Agreement of such Trust; (viii)
the rights, if any, to defer distributions on the Securities by extending the
interest payment period on the related Junior Subordinated Notes; and (ix) any
other relative rights, preferences, privileges, limitations or restrictions of
such Securities not inconsistent with the Trust Agreement of such Trust or
applicable law. All Securities offered hereby will be guaranteed by the Company
to the extent set forth under "Description of the Guarantees." Any material
United States federal income tax considerations applicable to an offering of
Securities will be described in the Prospectus Supplement relating thereto.
DESCRIPTION OF THE GUARANTEES
Set forth below is a summary of information concerning the Guarantees that
will be executed and delivered by the Company for the benefit of the holders of
Securities of the respective Trusts from time to time. Each Guarantee will be
qualified as an indenture under the 1939 Act. Bankers Trust Company will act as
indenture trustee under each Guarantee (the "Guarantee Trustee") for purposes of
the 1939 Act. The terms of the respective Guarantees will be those set forth
therein and those made part thereof by the 1939 Act. The following summary does
not purport to be complete and is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the Guarantees, the form of
which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, and the 1939 Act. Each Guarantee will be held by the
Guarantee Trustee for the benefit of holders of the Securities to which it
relates.
GENERAL
Pursuant to each Guarantee, the Company will irrevocably and
unconditionally agree, to the extent set forth therein, to pay in full, to the
holders of the related Securities, the Guarantee Payments (as defined herein),
to the extent not paid by, or on behalf of, the related Trust, regardless of any
defense, right of set-off or counterclaim that the Company may have or assert
against any person. The following payments or distributions with respect to the
Securities of any Trust to the extent not paid or made by, or on behalf of, such
Trust will be subject to the Guarantee related thereto (without duplication):
(i) any accrued and unpaid distributions required to be paid on the Securities
of such Trust but if and only if and to the extent that such Trust has funds
legally and immediately available therefor, (ii) the redemption price, including
all accrued and unpaid distributions to the date of redemption (the "Redemption
Price"), with respect to any Securities called for redemption by such Trust, but
if and only to the extent such Trust has funds legally and immediately available
therefor, and (iii) upon a dissolution, winding-up or termination of such Trust
(other than in connection with the distribution of Junior Subordinated Notes to
the holders of Trust Securities of such Trust or the redemption of all of the
Securities of such Trust), the lesser of (a) the aggregate of the liquidation
11
<PAGE> 75
amount and all accrued and unpaid distributions on the Securities of such Trust
to the date of payment, to the extent such Trust has funds legally and
immediately available therefor, and (b) the amount of assets of such Trust
remaining available for distribution to holders of Securities of such Trust in
liquidation of such Trust (the "Guarantee Payments"). The Company's obligation
to make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Company to the holders of the related Securities or by causing
the related Trust to pay such amounts to such holders.
Each Guarantee will be a guarantee of the Guarantee Payments with respect
to the related Securities from the time of issuance of such Securities, but will
not apply to the payment of distributions and other payments on such Securities
when the related Trust does not have sufficient funds legally and immediately
available to make such distributions or other payments. IF THE COMPANY DOES NOT
MAKE INTEREST PAYMENTS ON THE JUNIOR SUBORDINATED NOTES HELD BY THE PROPERTY
TRUSTEE UNDER ANY TRUST, SUCH TRUST WILL NOT MAKE DISTRIBUTIONS ON ITS
SECURITIES.
SUBORDINATION
The Company's obligations under each Guarantee to make the Guarantee
Payments will constitute an unsecured obligation of the Company and will rank
(i) subordinate and junior in right of payment to all other liabilities of the
Company, including the Junior Subordinated Notes, except those obligations or
liabilities made pari passu or subordinate by their terms, (ii) pari passu with
the most senior preferred or preference stock now or hereafter issued by the
Company and with any guarantee now or hereafter entered into by the Company in
respect of any preferred or preference securities of any affiliate of the
Company, and (iii) senior to all common stock of the Company. The terms of the
Securities will provide that each holder of Securities by acceptance thereof
agrees to the subordination provisions and other terms of the Guarantee related
thereto. The Company has outstanding preferred stock that ranks pari passu to
the Guarantees and common stock that ranks junior to the Guarantees. See
"Selected Information -- Selected Financial Information."
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the guarantee without first
instituting a legal proceeding against any other person or entity).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially and adversely
affect the rights of holders of the related Securities (in which case no consent
will be required), each Guarantee may be amended only with the prior approval of
the holders of not less than 66 2/3% in liquidation amount of such outstanding
Securities. The manner of obtaining any such approval of holders of the
Securities will be as set forth in an accompanying Prospectus Supplement. All
guarantees and agreements contained in each Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Company and shall inure
to the benefit of the holders of the related Securities then outstanding.
TERMINATION
Each Guarantee will terminate and be of no further force and effect as to
the related Securities upon full payment of the Redemption Price of all such
Securities, upon distribution of Junior Subordinated Notes to the holders of
such Securities, or upon full payment of the amounts payable upon liquidation of
the related Trust. Each Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the related
Securities must restore payment of any sums paid with respect to such Securities
or under such Guarantee.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure by the
Company to perform any of its payment obligations thereunder. The holders of a
majority in liquidation amount of the Securities to which any Guarantee relates
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee in respect of such Guarantee
or to direct the exercise of any
12
<PAGE> 76
trust or power conferred upon the Guarantee Trustee under such Guarantee. Any
holder of the related Securities may institute a legal proceeding directly
against the Company to enforce its rights under such Guarantee without first
instituting a legal proceeding against the Guarantee Trustee or any other person
or entity. The holders of a majority in liquidation amount of Securities of any
series may, by vote, on behalf of the holders of all the Securities of such
series, waive any past event of default and its consequences.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of any event of default with
respect to any Guarantee and after the curing or waiving of all events of
default with respect to such Guarantee, undertakes to perform only such duties
as are specifically set forth in such Guarantee and, in case an event of default
has occurred, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by any Guarantee at the request of any holder of the related
Securities, unless offered reasonable indemnity against the costs, expenses and
liabilities which might be incurred thereby.
Bankers Trust Company, the Guarantee Trustee, also serves as Property
Trustee and as Indenture Trustee. The Company and certain of its affiliates
maintain deposit accounts and banking relationships with Bankers Trust Company.
Bankers Trust Company serves as trustee under other indentures pursuant to which
securities of the Company and affiliates of the Company are outstanding.
GOVERNING LAW
Each Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
THE AGREEMENTS AS TO EXPENSES AND LIABILITIES
Pursuant to an Agreement as to Expenses and Liabilities to be entered into
by the Company under each Trust Agreement, the Company will irrevocably and
unconditionally guarantee to each person or entity to whom each Trust becomes
indebted or liable the full payment of any indebtedness, expenses or liabilities
of such Trust, other than obligations of such Trust to pay to the holders of the
related Securities or other similar interests in such Trust the amounts due such
holders pursuant to the terms of such Securities or such other similar
interests, as the case may be.
RELATIONSHIP AMONG THE SECURITIES,
THE JUNIOR SUBORDINATED NOTES AND THE GUARANTEES
As long as payments of interest and other payments are made when due on
each series of Junior Subordinated Notes issued to a Trust, such payments will
be sufficient to cover distributions and payments due on the related Trust
Securities of such Trust primarily because (i) the aggregate principal amount of
each series of Junior Subordinated Notes will be equal to the sum of the
aggregate stated liquidation amount of the related Trust Securities; (ii) the
interest rate and interest and other payment dates on each series of Junior
Subordinated Notes will match the distribution rate and distribution and other
payment dates for the related Securities; (iii) the Company shall pay for all
costs and expenses of each Trust pursuant to the Agreements as to Expenses and
Liabilities; and (iv) each Trust Agreement provides that the Securities Trustees
thereunder shall not cause or permit the Trust to, among other things, engage in
any activity that is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are legally and
immediately available) and other payments due on the Securities (to the extent
funds therefor are legally and immediately available) will be guaranteed by the
Company as and to the extent set forth under "Description of the Guarantees." If
the Company does not make interest payments on any series of Junior Subordinated
Notes, it is not expected that the related Trust will have sufficient funds to
pay distributions on its Securities. Each Guarantee is a guarantee
13
<PAGE> 77
from the time of its issuance, but does not apply to any payment of
distributions unless and until the related Trust has sufficient funds legally
and immediately available for the payment of such distributions.
If the Company fails to make interest or other payments on any series of
Junior Subordinated Notes when due (taking into account any extension period as
described in the applicable Prospectus Supplement), the Trust Agreement provides
a mechanism whereby the holders of the related Securities may appoint a
substitute Property Trustee. Such holders may also direct the Property Trustee
to enforce its rights under the Junior Subordinated Notes of such series,
including proceeding directly against the Company to enforce such Junior
Subordinated Notes. If the Property Trustee fails to enforce its rights under
any series of Junior Subordinated Notes, to the fullest extent permitted by
applicable law, any holder of related Securities may institute a legal
proceeding directly against the Company to enforce the Property Trustee's rights
under such series of Junior Subordinated Notes without first instituting any
legal proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, a holder of Securities may institute a legal
proceeding directly against the Company, without first instituting a legal
proceeding against the Property Trustee or any other person or entity, for
enforcement of payment to such holder of principal of or interest on Junior
Subordinated Notes of the related series having a principal amount equal to the
aggregate stated liquidation amount of the Securities of such holder on or after
the due dates specified in the Junior Subordinated Notes of such series.
If the Company fails to make payments under any Guarantee, such Guarantee
provides a mechanism whereby the holders of the Securities to which such
Guarantee relates may direct the Guarantee Trustee to enforce its rights
thereunder. In addition, any holder of Securities may institute a legal
proceeding directly against the Company to enforce the Guarantee Trustee's
rights under the related Guarantee without first instituting a legal proceeding
against the Guarantee Trustee or any other person or entity.
Each Guarantee, the Subordinated Note Indenture, the Junior Subordinated
Notes of the related series, the related Trust Agreement and the related
Agreement as to Expenses and Liabilities, as described above, constitute a full
and unconditional guarantee by the Company of the payments due on the related
series of Securities.
Upon any voluntary or involuntary dissolution, winding-up or termination of
any Trust, unless Junior Subordinated Notes of the related series are
distributed in connection therewith, the holders of Securities of such Trust
will be entitled to receive, out of assets legally available for distribution to
holders, a liquidation distribution in cash as described in the applicable
Prospectus Supplement. Upon any voluntary or involuntary liquidation or
bankruptcy of the Company, the Property Trustee, as holder of the related series
of Junior Subordinated Notes, would be a subordinated creditor of the Company,
subordinated in right of payment to all Senior Indebtedness, but entitled to
receive payment in full of principal and interest, before any stockholders of
the Company receive payments or distributions. Because the Company is guarantor
under each Guarantee and has agreed to pay for all costs, expenses and
liabilities of each Trust (other than the Trust's obligations to holders of the
Securities) pursuant to the related Agreement as to Expenses and Liabilities,
the positions of a holder of Securities and a holder of Junior Subordinated
Notes of the related series relative to other creditors and to stockholders of
the Company in the event of liquidation or bankruptcy of the Company would be
substantially the same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Subordinated Note Indenture.
However, in the event of payment defaults under, or acceleration of, Senior
Indebtedness, the subordination provisions of the Junior Subordinated Notes
provide that no payments may be made in respect of the Junior Subordinated Notes
until such Senior Indebtedness has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on the
Junior Subordinated Notes of any series would constitute an Event of Default
under the Subordinated Note Indenture with respect to the Junior Subordinated
Notes of such series except that failure to make interest payments on the Junior
Subordinated Notes of such series will not be an Event of Default during an
extension period as described in the applicable Prospectus Supplement.
14
<PAGE> 78
POSSIBLE TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"),
the revenue portion of President Clinton's 1996 budget proposal, was released.
The Bill would, among other things, generally deny interest deductions for
interest on an instrument, issued by a corporation, that has a maximum term of
more than 20 years and that is not shown as indebtedness on the separate balance
sheet of the issuer or, where the instrument is issued to a related party (other
than a corporation), where the holder or some other related party issues a
related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. The above-described provisions of the Bill were
proposed to be effective generally for instruments issued on or after December
7, 1995. If such provisions were to apply to the Junior Subordinated Notes of
any series, the Company would be unable to deduct interest on the Junior
Subordinated Notes of such series. However, on March 29, 1996, the Chairmen of
the Senate Finance and House Ways and Means Committees issued a joint statement
to the effect that it was their intention that the effective date of the
President's legislative proposals, if adopted, will be no earlier than the date
of appropriate Congressional action. The Company believes that, under current
law, it will be able to deduct interest on the Junior Subordinated Notes. There
can be no assurance, however, that current or future legislative proposals or
final legislation will not affect the ability of the Company to deduct interest
on the Junior Subordinated Notes. Such a change could give rise to certain
events which may permit the Company to cause a redemption of the Securities or a
determination by the Company to terminate a Trust and cause the Junior
Subordinated Notes of the related series to be distributed to the holders of the
Securities of such Trust in liquidation thereof, all as described in the
applicable Prospectus Supplement.
PLAN OF DISTRIBUTION
The Company may sell the Junior Subordinated Notes and the Trusts may sell
the Securities in one or more of the following ways from time to time: (i) to
underwriters for resale to the public or to institutional investors; (ii)
directly to institutional investors; or (iii) through agents to the public or to
institutional investors. The Prospectus Supplement with respect to each series
of Junior Subordinated Notes or Securities will set forth the terms of the
offering of such Junior Subordinated Notes or Securities, including the name or
names of any underwriters or agents, the purchase price of such Junior
Subordinated Notes or Securities and the proceeds to the Company or the
applicable Trust from such sale, any underwriting discounts or agency fees and
other items constituting underwriters' or agents' compensation, any initial
public offering price, any discounts or concessions allowed or reallowed or paid
to dealers and any securities exchange on which such Junior Subordinated Notes
or Securities may be listed.
If underwriters participate in the sale, such Junior Subordinated Notes or
Securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale.
Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase any series of Junior Subordinated Notes or
Securities will be subject to certain conditions precedent and the underwriters
will be obligated to purchase all of such series of Junior Subordinated Notes or
Securities, if any are purchased.
Underwriters and agents may be entitled under agreements entered into with
the Company and/or the applicable Trust to indemnification against certain civil
liabilities, including liabilities under the 1933 Act. Underwriters and agents
may engage in transactions with, or perform services for, the Company in the
ordinary course of business.
Each series of Junior Subordinated Notes or Securities will be a new issue
of securities and will have no established trading market. Any underwriters to
whom Junior Subordinated Notes or Securities are sold for public offering and
sale may make a market in such Junior Subordinated Notes or Securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. The Junior Subordinated Notes or Securities
may or may not be listed on a national securities exchange.
15
<PAGE> 79
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Securities
will be passed upon on behalf of the Company and the Trusts by Richards, Layton
& Finger, Wilmington, Delaware, special Delaware counsel to the Company and the
Trusts. The validity of the Junior Subordinated Notes, the Guarantees and
certain matters relating thereto will be passed upon on behalf of the Company by
Eaton and Cottrell, P.A., Gulfport, Mississippi, and by Troutman Sanders LLP,
Atlanta, Georgia. Certain legal matters will be passed upon for the Underwriters
by Dewey Ballantine, New York, New York.
EXPERTS
The financial statements and schedules of the Company included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995,
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated herein in reliance upon the authority of
said firm as experts in accounting and auditing in giving said reports.
Statements as to matters of law and legal conclusions in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, relating to
titles to property of the Company under "Item 2 -- Properties -- Titles to
Property", and relating to the Company under "Item 1 -- Business -- Regulation",
"Item 1 -- Business -- Rate Matters" and "Item 1 -- Business -- Competition",
have been reviewed by Eaton and Cottrell, P.A., general counsel for the Company,
and such statements are made upon the authority of such firm as experts.
16
<PAGE> 80
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of issuance and distribution, other than
underwriting discounts and commissions, to be borne by the Company are as
follows:
<TABLE>
<CAPTION>
PREFERRED SECURITIES
----------------------
EACH
INITIAL ADDITIONAL
SALE SALE
-------- ----------
<S> <C> <C>
*Filing Fees -- Securities and Exchange
Commission -- registration statement...................... $ 16,667 $ --
Charges of trustees (including counsel)..................... 17,000 17,000
*Listing fees of New York Stock Exchange.................... 30,900 --
Printing and preparation of registration statement,
prospectus, etc........................................... 40,000 10,000
Rating fees --
Moody's Investors Service, Inc............................ 15,000 15,000
Standard & Poor's Corporation............................. 16,100 --
Duff and Phelps, Inc...................................... 5,500 5,500
Services of Southern Company Services, Inc.................. 40,000 10,000
Fees and expenses of counsel................................ 65,000 35,000
Blue sky fees and expenses.................................. 3,500 3,500
Fees of accountants, Arthur Andersen LLP.................... 35,000 25,000
Miscellaneous, including telephone charges and traveling
expenses.................................................. 10,333 9,000
-------- --------
Total............................................. $295,000 $130,000
======== ========
</TABLE>
- ---------------
* The Prospectus Supplement will reflect actual filing fees and listing fees
based upon the amount of the related offering.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 79-4-8.51 of the Mississippi Business Corporation Act (the "Act")
gives a corporation the authority to indemnify an individual who was, is or is
threatened to be made a named defendant or respondent in any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative and whether formal or informal, because he is or was a director
of the corporation or, while a director of the corporation, is or was serving at
the corporation's request as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or other entity, against liability incurred in the
proceeding if he conducted himself in good faith; he reasonably believed, in the
case of conduct in his official capacity with the corporation, that his conduct
was in the best interests of the corporation and, in all other cases, that his
conduct was at least not opposed to the best interests of the corporation; and,
in the case of any criminal proceeding, he had no reasonable cause to believe
his conduct was unlawful. Said section also provides that a corporation may not
indemnify a director thereunder in connection with a proceeding by or in the
right of the corporation in which the director was adjudged liable to the
corporation or in connection with any other proceeding charging improper
personal benefit to him, whether or not involving action in his official
capacity, in which he was adjudged liable on the basis that personal benefit was
improperly received by him; and that indemnification permitted thereunder in
connection with a proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding. Section
79-4-8.52 of the Act provides that a corporation shall indemnify a director who
was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in connection with the
proceeding. Section 79-4-8.56 of the Act provides that an officer of the
corporation who is
II-1
<PAGE> 81
not a director is entitled to mandatory indemnification under Section 79-4-8.52
to the same extent to which a director may be entitled to indemnification.
Section 4.1 of the By-laws of the Company provides in pertinent part as
follows:
To the fullest extent permitted by law, the Company shall indemnify
each person made, or threatened to be made, a party to any threatened,
pending, or completed claim, action, suit or proceeding, whether civil or
criminal, administrative or investigative, and whether by or in the right
of the Company or otherwise, by reason of the fact that such person, or
such person's testator or intestate, is or was a director, officer or was
an employee of the Company holding one or more management positions through
and inclusive of department managers (but not positions below the level of
department managers) (such positions being hereinafter referred to as
"Management Positions") or is or was serving at the request of the Company
as a director, officer, employee, agent or trustee of another corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise, in any capacity at the request of the Company, against all loss
and expense actually or reasonably incurred by him including, without
limiting the generality of the foregoing, judgments, fines, penalties,
liabilities, sanctions, and amounts paid in settlement and attorney's fees
and disbursements actually and necessarily incurred by him in defense of
such action or proceeding, or any appeal therefrom. The indemnification
provided by this Section shall inure to the benefit of the heirs, executors
and administrators of such person.
In any case in which a director, officer of the Company or employee of
the Company holding one or more Management Positions requests
indemnification with respect to the defense of any such claim, action or
suit or proceedings, the Company may advance expenses (including attorney's
fees) incurred by such person prior to the final disposition of such claim,
action, suit or proceeding, as authorized by the Board of Directors in the
specific case, upon receipt of a written undertaking by or on behalf of
such person to repay amounts advanced if it shall ultimately be determined
that such person was not entitled to be indemnified by the Company under
this Section or otherwise; provided, however, that the advancement of such
expenses shall not be deemed to be indemnification unless and until it
shall ultimately be determined that such person is entitled to be
indemnified by the Company. Such a person claiming indemnification shall be
entitled to indemnification upon a determination that no judgment or other
final adjudication adverse to such person has established that such
person's acts were committed in bad faith or were the result of active and
deliberate dishonesty and were material to the cause of action so
adjudicated, or such person personally obtained an economic benefit
including a financial profit or other advantage to which such person was
not legally entitled.
Without limiting the generality of the foregoing provision, no former,
present or future director or officer of the Company or employee of the
Company holding one or more management positions, or his heirs, executors
or administrators, shall be liable for any undertaking entered into by the
Company or its subsidiaries or affiliates as required by the Securities and
Exchange Commission pursuant to any rule or regulation of the Securities
and Exchange Commission now or hereafter in effect or orders issued
pursuant to the Public Utility Holding Company Act of 1935, the Federal
Power Act, or any undertaking entered into by the Company due to
environmental requirements including all legally enforceable environmental
compliance obligations imposed by federal, state or local statute,
regulation, permit, judicial or administrative decree, order and judgment
or other similar means, or any undertaking entered into by the Company
pursuant to any approved Company compliance plan or any federal or state or
municipal ordinance which directly or indirectly regulates the Company, or
its parent by reason of their being holding or investment companies, public
utility companies, public utility holding companies or subsidiaries of
public utility holding companies.
The foregoing rights shall not be exclusive of any other rights to
which any such director, officer or employee may otherwise be entitled and
shall be available whether or not the director, officer or employee
continues to be a director, officer or employee at the time of incurring
any such expenses and liabilities.
II-2
<PAGE> 82
The Company has an insurance policy covering its liabilities and expenses
which might arise in connection with its lawful indemnification of its directors
and officers for certain of their liabilities and expenses and also covering its
officers and directors against certain other liabilities and expenses.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ---------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement relating to Junior
Subordinated Notes.*
1.2 -- Form of Underwriting Agreement relating to Preferred
Securities.*
1.3 -- Form of Underwriting Agreement relating to Capital
Securities.*
4.1 -- Form of Subordinated Note Indenture between Mississippi
Power Company and Bankers Trust Company, as Trustee.**
4.2-A -- Form of Supplemental Indenture to Subordinated Note
Indenture to be used in connection with the issuance of
Junior Subordinated Notes relating to Preferred
Securities.**
4.2-B -- Form of Supplemental Indenture to Subordinated Note
Indenture to be used in connection with the issuance of
Junior Subordinated Notes relating to Capital
Securities.**
4.3-A -- Certificate of Trust of Mississippi Power Capital Trust I.**
4.3-B -- Certificate of Trust of Mississippi Power Capital Trust
II.**
4.4-A -- Trust Agreement of Mississippi Power Capital Trust I.**
4.4-B -- Trust Agreement of Mississippi Power Capital Trust II.**
4.5-A -- Form of Amended and Restated Trust Agreement of Mississippi
Power Capital Trust I relating to Preferred Securities.**
4.5-B -- Form of Amended and Restated Trust Agreement of Mississippi
Power Capital Trust II relating to Preferred Securities.**
4.5-C -- Form of Amended and Restated Trust Agreement of Mississippi
Power Capital Trust I relating to Capital Securities.**
4.5-D -- Form of Amended and Restated Trust Agreement of Mississippi
Power Capital Trust II relating to Capital Securities.**
4.6-A -- Form of Preferred Security of Mississippi Power Capital
Trust I (included in Exhibit 4.5-A above).
4.6-B -- Form of Preferred Security of Mississippi Power Capital
Trust II (included in Exhibit 4.5-B above).
4.6-C -- Form of Capital Security of Mississippi Power Capital Trust
I (included in Exhibit 4.5-C above).
4.6-D -- Form of Capital Security of Mississippi Power Capital Trust
II (included in Exhibit 4.5-D above).
4.7-A -- Form of Junior Subordinated Note relating to Preferred
Securities (included in Exhibit 4.2-A above).
4.7-B -- Form of Junior Subordinated Notes relating to Capital
Securities (included in Exhibit 4.2-B above).
4.8-A -- Form of Guarantee relating to Mississippi Power Capital
Trust I Preferred Securities.**
4.8-B -- Form of Guarantee relating to Mississippi Power Capital
Trust II Preferred Securities.**
4.8-C -- Form of Guarantee relating to Mississippi Power Capital
Trust I Capital Securities.**
4.8-D -- Form of Guarantee relating to Mississippi Power Capital
Trust II Capital Securities.**
4.9-A -- Form of Agreement as to Expenses and Liabilities relating to
Mississippi Power Capital Trust I Preferred Securities
(included in Exhibit 4.5-A above).
4.9-B -- Form of Agreement as to Expenses and Liabilities relating to
Mississippi Power Capital Trust II Preferred Securities
(included in Exhibit 4.5-B above).
4.9-C -- Form of Agreement as to Expenses and Liabilities relating to
Mississippi Power Capital Trust I Capital Securities
(included in Exhibit 4.5-C above).
4.9-D -- Form of Agreement as to Expenses and Liabilities relating to
Mississippi Power Capital Trust II Capital Securities
(included in Exhibit 4.5-D above).
5.1-A -- Opinion of Eaton and Cottrell, P.A., relating to Mississippi
Power Capital Trust I.**
5.1-B -- Opinion of Eaton and Cottrell, P.A., relating to Mississippi
Power Capital Trust II.**
5.2-A -- Opinion of Richards, Layton & Finger relating to Mississippi
Power Capital Trust I.**
5.2-B -- Opinion of Richards, Layton & Finger relating to Mississippi
Power Capital Trust II.**
</TABLE>
II-3
<PAGE> 83
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ---------
<C> <C> <S>
8.1 -- Tax Opinion of Troutman Sanders LLP.**
12.1 -- Computation of ratio of earnings to fixed charges.**
12.2 -- Computation of ratio of earnings to fixed charges plus
preferred dividend requirements (pre-income tax basis).**
23.1 -- Consent of Arthur Andersen LLP.**
23.2 -- Consent of Eaton and Cottrell, P.A., (included in Exhibit
5.1-A and 5.1-B above).
23.3 -- Consent of Troutman Sanders LLP (included in Exhibit 8.1
above).
23.4 -- Consent of Richards, Layton & Finger (included in Exhibit
5.2-A and, 5.2-B above).
24.1 -- Powers of Attorney and Resolution.**
25.1 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of Bankers Trust Company, as Indenture
Trustee.**
25.2 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of Bankers Trust Company, as Property Trustee,
relating to Mississippi Power Capital Trust I in
connection with Preferred Securities.**
25.3 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of Bankers Trust Company, as Guarantee
Trustee, relating to Mississippi Power Capital Trust I in
connection with Preferred Securities.**
25.4 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of Bankers Trust Company, as Property Trustee,
relating to Mississippi Power Capital Trust II in
connection with Preferred Securities.**
25.5 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of Bankers Trust Company, as Guarantee
Trustee, relating to Mississippi Power Capital Trust II in
connection with Preferred Securities.**
25.6 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of Bankers Trust Company, as Property Trustee,
relating to Mississippi Power Capital Trust I in
connection with Capital Securities.**
25.7 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of Bankers Trust Company, as Guarantee
Trustee, relating to Mississippi Power Capital Trust I in
connection with Capital Securities.**
25.8 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of Bankers Trust Company, as Property Trustee,
relating to Mississippi Power Capital Trust II in
connection with Capital Securities.**
25.9 -- Statement of Eligibility under Trust Indenture Act of 1939,
as amended, of Bankers Trust Company, as Guarantee
Trustee, relating to Mississippi Power Capital Trust II in
connection with Capital Securities.**
</TABLE>
- ---------------
* To be subsequently filed or incorporated by reference.
** Previously filed.
ITEM 17. UNDERTAKINGS.
(a) Undertaking related to Rule 415 offering:
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement; Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering
II-4
<PAGE> 84
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, S-8 or F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrants
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) Undertaking related to filings incorporating subsequent Securities
Exchange Act of 1934 documents by reference:
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Company's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Undertaking related to acceleration of effectiveness:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrants pursuant to the foregoing provisions
or otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrants of expenses incurred or paid by a director,
officer or controlling person of the registrants 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
registrants will, unless in the opinion of their counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 85
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, MISSISSIPPI
POWER COMPANY CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ATLANTA, STATE OF
GEORGIA, ON THE 31ST DAY OF JANUARY, 1997.
MISSISSIPPI POWER COMPANY
By: DWIGHT H. EVANS,
President and Chief Executive
Officer
By: WAYNE BOSTON,
Attorney-in-fact
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, MISSISSIPPI
POWER CAPITAL TRUST I CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT
IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ATLANTA, STATE OF
GEORGIA, ON THE 31ST DAY OF JANUARY, 1997.
MISSISSIPPI POWER CAPITAL TRUST I
By: MISSISSIPPI POWER COMPANY
Depositor
By: WAYNE BOSTON,
Assistant Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, MISSISSIPPI
POWER CAPITAL TRUST II CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT
IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ATLANTA, STATE OF
GEORGIA, ON THE 31ST DAY OF JANUARY, 1997.
MISSISSIPPI POWER CAPITAL TRUST II
By: MISSISSIPPI POWER COMPANY
Depositor
By: WAYNE BOSTON,
Assistant Secretary
II-6
<PAGE> 86
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING DIRECTORS AND
OFFICERS OF MISSISSIPPI POWER COMPANY IN THE CAPACITIES AND ON THE DATE
INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
DWIGHT H. EVANS President, Chief Executive
Officer and Director
(Principal Executive
Officer)
MICHAEL W. SOUTHERN Vice President, Secretary,
Treasurer and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
PAUL J. DENICOLA
EDWIN E. DOWNER
ROBERT S. GADDIS
WALTER H. HURT, III
AUBREY K. LUCAS Directors
GEORGE A. SCHLOEGEL
PHILIP J. TERRELL
GENE WARR
DIRECTORS
By WAYNE BOSTON January 31, 1997
(WAYNE BOSTON, ATTORNEY-IN-FACT)
</TABLE>
II-7
